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TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
1Å
1nm
1microm
1mm
1nm 10micro400nm 500nm 700nm 1micro(Electron Beam)
(Ultraviolet) (Visible) (Infrared)
(Measurement PrecisionResolution)
( Wavelength Used)
(Radio Waves)1nm 10micro1400 500 700 1micro(Electron Beam)m
( W U
(Radio Wa
Scanning Electron Microscope
Proximity AlignerChip Defect Inspection System
Auto RefractometerAuto Kerato-Refractometer
Rotating Laser
Optical Engine for Projectors
3D OCT
Retinal Camera
Image Measuring
Electrical Measurement Instrument
Infrared Optical Parts
Total StationGNSSMachine
Controls
Topconrsquos Strength A Wide Range of Wavelengths
Profile
01Contents
History of Topcon
02
Our ThreeBusiness Fields
04
ConsolidatedFinancialHighlights
06
To OurStakeholders
08
Interview withthe President
10Special Feature 1Reform ampEnhancement ofBusiness Structure
14
Special Feature 2TopconrsquosTechnologicalProwess
18
At a Glance
20
PositioningBusiness
22
Eye CareBusiness
24
FinetechBusiness
26
Global Network
28CSR
30
Directors Corporate Auditorsand ExecutiveOfficers
33
Glossary
34
FinancialSection
35
CorporateProfile
47
StockInformation
47
Japanese andOverseas GroupCompanies
48
Ever since its establishment in 1932 the Topcon Group has maintained optical technology as its core technologyand has now merged this field with digital technology to develop a wide range of businesses The Companyrsquosoptical technology spanning a wide range of wavelengths from electron beams to infrared rays is our majorstrength Furthermore from early on we have sought customers from many regions and have thus cultivatedmarkets in such areas as the United States and Europe As a result we are currently implementing a global man-agement system with development production and sales centers in countries throughout the worldThe Topcon Group aims to create new value and by extension contribute to mankind by differentiating itself fromits rivals through the provision of the worldrsquos top as well as attractive products faster than anyone else
Items related to performance forecasts and future outlookIn this annual report information regarding performance forecasts strategies and future outlook is based on predictions drawn from informationcurrently available Accordingly we would like you to be aware of the fact that our actual performance may deviate from the listed forecasts depend-ing on conditions going forward Unless stated otherwise information contained in this annual report is drawn from that currently available as ofAugust 2011
PROFILE
TOPCON Annual Report 2011 | Profile 01
Founding andBusiness Base Establishment Phase
Development Phase Growth Phase
1932Establishment of Tokyo Optical Co LtdEstablished based on the surveying instruments division of K Hattori amp Co Ltd after acquiring the lens manufacturing facilities of Katsuma Kogaku Kikai Co Ltd at the request of the Japanese Ministry of War
1945Concentrated mostly on the production of binoculars which were largely exported to the United States paving the way for the dominance of the US market by Japanese binoculars Moreover the production of surveying instruments contributed to the reconstruction and development of Japan in the post-war era
1951Released Japanrsquos first Refractometer RM-1
1970Established Topcon Europe NV (currently Topcon Europe BV) in the Netherlands
Then established Topcon Instrument Corporation of America (currently Topcon Medical Systems Inc) in the United States
1979Established Topcon Singapore Pte Ltd in Singapore
1985Made a yen38 million public stock offering the largest amount for the company at the time in order to strengthen its managerial foundation by means of a capital increase at the market price
1986Established Topcon Optical (HK) Ltd its first overseas local manufacturing base in Hong Kong
1989Changed corporate name to Topcon Corporation
1947TOHKOH Transit 3inch half
1951RefractometerRM-1
Enter the optical industry as a first step
Leverage technologicalexpertise to launch a series of hit products
Undertake full-scale globalization
1960Became an affiliate of Tokyo Shibaura Electric Co Ltd (currently Toshiba Corporation)
1963Released Topcon RE Super the worldrsquos first single-lens reflex camera with a TTL full-aperture metering system
1981Enjoyed increased profit from strong sales of the extremely popular refractometer RM-100 and the electric distance meter DM-C2
1991Entered the electron beam business
1932- 1963-U d k f l
1985-
1979Electric Distance Meter DM-C2
1979Non-Mydriatic Retinal CameraTRC-NW
1985Total Station GTS-3
1988Digital Image Filing System IMAGEnet
1986Wafer Surface Particle Measuring System WM-3
1966Universal Measuring Microscope TUM
1963Topcon RE Super
02 TOPCON Annual Report 2011 | History of Topcon
HISTORY OF TOPCON
Topcon was established in 1932 based on the surveying instruments division of K Hattori amp Co Ltd (currentlySeiko Holdings Corporation) The Company changed its name from Tokyo Optical Co Ltd to Topcon Corporationin 1989 Today the Company continues its activities as a general precision optical manufacturer mainly of survey-ing instruments and ophthalmic medical instruments
TOPCON Annual Report 2011 | History of Topcon 03
Mature Phase Transformation Phase
1994Entered the Machine Control (MC) BusinessEstablished Topcon Laser Systems Inc (currently Topcon Positioning Systems Inc) and acquired a laser equipment manufacturer in the United States to enter the machine control field
2000Entered the GPS-related BusinessAcquired Javad Positioning Systems Inc in the United States and began developing precision GPS receivers and related system products while merging the GPS-related business with conventional surveying instruments
2001Established Topcon Positioning Systems Inc and Topcon Medical Systems Inc in the United States as part of a plan to improve overseas business
Lay the groundwork for the current core businesses
Reform the business structure in the aftermath of the Lehman Shock
2004Improved Production in ChinaEstablished Topcon (Beijing) Opto-Electronics Corp a surveying instruments manufacturing company to further accelerate the surveying instruments business in China
2008Pursued Business Merger with Sokkia Conducted a takeover bid for shares of SokkiaCo Ltd and made it a subsidiary to enhance competitiveness of the Positioning Business in the global market
2009Established Topcon 3D Inspection Laboratories Inc a 3D inspection technology developmentdesign company in Canada and entered into the 3D metrology system and cutting-edge substrate inspection business
2010Established Topcon Medical Laser Systems Inc by acquiring the retina and glaucoma business of OptiMedica (USA) and entered the therapeutic laser market
2011Established the ldquoTOPCON WAYrdquo
1994-R f h bb
2008-
2003Proximity Aligner for LCD Color Filters TME-1780S
2006GNSS Receiver GR-3
20063D Optical Coherence Tomography 3D OCT-1000
2010Substrate 3D Inspection System SB-Z500
20083D Laser Scanner GLS-1000
2010Ophthalmic Laser Photocoagulator PASCAL
2010Robotic Total Station QS
19983D Machine Control System3D-MC LPS
SurveyingGISMeasurementThe 3D Station NET05 offers the worldrsquos highest 05rdquo angle measurement accuracy (as of August 2011) as a total station It provides highly accurate and efficient measure-ments in areas ranging from industrial measurement to monitoring applications Furthermore we are the frontrun-ner and always lead the world in such areas as the launch of a survey-grade GNSS receiver that tracks both GPS of the US and GLONASS of Russia
ConstructionOur machine control systems significantly improve the produc-tion efficiency of construction sites through the control of machines by reproducing design data exactly
Precision AgricultureBy applying machine control technology for construction to the agricultural field we are making possible the automa-tion of agricultural machines and the incorporation of ICT into their operation Agricultural machines equipped with CropSpec sensors allow farm operators in real time to monitor crop conditions and manage the amount of fertilizer desirable for plant growth
Dual-Frequency GNSS Receiver HiPer II
Machine Control 3D-MC Millimeter GPS
Plant Nutrition Sensor CropSpec
Mobile Mapping System IP-S2 Lite
3D Station NET05AX
Mobile MeasurementBy simply mounting our sensor unit on a vehicle and driving you can collect surrounding 3D positional information and 360 degree images and create 3D virtual space using our worldrsquos first image processing technology
Positioning Business1
r
WorldrsquosNo1
OUR THREE BUSINESS FIELDS
The Topcon Group provides many attractive world-leading products in three business fields centering on ourunparalleled optical and cutting-edge digital technologies
A top three surveying instruments manufacturerThe Positioning Business is Topconrsquos largest business segment mainly providingmeasurement instruments primarily for measuring positions distances and angles Inrecent years we have been expanding our business domain to include applicationsfor high-precision 3D position information through the integration of our core tech-nologies which we have cultivated since our establishment leveraging our machinecontrol image processing GPS and other advanced technologies
04 TOPCON Annual Report 2011 | Our Three Business Fields
Ophthalmic InstrumentsAll over the world we supply diagnostic instru-ments that enable the observation and capture images of all parts of the eye including the cornea the crystalline lens and the retina In particular we maintain the top global market share for retinal imaging diagnostic equipment including retinal cameras and OCT as well as digital image filing systems
We are expanding our business to include not only diagnostic instruments but also treatment instruments most notably retinal laser photo-coagulators and operation microscopes
OptometricInstrumentsWe provide all types of vision testing equipment used at eyeglasses shops Topconrsquos auto refractome-ter which gauges the refrac-tive power of the eye and vision tester a device for measuring vision and other such equipment are highly regarded not only in Japan but around the globe
SemiconductorsWe supply a wide range of inspec-tion systems for cutting-edge semiconductor devices used in digital consumer electronics Furthermore the use of our optical technology our forte enables automatic high-speed high-precision inspection in place of traditional visual inspection
FPDsWe offer spectroradiometers that have the capability of measuring a wide dynamic range of brightness from ultra-low to ultra-high luminance for evaluating the quality of LEDs the use of which has been spreading rapidly in recent years
Optical DevicesWe develop and offer optical units for high-quality projec-tors used in presentations Moreover we provide the optical units considered to be the core parts of digital copying machines to major c o p i e r m a n u f a c t u r e r s throughout the world
Ophthalmic Laser PhotocoagulatorPASCAL
Auto Kerato-Refractometer KR-1
Substrate 3D Inspection System SB-Z500
Pico Projector
Optical Coherence Tomography3D OCT Series
SpectroradiometerSR-LEDW
Eye Care Business Finetech Business2 3
r WorldrsquosNo1
The largest manufacturer of ophthalmic instruments inthe industryWe provide ophthalmic diagnostic and treatment instruments and oph-thalm ic digital image fil ing systems primarily for ophthalmologydepartments in hospitals and optometric vision testing instruments foreyeglasses shops Furthermore recently we have been focusing on sys-tems solutions the development of advanced ophthalmic medicalinstruments and diabetic screening tools and other preventative medicaldevices
Topcon has the highest market share in optical measurement instrumentsWe primarily provide semiconductor inspection systems and flatpanel display (FPD) equipment In addition to optical measure-ment instruments that are essential for the evaluation of imagequality of displays such as color quality and brightness we alsosupply optical engines for projectors and optical devices for new-generation DVD media etc
TOPCON Annual Report 2011 | Our Three Business Fields 05
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
1Å
1nm
1microm
1mm
1nm 10micro400nm 500nm 700nm 1micro(Electron Beam)
(Ultraviolet) (Visible) (Infrared)
(Measurement PrecisionResolution)
( Wavelength Used)
(Radio Waves)1nm 10micro1400 500 700 1micro(Electron Beam)m
( W U
(Radio Wa
Scanning Electron Microscope
Proximity AlignerChip Defect Inspection System
Auto RefractometerAuto Kerato-Refractometer
Rotating Laser
Optical Engine for Projectors
3D OCT
Retinal Camera
Image Measuring
Electrical Measurement Instrument
Infrared Optical Parts
Total StationGNSSMachine
Controls
Topconrsquos Strength A Wide Range of Wavelengths
Profile
01Contents
History of Topcon
02
Our ThreeBusiness Fields
04
ConsolidatedFinancialHighlights
06
To OurStakeholders
08
Interview withthe President
10Special Feature 1Reform ampEnhancement ofBusiness Structure
14
Special Feature 2TopconrsquosTechnologicalProwess
18
At a Glance
20
PositioningBusiness
22
Eye CareBusiness
24
FinetechBusiness
26
Global Network
28CSR
30
Directors Corporate Auditorsand ExecutiveOfficers
33
Glossary
34
FinancialSection
35
CorporateProfile
47
StockInformation
47
Japanese andOverseas GroupCompanies
48
Ever since its establishment in 1932 the Topcon Group has maintained optical technology as its core technologyand has now merged this field with digital technology to develop a wide range of businesses The Companyrsquosoptical technology spanning a wide range of wavelengths from electron beams to infrared rays is our majorstrength Furthermore from early on we have sought customers from many regions and have thus cultivatedmarkets in such areas as the United States and Europe As a result we are currently implementing a global man-agement system with development production and sales centers in countries throughout the worldThe Topcon Group aims to create new value and by extension contribute to mankind by differentiating itself fromits rivals through the provision of the worldrsquos top as well as attractive products faster than anyone else
Items related to performance forecasts and future outlookIn this annual report information regarding performance forecasts strategies and future outlook is based on predictions drawn from informationcurrently available Accordingly we would like you to be aware of the fact that our actual performance may deviate from the listed forecasts depend-ing on conditions going forward Unless stated otherwise information contained in this annual report is drawn from that currently available as ofAugust 2011
PROFILE
TOPCON Annual Report 2011 | Profile 01
Founding andBusiness Base Establishment Phase
Development Phase Growth Phase
1932Establishment of Tokyo Optical Co LtdEstablished based on the surveying instruments division of K Hattori amp Co Ltd after acquiring the lens manufacturing facilities of Katsuma Kogaku Kikai Co Ltd at the request of the Japanese Ministry of War
1945Concentrated mostly on the production of binoculars which were largely exported to the United States paving the way for the dominance of the US market by Japanese binoculars Moreover the production of surveying instruments contributed to the reconstruction and development of Japan in the post-war era
1951Released Japanrsquos first Refractometer RM-1
1970Established Topcon Europe NV (currently Topcon Europe BV) in the Netherlands
Then established Topcon Instrument Corporation of America (currently Topcon Medical Systems Inc) in the United States
1979Established Topcon Singapore Pte Ltd in Singapore
1985Made a yen38 million public stock offering the largest amount for the company at the time in order to strengthen its managerial foundation by means of a capital increase at the market price
1986Established Topcon Optical (HK) Ltd its first overseas local manufacturing base in Hong Kong
1989Changed corporate name to Topcon Corporation
1947TOHKOH Transit 3inch half
1951RefractometerRM-1
Enter the optical industry as a first step
Leverage technologicalexpertise to launch a series of hit products
Undertake full-scale globalization
1960Became an affiliate of Tokyo Shibaura Electric Co Ltd (currently Toshiba Corporation)
1963Released Topcon RE Super the worldrsquos first single-lens reflex camera with a TTL full-aperture metering system
1981Enjoyed increased profit from strong sales of the extremely popular refractometer RM-100 and the electric distance meter DM-C2
1991Entered the electron beam business
1932- 1963-U d k f l
1985-
1979Electric Distance Meter DM-C2
1979Non-Mydriatic Retinal CameraTRC-NW
1985Total Station GTS-3
1988Digital Image Filing System IMAGEnet
1986Wafer Surface Particle Measuring System WM-3
1966Universal Measuring Microscope TUM
1963Topcon RE Super
02 TOPCON Annual Report 2011 | History of Topcon
HISTORY OF TOPCON
Topcon was established in 1932 based on the surveying instruments division of K Hattori amp Co Ltd (currentlySeiko Holdings Corporation) The Company changed its name from Tokyo Optical Co Ltd to Topcon Corporationin 1989 Today the Company continues its activities as a general precision optical manufacturer mainly of survey-ing instruments and ophthalmic medical instruments
TOPCON Annual Report 2011 | History of Topcon 03
Mature Phase Transformation Phase
1994Entered the Machine Control (MC) BusinessEstablished Topcon Laser Systems Inc (currently Topcon Positioning Systems Inc) and acquired a laser equipment manufacturer in the United States to enter the machine control field
2000Entered the GPS-related BusinessAcquired Javad Positioning Systems Inc in the United States and began developing precision GPS receivers and related system products while merging the GPS-related business with conventional surveying instruments
2001Established Topcon Positioning Systems Inc and Topcon Medical Systems Inc in the United States as part of a plan to improve overseas business
Lay the groundwork for the current core businesses
Reform the business structure in the aftermath of the Lehman Shock
2004Improved Production in ChinaEstablished Topcon (Beijing) Opto-Electronics Corp a surveying instruments manufacturing company to further accelerate the surveying instruments business in China
2008Pursued Business Merger with Sokkia Conducted a takeover bid for shares of SokkiaCo Ltd and made it a subsidiary to enhance competitiveness of the Positioning Business in the global market
2009Established Topcon 3D Inspection Laboratories Inc a 3D inspection technology developmentdesign company in Canada and entered into the 3D metrology system and cutting-edge substrate inspection business
2010Established Topcon Medical Laser Systems Inc by acquiring the retina and glaucoma business of OptiMedica (USA) and entered the therapeutic laser market
2011Established the ldquoTOPCON WAYrdquo
1994-R f h bb
2008-
2003Proximity Aligner for LCD Color Filters TME-1780S
2006GNSS Receiver GR-3
20063D Optical Coherence Tomography 3D OCT-1000
2010Substrate 3D Inspection System SB-Z500
20083D Laser Scanner GLS-1000
2010Ophthalmic Laser Photocoagulator PASCAL
2010Robotic Total Station QS
19983D Machine Control System3D-MC LPS
SurveyingGISMeasurementThe 3D Station NET05 offers the worldrsquos highest 05rdquo angle measurement accuracy (as of August 2011) as a total station It provides highly accurate and efficient measure-ments in areas ranging from industrial measurement to monitoring applications Furthermore we are the frontrun-ner and always lead the world in such areas as the launch of a survey-grade GNSS receiver that tracks both GPS of the US and GLONASS of Russia
ConstructionOur machine control systems significantly improve the produc-tion efficiency of construction sites through the control of machines by reproducing design data exactly
Precision AgricultureBy applying machine control technology for construction to the agricultural field we are making possible the automa-tion of agricultural machines and the incorporation of ICT into their operation Agricultural machines equipped with CropSpec sensors allow farm operators in real time to monitor crop conditions and manage the amount of fertilizer desirable for plant growth
Dual-Frequency GNSS Receiver HiPer II
Machine Control 3D-MC Millimeter GPS
Plant Nutrition Sensor CropSpec
Mobile Mapping System IP-S2 Lite
3D Station NET05AX
Mobile MeasurementBy simply mounting our sensor unit on a vehicle and driving you can collect surrounding 3D positional information and 360 degree images and create 3D virtual space using our worldrsquos first image processing technology
Positioning Business1
r
WorldrsquosNo1
OUR THREE BUSINESS FIELDS
The Topcon Group provides many attractive world-leading products in three business fields centering on ourunparalleled optical and cutting-edge digital technologies
A top three surveying instruments manufacturerThe Positioning Business is Topconrsquos largest business segment mainly providingmeasurement instruments primarily for measuring positions distances and angles Inrecent years we have been expanding our business domain to include applicationsfor high-precision 3D position information through the integration of our core tech-nologies which we have cultivated since our establishment leveraging our machinecontrol image processing GPS and other advanced technologies
04 TOPCON Annual Report 2011 | Our Three Business Fields
Ophthalmic InstrumentsAll over the world we supply diagnostic instru-ments that enable the observation and capture images of all parts of the eye including the cornea the crystalline lens and the retina In particular we maintain the top global market share for retinal imaging diagnostic equipment including retinal cameras and OCT as well as digital image filing systems
We are expanding our business to include not only diagnostic instruments but also treatment instruments most notably retinal laser photo-coagulators and operation microscopes
OptometricInstrumentsWe provide all types of vision testing equipment used at eyeglasses shops Topconrsquos auto refractome-ter which gauges the refrac-tive power of the eye and vision tester a device for measuring vision and other such equipment are highly regarded not only in Japan but around the globe
SemiconductorsWe supply a wide range of inspec-tion systems for cutting-edge semiconductor devices used in digital consumer electronics Furthermore the use of our optical technology our forte enables automatic high-speed high-precision inspection in place of traditional visual inspection
FPDsWe offer spectroradiometers that have the capability of measuring a wide dynamic range of brightness from ultra-low to ultra-high luminance for evaluating the quality of LEDs the use of which has been spreading rapidly in recent years
Optical DevicesWe develop and offer optical units for high-quality projec-tors used in presentations Moreover we provide the optical units considered to be the core parts of digital copying machines to major c o p i e r m a n u f a c t u r e r s throughout the world
Ophthalmic Laser PhotocoagulatorPASCAL
Auto Kerato-Refractometer KR-1
Substrate 3D Inspection System SB-Z500
Pico Projector
Optical Coherence Tomography3D OCT Series
SpectroradiometerSR-LEDW
Eye Care Business Finetech Business2 3
r WorldrsquosNo1
The largest manufacturer of ophthalmic instruments inthe industryWe provide ophthalmic diagnostic and treatment instruments and oph-thalm ic digital image fil ing systems primarily for ophthalmologydepartments in hospitals and optometric vision testing instruments foreyeglasses shops Furthermore recently we have been focusing on sys-tems solutions the development of advanced ophthalmic medicalinstruments and diabetic screening tools and other preventative medicaldevices
Topcon has the highest market share in optical measurement instrumentsWe primarily provide semiconductor inspection systems and flatpanel display (FPD) equipment In addition to optical measure-ment instruments that are essential for the evaluation of imagequality of displays such as color quality and brightness we alsosupply optical engines for projectors and optical devices for new-generation DVD media etc
TOPCON Annual Report 2011 | Our Three Business Fields 05
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
1Å
1nm
1microm
1mm
1nm 10micro400nm 500nm 700nm 1micro(Electron Beam)
(Ultraviolet) (Visible) (Infrared)
(Measurement PrecisionResolution)
( Wavelength Used)
(Radio Waves)1nm 10micro1400 500 700 1micro(Electron Beam)m
( W U
(Radio Wa
Scanning Electron Microscope
Proximity AlignerChip Defect Inspection System
Auto RefractometerAuto Kerato-Refractometer
Rotating Laser
Optical Engine for Projectors
3D OCT
Retinal Camera
Image Measuring
Electrical Measurement Instrument
Infrared Optical Parts
Total StationGNSSMachine
Controls
Topconrsquos Strength A Wide Range of Wavelengths
Profile
01Contents
History of Topcon
02
Our ThreeBusiness Fields
04
ConsolidatedFinancialHighlights
06
To OurStakeholders
08
Interview withthe President
10Special Feature 1Reform ampEnhancement ofBusiness Structure
14
Special Feature 2TopconrsquosTechnologicalProwess
18
At a Glance
20
PositioningBusiness
22
Eye CareBusiness
24
FinetechBusiness
26
Global Network
28CSR
30
Directors Corporate Auditorsand ExecutiveOfficers
33
Glossary
34
FinancialSection
35
CorporateProfile
47
StockInformation
47
Japanese andOverseas GroupCompanies
48
Ever since its establishment in 1932 the Topcon Group has maintained optical technology as its core technologyand has now merged this field with digital technology to develop a wide range of businesses The Companyrsquosoptical technology spanning a wide range of wavelengths from electron beams to infrared rays is our majorstrength Furthermore from early on we have sought customers from many regions and have thus cultivatedmarkets in such areas as the United States and Europe As a result we are currently implementing a global man-agement system with development production and sales centers in countries throughout the worldThe Topcon Group aims to create new value and by extension contribute to mankind by differentiating itself fromits rivals through the provision of the worldrsquos top as well as attractive products faster than anyone else
Items related to performance forecasts and future outlookIn this annual report information regarding performance forecasts strategies and future outlook is based on predictions drawn from informationcurrently available Accordingly we would like you to be aware of the fact that our actual performance may deviate from the listed forecasts depend-ing on conditions going forward Unless stated otherwise information contained in this annual report is drawn from that currently available as ofAugust 2011
PROFILE
TOPCON Annual Report 2011 | Profile 01
Founding andBusiness Base Establishment Phase
Development Phase Growth Phase
1932Establishment of Tokyo Optical Co LtdEstablished based on the surveying instruments division of K Hattori amp Co Ltd after acquiring the lens manufacturing facilities of Katsuma Kogaku Kikai Co Ltd at the request of the Japanese Ministry of War
1945Concentrated mostly on the production of binoculars which were largely exported to the United States paving the way for the dominance of the US market by Japanese binoculars Moreover the production of surveying instruments contributed to the reconstruction and development of Japan in the post-war era
1951Released Japanrsquos first Refractometer RM-1
1970Established Topcon Europe NV (currently Topcon Europe BV) in the Netherlands
Then established Topcon Instrument Corporation of America (currently Topcon Medical Systems Inc) in the United States
1979Established Topcon Singapore Pte Ltd in Singapore
1985Made a yen38 million public stock offering the largest amount for the company at the time in order to strengthen its managerial foundation by means of a capital increase at the market price
1986Established Topcon Optical (HK) Ltd its first overseas local manufacturing base in Hong Kong
1989Changed corporate name to Topcon Corporation
1947TOHKOH Transit 3inch half
1951RefractometerRM-1
Enter the optical industry as a first step
Leverage technologicalexpertise to launch a series of hit products
Undertake full-scale globalization
1960Became an affiliate of Tokyo Shibaura Electric Co Ltd (currently Toshiba Corporation)
1963Released Topcon RE Super the worldrsquos first single-lens reflex camera with a TTL full-aperture metering system
1981Enjoyed increased profit from strong sales of the extremely popular refractometer RM-100 and the electric distance meter DM-C2
1991Entered the electron beam business
1932- 1963-U d k f l
1985-
1979Electric Distance Meter DM-C2
1979Non-Mydriatic Retinal CameraTRC-NW
1985Total Station GTS-3
1988Digital Image Filing System IMAGEnet
1986Wafer Surface Particle Measuring System WM-3
1966Universal Measuring Microscope TUM
1963Topcon RE Super
02 TOPCON Annual Report 2011 | History of Topcon
HISTORY OF TOPCON
Topcon was established in 1932 based on the surveying instruments division of K Hattori amp Co Ltd (currentlySeiko Holdings Corporation) The Company changed its name from Tokyo Optical Co Ltd to Topcon Corporationin 1989 Today the Company continues its activities as a general precision optical manufacturer mainly of survey-ing instruments and ophthalmic medical instruments
TOPCON Annual Report 2011 | History of Topcon 03
Mature Phase Transformation Phase
1994Entered the Machine Control (MC) BusinessEstablished Topcon Laser Systems Inc (currently Topcon Positioning Systems Inc) and acquired a laser equipment manufacturer in the United States to enter the machine control field
2000Entered the GPS-related BusinessAcquired Javad Positioning Systems Inc in the United States and began developing precision GPS receivers and related system products while merging the GPS-related business with conventional surveying instruments
2001Established Topcon Positioning Systems Inc and Topcon Medical Systems Inc in the United States as part of a plan to improve overseas business
Lay the groundwork for the current core businesses
Reform the business structure in the aftermath of the Lehman Shock
2004Improved Production in ChinaEstablished Topcon (Beijing) Opto-Electronics Corp a surveying instruments manufacturing company to further accelerate the surveying instruments business in China
2008Pursued Business Merger with Sokkia Conducted a takeover bid for shares of SokkiaCo Ltd and made it a subsidiary to enhance competitiveness of the Positioning Business in the global market
2009Established Topcon 3D Inspection Laboratories Inc a 3D inspection technology developmentdesign company in Canada and entered into the 3D metrology system and cutting-edge substrate inspection business
2010Established Topcon Medical Laser Systems Inc by acquiring the retina and glaucoma business of OptiMedica (USA) and entered the therapeutic laser market
2011Established the ldquoTOPCON WAYrdquo
1994-R f h bb
2008-
2003Proximity Aligner for LCD Color Filters TME-1780S
2006GNSS Receiver GR-3
20063D Optical Coherence Tomography 3D OCT-1000
2010Substrate 3D Inspection System SB-Z500
20083D Laser Scanner GLS-1000
2010Ophthalmic Laser Photocoagulator PASCAL
2010Robotic Total Station QS
19983D Machine Control System3D-MC LPS
SurveyingGISMeasurementThe 3D Station NET05 offers the worldrsquos highest 05rdquo angle measurement accuracy (as of August 2011) as a total station It provides highly accurate and efficient measure-ments in areas ranging from industrial measurement to monitoring applications Furthermore we are the frontrun-ner and always lead the world in such areas as the launch of a survey-grade GNSS receiver that tracks both GPS of the US and GLONASS of Russia
ConstructionOur machine control systems significantly improve the produc-tion efficiency of construction sites through the control of machines by reproducing design data exactly
Precision AgricultureBy applying machine control technology for construction to the agricultural field we are making possible the automa-tion of agricultural machines and the incorporation of ICT into their operation Agricultural machines equipped with CropSpec sensors allow farm operators in real time to monitor crop conditions and manage the amount of fertilizer desirable for plant growth
Dual-Frequency GNSS Receiver HiPer II
Machine Control 3D-MC Millimeter GPS
Plant Nutrition Sensor CropSpec
Mobile Mapping System IP-S2 Lite
3D Station NET05AX
Mobile MeasurementBy simply mounting our sensor unit on a vehicle and driving you can collect surrounding 3D positional information and 360 degree images and create 3D virtual space using our worldrsquos first image processing technology
Positioning Business1
r
WorldrsquosNo1
OUR THREE BUSINESS FIELDS
The Topcon Group provides many attractive world-leading products in three business fields centering on ourunparalleled optical and cutting-edge digital technologies
A top three surveying instruments manufacturerThe Positioning Business is Topconrsquos largest business segment mainly providingmeasurement instruments primarily for measuring positions distances and angles Inrecent years we have been expanding our business domain to include applicationsfor high-precision 3D position information through the integration of our core tech-nologies which we have cultivated since our establishment leveraging our machinecontrol image processing GPS and other advanced technologies
04 TOPCON Annual Report 2011 | Our Three Business Fields
Ophthalmic InstrumentsAll over the world we supply diagnostic instru-ments that enable the observation and capture images of all parts of the eye including the cornea the crystalline lens and the retina In particular we maintain the top global market share for retinal imaging diagnostic equipment including retinal cameras and OCT as well as digital image filing systems
We are expanding our business to include not only diagnostic instruments but also treatment instruments most notably retinal laser photo-coagulators and operation microscopes
OptometricInstrumentsWe provide all types of vision testing equipment used at eyeglasses shops Topconrsquos auto refractome-ter which gauges the refrac-tive power of the eye and vision tester a device for measuring vision and other such equipment are highly regarded not only in Japan but around the globe
SemiconductorsWe supply a wide range of inspec-tion systems for cutting-edge semiconductor devices used in digital consumer electronics Furthermore the use of our optical technology our forte enables automatic high-speed high-precision inspection in place of traditional visual inspection
FPDsWe offer spectroradiometers that have the capability of measuring a wide dynamic range of brightness from ultra-low to ultra-high luminance for evaluating the quality of LEDs the use of which has been spreading rapidly in recent years
Optical DevicesWe develop and offer optical units for high-quality projec-tors used in presentations Moreover we provide the optical units considered to be the core parts of digital copying machines to major c o p i e r m a n u f a c t u r e r s throughout the world
Ophthalmic Laser PhotocoagulatorPASCAL
Auto Kerato-Refractometer KR-1
Substrate 3D Inspection System SB-Z500
Pico Projector
Optical Coherence Tomography3D OCT Series
SpectroradiometerSR-LEDW
Eye Care Business Finetech Business2 3
r WorldrsquosNo1
The largest manufacturer of ophthalmic instruments inthe industryWe provide ophthalmic diagnostic and treatment instruments and oph-thalm ic digital image fil ing systems primarily for ophthalmologydepartments in hospitals and optometric vision testing instruments foreyeglasses shops Furthermore recently we have been focusing on sys-tems solutions the development of advanced ophthalmic medicalinstruments and diabetic screening tools and other preventative medicaldevices
Topcon has the highest market share in optical measurement instrumentsWe primarily provide semiconductor inspection systems and flatpanel display (FPD) equipment In addition to optical measure-ment instruments that are essential for the evaluation of imagequality of displays such as color quality and brightness we alsosupply optical engines for projectors and optical devices for new-generation DVD media etc
TOPCON Annual Report 2011 | Our Three Business Fields 05
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Founding andBusiness Base Establishment Phase
Development Phase Growth Phase
1932Establishment of Tokyo Optical Co LtdEstablished based on the surveying instruments division of K Hattori amp Co Ltd after acquiring the lens manufacturing facilities of Katsuma Kogaku Kikai Co Ltd at the request of the Japanese Ministry of War
1945Concentrated mostly on the production of binoculars which were largely exported to the United States paving the way for the dominance of the US market by Japanese binoculars Moreover the production of surveying instruments contributed to the reconstruction and development of Japan in the post-war era
1951Released Japanrsquos first Refractometer RM-1
1970Established Topcon Europe NV (currently Topcon Europe BV) in the Netherlands
Then established Topcon Instrument Corporation of America (currently Topcon Medical Systems Inc) in the United States
1979Established Topcon Singapore Pte Ltd in Singapore
1985Made a yen38 million public stock offering the largest amount for the company at the time in order to strengthen its managerial foundation by means of a capital increase at the market price
1986Established Topcon Optical (HK) Ltd its first overseas local manufacturing base in Hong Kong
1989Changed corporate name to Topcon Corporation
1947TOHKOH Transit 3inch half
1951RefractometerRM-1
Enter the optical industry as a first step
Leverage technologicalexpertise to launch a series of hit products
Undertake full-scale globalization
1960Became an affiliate of Tokyo Shibaura Electric Co Ltd (currently Toshiba Corporation)
1963Released Topcon RE Super the worldrsquos first single-lens reflex camera with a TTL full-aperture metering system
1981Enjoyed increased profit from strong sales of the extremely popular refractometer RM-100 and the electric distance meter DM-C2
1991Entered the electron beam business
1932- 1963-U d k f l
1985-
1979Electric Distance Meter DM-C2
1979Non-Mydriatic Retinal CameraTRC-NW
1985Total Station GTS-3
1988Digital Image Filing System IMAGEnet
1986Wafer Surface Particle Measuring System WM-3
1966Universal Measuring Microscope TUM
1963Topcon RE Super
02 TOPCON Annual Report 2011 | History of Topcon
HISTORY OF TOPCON
Topcon was established in 1932 based on the surveying instruments division of K Hattori amp Co Ltd (currentlySeiko Holdings Corporation) The Company changed its name from Tokyo Optical Co Ltd to Topcon Corporationin 1989 Today the Company continues its activities as a general precision optical manufacturer mainly of survey-ing instruments and ophthalmic medical instruments
TOPCON Annual Report 2011 | History of Topcon 03
Mature Phase Transformation Phase
1994Entered the Machine Control (MC) BusinessEstablished Topcon Laser Systems Inc (currently Topcon Positioning Systems Inc) and acquired a laser equipment manufacturer in the United States to enter the machine control field
2000Entered the GPS-related BusinessAcquired Javad Positioning Systems Inc in the United States and began developing precision GPS receivers and related system products while merging the GPS-related business with conventional surveying instruments
2001Established Topcon Positioning Systems Inc and Topcon Medical Systems Inc in the United States as part of a plan to improve overseas business
Lay the groundwork for the current core businesses
Reform the business structure in the aftermath of the Lehman Shock
2004Improved Production in ChinaEstablished Topcon (Beijing) Opto-Electronics Corp a surveying instruments manufacturing company to further accelerate the surveying instruments business in China
2008Pursued Business Merger with Sokkia Conducted a takeover bid for shares of SokkiaCo Ltd and made it a subsidiary to enhance competitiveness of the Positioning Business in the global market
2009Established Topcon 3D Inspection Laboratories Inc a 3D inspection technology developmentdesign company in Canada and entered into the 3D metrology system and cutting-edge substrate inspection business
2010Established Topcon Medical Laser Systems Inc by acquiring the retina and glaucoma business of OptiMedica (USA) and entered the therapeutic laser market
2011Established the ldquoTOPCON WAYrdquo
1994-R f h bb
2008-
2003Proximity Aligner for LCD Color Filters TME-1780S
2006GNSS Receiver GR-3
20063D Optical Coherence Tomography 3D OCT-1000
2010Substrate 3D Inspection System SB-Z500
20083D Laser Scanner GLS-1000
2010Ophthalmic Laser Photocoagulator PASCAL
2010Robotic Total Station QS
19983D Machine Control System3D-MC LPS
SurveyingGISMeasurementThe 3D Station NET05 offers the worldrsquos highest 05rdquo angle measurement accuracy (as of August 2011) as a total station It provides highly accurate and efficient measure-ments in areas ranging from industrial measurement to monitoring applications Furthermore we are the frontrun-ner and always lead the world in such areas as the launch of a survey-grade GNSS receiver that tracks both GPS of the US and GLONASS of Russia
ConstructionOur machine control systems significantly improve the produc-tion efficiency of construction sites through the control of machines by reproducing design data exactly
Precision AgricultureBy applying machine control technology for construction to the agricultural field we are making possible the automa-tion of agricultural machines and the incorporation of ICT into their operation Agricultural machines equipped with CropSpec sensors allow farm operators in real time to monitor crop conditions and manage the amount of fertilizer desirable for plant growth
Dual-Frequency GNSS Receiver HiPer II
Machine Control 3D-MC Millimeter GPS
Plant Nutrition Sensor CropSpec
Mobile Mapping System IP-S2 Lite
3D Station NET05AX
Mobile MeasurementBy simply mounting our sensor unit on a vehicle and driving you can collect surrounding 3D positional information and 360 degree images and create 3D virtual space using our worldrsquos first image processing technology
Positioning Business1
r
WorldrsquosNo1
OUR THREE BUSINESS FIELDS
The Topcon Group provides many attractive world-leading products in three business fields centering on ourunparalleled optical and cutting-edge digital technologies
A top three surveying instruments manufacturerThe Positioning Business is Topconrsquos largest business segment mainly providingmeasurement instruments primarily for measuring positions distances and angles Inrecent years we have been expanding our business domain to include applicationsfor high-precision 3D position information through the integration of our core tech-nologies which we have cultivated since our establishment leveraging our machinecontrol image processing GPS and other advanced technologies
04 TOPCON Annual Report 2011 | Our Three Business Fields
Ophthalmic InstrumentsAll over the world we supply diagnostic instru-ments that enable the observation and capture images of all parts of the eye including the cornea the crystalline lens and the retina In particular we maintain the top global market share for retinal imaging diagnostic equipment including retinal cameras and OCT as well as digital image filing systems
We are expanding our business to include not only diagnostic instruments but also treatment instruments most notably retinal laser photo-coagulators and operation microscopes
OptometricInstrumentsWe provide all types of vision testing equipment used at eyeglasses shops Topconrsquos auto refractome-ter which gauges the refrac-tive power of the eye and vision tester a device for measuring vision and other such equipment are highly regarded not only in Japan but around the globe
SemiconductorsWe supply a wide range of inspec-tion systems for cutting-edge semiconductor devices used in digital consumer electronics Furthermore the use of our optical technology our forte enables automatic high-speed high-precision inspection in place of traditional visual inspection
FPDsWe offer spectroradiometers that have the capability of measuring a wide dynamic range of brightness from ultra-low to ultra-high luminance for evaluating the quality of LEDs the use of which has been spreading rapidly in recent years
Optical DevicesWe develop and offer optical units for high-quality projec-tors used in presentations Moreover we provide the optical units considered to be the core parts of digital copying machines to major c o p i e r m a n u f a c t u r e r s throughout the world
Ophthalmic Laser PhotocoagulatorPASCAL
Auto Kerato-Refractometer KR-1
Substrate 3D Inspection System SB-Z500
Pico Projector
Optical Coherence Tomography3D OCT Series
SpectroradiometerSR-LEDW
Eye Care Business Finetech Business2 3
r WorldrsquosNo1
The largest manufacturer of ophthalmic instruments inthe industryWe provide ophthalmic diagnostic and treatment instruments and oph-thalm ic digital image fil ing systems primarily for ophthalmologydepartments in hospitals and optometric vision testing instruments foreyeglasses shops Furthermore recently we have been focusing on sys-tems solutions the development of advanced ophthalmic medicalinstruments and diabetic screening tools and other preventative medicaldevices
Topcon has the highest market share in optical measurement instrumentsWe primarily provide semiconductor inspection systems and flatpanel display (FPD) equipment In addition to optical measure-ment instruments that are essential for the evaluation of imagequality of displays such as color quality and brightness we alsosupply optical engines for projectors and optical devices for new-generation DVD media etc
TOPCON Annual Report 2011 | Our Three Business Fields 05
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | History of Topcon 03
Mature Phase Transformation Phase
1994Entered the Machine Control (MC) BusinessEstablished Topcon Laser Systems Inc (currently Topcon Positioning Systems Inc) and acquired a laser equipment manufacturer in the United States to enter the machine control field
2000Entered the GPS-related BusinessAcquired Javad Positioning Systems Inc in the United States and began developing precision GPS receivers and related system products while merging the GPS-related business with conventional surveying instruments
2001Established Topcon Positioning Systems Inc and Topcon Medical Systems Inc in the United States as part of a plan to improve overseas business
Lay the groundwork for the current core businesses
Reform the business structure in the aftermath of the Lehman Shock
2004Improved Production in ChinaEstablished Topcon (Beijing) Opto-Electronics Corp a surveying instruments manufacturing company to further accelerate the surveying instruments business in China
2008Pursued Business Merger with Sokkia Conducted a takeover bid for shares of SokkiaCo Ltd and made it a subsidiary to enhance competitiveness of the Positioning Business in the global market
2009Established Topcon 3D Inspection Laboratories Inc a 3D inspection technology developmentdesign company in Canada and entered into the 3D metrology system and cutting-edge substrate inspection business
2010Established Topcon Medical Laser Systems Inc by acquiring the retina and glaucoma business of OptiMedica (USA) and entered the therapeutic laser market
2011Established the ldquoTOPCON WAYrdquo
1994-R f h bb
2008-
2003Proximity Aligner for LCD Color Filters TME-1780S
2006GNSS Receiver GR-3
20063D Optical Coherence Tomography 3D OCT-1000
2010Substrate 3D Inspection System SB-Z500
20083D Laser Scanner GLS-1000
2010Ophthalmic Laser Photocoagulator PASCAL
2010Robotic Total Station QS
19983D Machine Control System3D-MC LPS
SurveyingGISMeasurementThe 3D Station NET05 offers the worldrsquos highest 05rdquo angle measurement accuracy (as of August 2011) as a total station It provides highly accurate and efficient measure-ments in areas ranging from industrial measurement to monitoring applications Furthermore we are the frontrun-ner and always lead the world in such areas as the launch of a survey-grade GNSS receiver that tracks both GPS of the US and GLONASS of Russia
ConstructionOur machine control systems significantly improve the produc-tion efficiency of construction sites through the control of machines by reproducing design data exactly
Precision AgricultureBy applying machine control technology for construction to the agricultural field we are making possible the automa-tion of agricultural machines and the incorporation of ICT into their operation Agricultural machines equipped with CropSpec sensors allow farm operators in real time to monitor crop conditions and manage the amount of fertilizer desirable for plant growth
Dual-Frequency GNSS Receiver HiPer II
Machine Control 3D-MC Millimeter GPS
Plant Nutrition Sensor CropSpec
Mobile Mapping System IP-S2 Lite
3D Station NET05AX
Mobile MeasurementBy simply mounting our sensor unit on a vehicle and driving you can collect surrounding 3D positional information and 360 degree images and create 3D virtual space using our worldrsquos first image processing technology
Positioning Business1
r
WorldrsquosNo1
OUR THREE BUSINESS FIELDS
The Topcon Group provides many attractive world-leading products in three business fields centering on ourunparalleled optical and cutting-edge digital technologies
A top three surveying instruments manufacturerThe Positioning Business is Topconrsquos largest business segment mainly providingmeasurement instruments primarily for measuring positions distances and angles Inrecent years we have been expanding our business domain to include applicationsfor high-precision 3D position information through the integration of our core tech-nologies which we have cultivated since our establishment leveraging our machinecontrol image processing GPS and other advanced technologies
04 TOPCON Annual Report 2011 | Our Three Business Fields
Ophthalmic InstrumentsAll over the world we supply diagnostic instru-ments that enable the observation and capture images of all parts of the eye including the cornea the crystalline lens and the retina In particular we maintain the top global market share for retinal imaging diagnostic equipment including retinal cameras and OCT as well as digital image filing systems
We are expanding our business to include not only diagnostic instruments but also treatment instruments most notably retinal laser photo-coagulators and operation microscopes
OptometricInstrumentsWe provide all types of vision testing equipment used at eyeglasses shops Topconrsquos auto refractome-ter which gauges the refrac-tive power of the eye and vision tester a device for measuring vision and other such equipment are highly regarded not only in Japan but around the globe
SemiconductorsWe supply a wide range of inspec-tion systems for cutting-edge semiconductor devices used in digital consumer electronics Furthermore the use of our optical technology our forte enables automatic high-speed high-precision inspection in place of traditional visual inspection
FPDsWe offer spectroradiometers that have the capability of measuring a wide dynamic range of brightness from ultra-low to ultra-high luminance for evaluating the quality of LEDs the use of which has been spreading rapidly in recent years
Optical DevicesWe develop and offer optical units for high-quality projec-tors used in presentations Moreover we provide the optical units considered to be the core parts of digital copying machines to major c o p i e r m a n u f a c t u r e r s throughout the world
Ophthalmic Laser PhotocoagulatorPASCAL
Auto Kerato-Refractometer KR-1
Substrate 3D Inspection System SB-Z500
Pico Projector
Optical Coherence Tomography3D OCT Series
SpectroradiometerSR-LEDW
Eye Care Business Finetech Business2 3
r WorldrsquosNo1
The largest manufacturer of ophthalmic instruments inthe industryWe provide ophthalmic diagnostic and treatment instruments and oph-thalm ic digital image fil ing systems primarily for ophthalmologydepartments in hospitals and optometric vision testing instruments foreyeglasses shops Furthermore recently we have been focusing on sys-tems solutions the development of advanced ophthalmic medicalinstruments and diabetic screening tools and other preventative medicaldevices
Topcon has the highest market share in optical measurement instrumentsWe primarily provide semiconductor inspection systems and flatpanel display (FPD) equipment In addition to optical measure-ment instruments that are essential for the evaluation of imagequality of displays such as color quality and brightness we alsosupply optical engines for projectors and optical devices for new-generation DVD media etc
TOPCON Annual Report 2011 | Our Three Business Fields 05
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
SurveyingGISMeasurementThe 3D Station NET05 offers the worldrsquos highest 05rdquo angle measurement accuracy (as of August 2011) as a total station It provides highly accurate and efficient measure-ments in areas ranging from industrial measurement to monitoring applications Furthermore we are the frontrun-ner and always lead the world in such areas as the launch of a survey-grade GNSS receiver that tracks both GPS of the US and GLONASS of Russia
ConstructionOur machine control systems significantly improve the produc-tion efficiency of construction sites through the control of machines by reproducing design data exactly
Precision AgricultureBy applying machine control technology for construction to the agricultural field we are making possible the automa-tion of agricultural machines and the incorporation of ICT into their operation Agricultural machines equipped with CropSpec sensors allow farm operators in real time to monitor crop conditions and manage the amount of fertilizer desirable for plant growth
Dual-Frequency GNSS Receiver HiPer II
Machine Control 3D-MC Millimeter GPS
Plant Nutrition Sensor CropSpec
Mobile Mapping System IP-S2 Lite
3D Station NET05AX
Mobile MeasurementBy simply mounting our sensor unit on a vehicle and driving you can collect surrounding 3D positional information and 360 degree images and create 3D virtual space using our worldrsquos first image processing technology
Positioning Business1
r
WorldrsquosNo1
OUR THREE BUSINESS FIELDS
The Topcon Group provides many attractive world-leading products in three business fields centering on ourunparalleled optical and cutting-edge digital technologies
A top three surveying instruments manufacturerThe Positioning Business is Topconrsquos largest business segment mainly providingmeasurement instruments primarily for measuring positions distances and angles Inrecent years we have been expanding our business domain to include applicationsfor high-precision 3D position information through the integration of our core tech-nologies which we have cultivated since our establishment leveraging our machinecontrol image processing GPS and other advanced technologies
04 TOPCON Annual Report 2011 | Our Three Business Fields
Ophthalmic InstrumentsAll over the world we supply diagnostic instru-ments that enable the observation and capture images of all parts of the eye including the cornea the crystalline lens and the retina In particular we maintain the top global market share for retinal imaging diagnostic equipment including retinal cameras and OCT as well as digital image filing systems
We are expanding our business to include not only diagnostic instruments but also treatment instruments most notably retinal laser photo-coagulators and operation microscopes
OptometricInstrumentsWe provide all types of vision testing equipment used at eyeglasses shops Topconrsquos auto refractome-ter which gauges the refrac-tive power of the eye and vision tester a device for measuring vision and other such equipment are highly regarded not only in Japan but around the globe
SemiconductorsWe supply a wide range of inspec-tion systems for cutting-edge semiconductor devices used in digital consumer electronics Furthermore the use of our optical technology our forte enables automatic high-speed high-precision inspection in place of traditional visual inspection
FPDsWe offer spectroradiometers that have the capability of measuring a wide dynamic range of brightness from ultra-low to ultra-high luminance for evaluating the quality of LEDs the use of which has been spreading rapidly in recent years
Optical DevicesWe develop and offer optical units for high-quality projec-tors used in presentations Moreover we provide the optical units considered to be the core parts of digital copying machines to major c o p i e r m a n u f a c t u r e r s throughout the world
Ophthalmic Laser PhotocoagulatorPASCAL
Auto Kerato-Refractometer KR-1
Substrate 3D Inspection System SB-Z500
Pico Projector
Optical Coherence Tomography3D OCT Series
SpectroradiometerSR-LEDW
Eye Care Business Finetech Business2 3
r WorldrsquosNo1
The largest manufacturer of ophthalmic instruments inthe industryWe provide ophthalmic diagnostic and treatment instruments and oph-thalm ic digital image fil ing systems primarily for ophthalmologydepartments in hospitals and optometric vision testing instruments foreyeglasses shops Furthermore recently we have been focusing on sys-tems solutions the development of advanced ophthalmic medicalinstruments and diabetic screening tools and other preventative medicaldevices
Topcon has the highest market share in optical measurement instrumentsWe primarily provide semiconductor inspection systems and flatpanel display (FPD) equipment In addition to optical measure-ment instruments that are essential for the evaluation of imagequality of displays such as color quality and brightness we alsosupply optical engines for projectors and optical devices for new-generation DVD media etc
TOPCON Annual Report 2011 | Our Three Business Fields 05
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Ophthalmic InstrumentsAll over the world we supply diagnostic instru-ments that enable the observation and capture images of all parts of the eye including the cornea the crystalline lens and the retina In particular we maintain the top global market share for retinal imaging diagnostic equipment including retinal cameras and OCT as well as digital image filing systems
We are expanding our business to include not only diagnostic instruments but also treatment instruments most notably retinal laser photo-coagulators and operation microscopes
OptometricInstrumentsWe provide all types of vision testing equipment used at eyeglasses shops Topconrsquos auto refractome-ter which gauges the refrac-tive power of the eye and vision tester a device for measuring vision and other such equipment are highly regarded not only in Japan but around the globe
SemiconductorsWe supply a wide range of inspec-tion systems for cutting-edge semiconductor devices used in digital consumer electronics Furthermore the use of our optical technology our forte enables automatic high-speed high-precision inspection in place of traditional visual inspection
FPDsWe offer spectroradiometers that have the capability of measuring a wide dynamic range of brightness from ultra-low to ultra-high luminance for evaluating the quality of LEDs the use of which has been spreading rapidly in recent years
Optical DevicesWe develop and offer optical units for high-quality projec-tors used in presentations Moreover we provide the optical units considered to be the core parts of digital copying machines to major c o p i e r m a n u f a c t u r e r s throughout the world
Ophthalmic Laser PhotocoagulatorPASCAL
Auto Kerato-Refractometer KR-1
Substrate 3D Inspection System SB-Z500
Pico Projector
Optical Coherence Tomography3D OCT Series
SpectroradiometerSR-LEDW
Eye Care Business Finetech Business2 3
r WorldrsquosNo1
The largest manufacturer of ophthalmic instruments inthe industryWe provide ophthalmic diagnostic and treatment instruments and oph-thalm ic digital image fil ing systems primarily for ophthalmologydepartments in hospitals and optometric vision testing instruments foreyeglasses shops Furthermore recently we have been focusing on sys-tems solutions the development of advanced ophthalmic medicalinstruments and diabetic screening tools and other preventative medicaldevices
Topcon has the highest market share in optical measurement instrumentsWe primarily provide semiconductor inspection systems and flatpanel display (FPD) equipment In addition to optical measure-ment instruments that are essential for the evaluation of imagequality of displays such as color quality and brightness we alsosupply optical engines for projectors and optical devices for new-generation DVD media etc
TOPCON Annual Report 2011 | Our Three Business Fields 05
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
06 TOPCON Annual Report 2011 | Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTSTopcon Corporation and Consolidated Subsidiaries
2011320103200932008320073 20113
Millions of yenThousands ofUS dollars
Operating results
Net sales
Positioning Business
Eye Care Business
Finetech Business
Overseas
Operating income (loss)
Ordinary income (loss)
Net income (loss)
Capital expenditures
Depreciation and amortization
RampD expenditures
Free cash flows
Financial position
Shareholdersrsquo equity
Total assets
Interest-bearing liabilities
Per share data (yen $)
Earnings per share (EPS)
Net assets per share (BPS)
Management indicators
Operating income ratio ()
Net income ratio ()
Ratio of RampD expenditures to net sales ()
Overseas net sales ratio ()
Return on assets (ROA) ()
Return on equity (ROE) ()
Price earnings ratio (PER) (times)
Price book-value ratio (PBR) (times)
Equity ratio ()
Total assets turnover ratio (timesyear)
DE ratio ()
Dividend payout ratio
yen 102470515593094619964742101799
608(1288)44995286
10275(7903)
yen 3690812481655300
yen (1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
yen 94862
49350
31561
13950
69138
1405
545
133
2109
6378
9609
1112
yen 40490
125539
51501
yen 144
43717
15
01
101
729
01
03
3580
12
323
077
1272
2770
yen 112666
58031
33503
21131
83684
(6944)
(9326)
(9992)
2620
6448
11589
(6991)
yen 39801
119702
49706
yen (10789)
42972
(62)
(89)
103
743
77
(208)
mdash
09
332
087
1249
mdash
yen 110818
50928
39828
20061
81027
10975
9205
7736
2893
3746
10178
(16185)
yen 56082
139362
43329
yen 8352
60549
99
70
92
731
65
140
94
13
402
093
773
192
yen 110490
53631
38464
18394
80575
15276
14233
8549
3012
3287
9424
1019
yen 54689
99859
14068
yen 9230
59045
138
77
85
729
90
167
195
30
548
117
257
217
$ 1232358620077372178240102892487216467320
(15499)5410763581
123573(95051)
$ 4438801501099
665069
$ (0167)4793
Note For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 2011
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
NET SALES AND OVERSEAS NET SALES RATIO
120000 80
100000 75
80000 70
60000 65
40000 60
20000 55
0 0
(Millions of yen) ()
093083073 103 113
Positioning Business (left) Eye Care Business (left)
Finetech Business (left) Overseas net sales ratio (right)
OPERATING INCOME (LOSS) AND OPERATING INCOME RATIO
20000 20
15000 15
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Operating income (loss) (left)
Operating income ratio (right)
NET INCOME (LOSS) ANDNET INCOME RATIO
10000 10
5000 5
0 0
-5000 -5
-10000 -10
(Millions of yen) ()
093083073 103 113
Net income (loss) (left)
Net income ratio (right)
FREE CASH FLOWS AND DE RATIO
CAPITAL EXPENDITURES ANDDEPRECIATION AND AMORTIZATION
RampD EXPENDITURES AND RATIO OF RampD EXPENDITURES TO NET SALES
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2
0 0
(Millions of yen) ()
RampD expenditures (left)
Ratio of RampD expenditures to net sales (right)
Free cash flow (left)
DE ratio (right)
Capital expenditures (left)
Depreciation and amortization (right)
ROE AND ROA
20
15
5
-5
10
0
-10
-15
-20
-25
()
Return on equity (ROE)
Return on assets (ROA)
PER AND PBR
400
300
200
100
0
4
3
2
1
0
(Times) (Times)
Price earnings ratio (PER)
Price-book value ratio(PBR)
INTEREST-BEARING LIABILITIES AND EQUITY RATIO
60000 60
50000 50
40000 40
30000 30
20000 20
10000 10
0 0
(Millions of yen) ()
Interest-bearing liabilities (left)
Equity ratio (right)
20000 200
10000 100
0 0
-10000 -100
-20000 -200
(Millions of yen) ()5000 7000
4000 6000
3000 5000
2000 4000
1000 3000
0 0
(Millions of yen) (Millions of yen)
093083073 103 113 093083073 103 113 093083073 103 113
093083073 103 113 093083073 103 113 093083073 103 113
TOPCON Annual Report 2011 | Consolidated Financial Highlights 07
FY2010 Financial Earnings Highlights
bullConsolidated net sales in FY2010 ended March 31 2011 rose 80 year on year to yen102470 million
bullOperating income surged 281 year on year to yen1799 million
bullThe Company recorded a net loss of yen1288 million owing to the incurrence of an extraordinary loss
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
08 TOPCON Annual Report 2011 | To Our Stakeholders
GREETINGSIt was my special honor and privilege to begin my term as
the new president of Topcon on June 24 2011 First of all
I would like to express our heartfelt condolences to every-
one affected by the Great East Japan Earthquake and our
prayers for a rapid recovery
Topconrsquos consolidated earnings results for fiscal 2010
ended March 31 2011 saw growth in both sales and profit
as the positive effects of cost reductions and sales volume
growth in the United States China and other areas over-
came the negative impacts of yen appreciation and
increased fixed costs Net sales rose 80 year on year to
yen102470 million and operating income increased 281 to
yen1799 million The Company distributed a full-year cash
dividend of yen4 per share in the fiscal year under review
TO OUR STAKEHOLDERS
MID-TERM BUSINESS PLAN 2013With an increasing global business more than 70 of the
Topcon Grouprsquos sales are outside Japan but the external
environment of recent years including foreign exchange
rates continues to have a great impact on our perform-
ance Consequently we have been advancing the reform
project since the previous fiscal year In fiscal 2011 we
have formulated the Mid-Term Business Plan 2013 and will
undertake the reform project under the Mid-Term Action
Plan which indicates the direction of the Business Plan
clearly demonstrating our intent to establish a robust cor-
porate structure From now on under the renewed
management structure we will focus our efforts on quickly
establishing a stable revenue base and sound financial
position following the slogan of ldquoReform amp Enhancementrdquo
to create a stronger corporate structure that is resilient to
the external business environment
One of the key strategies in our reform project specified in
the Action Plan is to reduce overall costs This strategy
includes reducing the cost of goods sold by enhancing
VACD (value analysiscost down) efforts and strengthening
overseas procurement optimizing the workforce by adjust-
ing headcount on a global basis and consolidatingintegrating
production bases and promoting business process reforms
by introducing an ERP (enterprise resource planning) system
Through such steps we aim to save a total of yen10 billion by
reducing the cost of goods sold and fixed costs
Realizing profitable and sustainable growth
to be a truly global and a truly excellent company
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | To Our Stakeholders 09
REALIZING PROFITABLE AND SUSTAINABLE GROWTHThe reduction of cost of goods sold and fixed costs is the
key strategy of the ongoing reform project and by acceler-
ating it we will generate profits and healthy cash flows that
will keep us one step ahead of our competitors We will
also advance reform of our corporate culture in accordance
with the TOPCON WAY established in April 2011 In these
ways we will achieve profitable and sustainable growth
We are also continuing our tireless pursuit of technology
with renewed efforts to revitalize the inherent DNA of ldquoTech-
nology-driven Topconrdquo and to further reinforce the TM-1
(Time to Market No 1) activities In addition we are working
to raise our level of monozukuri (superb manufacturing)mdash
the most fundamental element in the manufacturing
industrymdashto the highest level in the world to achieve our
objective of becoming a leading company that is truly
global and a truly excellent company with worldwide com-
petitive strength
In closing I would like to thank all our stakeholders for
their continued understanding and support as we strive to
achieve our goals
August 2011
NORIO UCHIDA
President
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
UNIT SALES OF MAJOR PRODUCTS (20083 has a value of 100)
130
120
100
80
110
90
70
6020083 20093 20103 20113
Total stations GPS
Retinal cameras and OCT
Auto refractometers and auto kerato-refractometers
()
10 TOPCON Annual Report 2011 | Interview with the President
INTERVIEW WITH THE PRESIDENT
Q 1
A 1
FISCAL 2010 RESULTSIn fiscal 2010 ended March 31 2011 net sales increased
80 year on year to yen102470 million supported by
expanded sales overseas Operating income rose 281 to
yen1799 million primarily due to increased sales volume
Meanwhile extraordinary losses associated with the liqui-
dation of affiliated companies led to a yen1288 million net
loss for the year
While yen appreciation affected the yearrsquos sales results
the impact was more than overcome by strong sales in the
Positioning Business in the United States and the Finetech
Business in China as well as in Japan Operating income
rose due to increased income from expanded sales vol-
ume and this increase more than offset such factors as
the effects of yen appreciation increased expenses asso-
ciated with measures to fortify development capabilities
and the sales network
ISSUES GOING FORWARDAlthough we were able to generate improved results in fis-
cal 2010 our results have been significantly influenced in
recent years by external conditions such as foreign
exchange rates It is plain to see how the foreign exchange
rates have affected our performance when we calculate
the fiscal 2010 results using the fiscal 2007 exchange rate
Adopting the fiscal 2007 rate of 9990 yen to the US dol-
lar our consolidated net sales for the year would have
reached a record-high yen1200 billion In addition compar-
ing unit sales of our total stations GPS products retinal
cameras 3D OCT (optical coherence tomography) systems
and other core products to fiscal 2007 levels also indicates
a clear recovery in demand In response we are accelerat-
ing the business restructuring commenced in the previous
fiscal year as part of our efforts to establish a more robust
corporate structure
How was the Topcon Grouprsquos performance for fiscal 2010
Topcon Group posted increases in both sales and profits with consolidated net sales reachingyen1024 billion and an operating income of yen17 billion However it also became clear during the year that our performance tends to fluctuate in response to external conditions
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
CORPORATE STRUCTURAL REFORMS
Overall Cost Reduction Strategy
yen10 billion
EnhanceVACDefforts
Strengthen overseas
procurement
Reduction in Cost of Goods Sold
Adjust headcount
Consolidateintegrate production bases
Optimization of Workforce Business Process Reforms
Introduce ERP
Strengthen qualityImprovement
process reforms
TOPCON Annual Report 2011 | Interview with the President 11
Q 2
A 2
What are the basic concepts of the Mid-Term Business Plan 2013
The basic concepts are to progress with radical reform project and to fortify our business structure The plan sets fiscal 2013 targets of yen120 billion in net sales and yen12 billion in operating income
The Mid-Term Business Plan 2013 under the slogan of
ldquoReform amp Enhancementrdquo of our business structure
focuses on establishing a stable revenue base and strong
financial position The plan sets fiscal 2013 targets for net
sales of yen1200 billion operating income of yen120 billion
and net income of yen70 billion
REFORM PROJECTOur strategies for cutting overall costs will include specific
measures to reduce the cost of goods sold through VACD
(value analysiscost down) lower the ratio of SGampA expenses
to sales generate cash flow reform our business processes
by introducing ERP (enterprise resource planning) and to
promote selection and concentration of businesses
FORTIFYING THE BUSINESS STRUCTUREWe are fortifying our business structure by revitalizing the
inherent DNA of ldquoTechnology-driven Topconrdquo pursuing the
worldrsquos highest level of monozukuri (superb manufactur-
ing) and using our core technologies to produce TM-1
(Time to Market No 1) products
In the Positioning Business we are fortifying our busi-
nesses in precision agriculture mobile measurement
equipment and other emerging fields and further advancing
the integration of Sokkia In the Eye Care Business we are
broadening our business domain into the fields of treatment
and prevention and are accelerating the expansion of the IT
solutions business In the Finetech Business we intend to
concentrate on operating in fields with strong profit-making
potential and modifying the business portfolio
(Please refer to ldquoMid-Term Business Plan 2013rdquo on pages 14ndash17 forfurther details)
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
DIVIDENDS PER SHARE PAYOUT RATIO
20
15
10
5
80
60
40
20
0 0113 123 (plan) 133 (plan) 143 (plan)
Dividends per share (left) Payout ratio (right)
(Yen) ()
12 TOPCON Annual Report 2011 | Interview with the President
Q 3
A 3
FISCAL 2011 OUTLOOKWe forecast consolidated net sales declining 24 year on
year to yen1000 billion owing to the unlikelihood of a full-
fledged recovery in global markets and anticipation that the
Great East Japan Earthquake will continue to have an
impact on production activity and on our domestic cus-
tomers At the same time we expect substantial
improvement on the earnings side with the reform project
bringing about an increase in earnings of approximately
yen51 billion As a result we forecast an increase in operat-
ing income of 668 year on year to yen30 billion ordinary
income of yen17 billion and net income of yen800 million
Our specific strategies in fiscal 2011 will focus on lowering
fixed costs cutting the cost of goods sold and improving
cash flow all of which are part of our business restructuring
By business segment in the Positioning Business we
What are your results outlook and dividend plan for fiscal 2011
In fiscal 2011 we expect net sales to be at roughly the same level as the previous year whileoperating income should increase significantly We plan to distribute dividends of yen4 per sharefor the year
will concentrate on introducing and promoting sales of
products where we can leverage synergies of the integra-
tion with Sokkia and on fortifying our operations in the
precision agriculture and mobile measurement equipment
business fields In the Eye Care Business we are aiming to
expand sales of OCT (optical coherence tomography) sys-
tems for the screening market and to fortify our presence
in the IT solutions and treatment fields In the Finetech
Business we will focus efforts on key business areas
such as LED and semiconductor packaging
SHAREHOLDER RETURNWe plan to distribute a full-year cash dividend of yen4 per share
in the fiscal 2011 period The Topcon Group places high prior-
ity on returning profits to shareholders through the
distribution of dividends which reflects the Grouprsquos earnings
growth aiming for a payout ratio of 20 or higher In fiscal
2010 although temporary expenses associated with the liqui-
dation of affiliated companies ultimately led us to record a net
loss for the term we remained fully committed to sustaining
a stable dividend and maintained the yen4 per share full-year
dividend level from the previous fiscal year In fiscal 2011 we
expect to repeat the current full-year dividend payment level
However we project rapid recovery in net income to
yen44 billion in fiscal 2012 and yen70 billion in fiscal 2013 and
are accordingly aiming to raise full-year dividend payments
to yen10 and yen16 respectively Over the medium and long
term we intend to maintain a consistent dividend level
based on our target of a 20 payout ratio
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Interview with the President 13
Q 4
A 4
How did the Great East Japan Earthquake impact the Topcon Group
and what is the Group doing to support the reconstruction efforts
The damage to the Grouprsquos plants and facilities was minor The Group is supporting the reconstruction efforts by supplying mobile surveyingmappingsystems to inspect the stricken areas
We were fortunate that no Topcon Group employees or
their family members were directly affected by the Great
East Japan Earthquake on March 11 Group companies in
the Tohoku region Topcon Yamagata Optonexus
Fukushima Sokkia and other affiliates suspended opera-
tions immediately after the disaster but resumed operations
having found no significant damage to their facilities All of
these companies are currently operating as normal
Regarding our efforts to support reconstruction we
have provided or lent out GPS-based surveying systems
and other equipment free of charge through government
channels because we recognized how essential our prod-
ucts would be in the reconstruction of the affected areas
One of the devices we provided the Mobile Survey-
ingMapping System incorporates all of our latest
positioning technology Simply by mounting various sen-
sors on the top of a vehicle and then driving along the
streets the revolutionary system records highly accurate
three-dimensional position data and 360deg image data of the
surrounding landscape as well as digital scanning data of
land and buildings along the route The data can also be
combined with digital maps aerial photographs or other
data on the computer facilitating comparison of pre- and
post-disaster topography We have supplied equipment
and other services to the Geospatial Information Authority
of Japan to assist in data collection for the cities towns
and villages of Iwate and Miyagi prefectures
Going forward accurate data on actual current condi-
tions will be essential to expediting the formulation of
concrete plans for reconstruction of the stricken area The
Topcon Group will continue to play an active role in cooper-
ating with central and local government groups to support
the reconstruction and restoration of the affected areas
Measurement using the Mobile Mapping System IP-S2 Lite
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
14 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
REFORM amp ENHANCEMENT OF BUSINESS STRUCTURE
We will focus on the early establishment of a stable revenue base and soundfinancial position and strive through reforms to create an even strongercorporate structure that is resilient to the external business environment
Our Group has steadily progressed with the globalization of our business and our overseas sales currentlyaccount for more than 70 of total sales In recent years however our earnings results have continued to besignificantly impacted by foreign exchange rates and other external factors
Under these circumstances we have formulated the Mid-Term Business Plan 2013 which focuses onbusiness restructuring as part of efforts to establish a more robust corporate structure
FINANCIAL TARGETS (Consolidated) (Millions of yen)
Consolidated 20103 20113 20123 20133 20143
Net Sales 94862 102470 100000 110000 120000
Operating Income 1405 1799 3000 8000 12000Operating Income Ratio 15 18 30 73 100
Ordinary Income 545 608 1700 6800 11000
Net Income (Loss) 133 (1288) 800 4400 7000
ROE 03 (33) 22 116 164
Total Assets Turnover Ratio (timesyear) 077 082 083 092 100
Dividend per Share (yen) 4 4 4 10 16
Dividend Payout Ratio 2770 mdash 463 210 212
Note Our earnings forecasts for FY2011-2013 assume exchange rates of yen80US$ and yen110Euro
Mid-Term Business Plan 2013
In the current Mid-Term Business Plan 2013 we aim for the
early establishment of a stable revenue base and sound
financial position under the renewed management struc-
ture as we advance our business restructuring following
the slogan of ldquoReform amp Enhancementrdquo To this end we
will implement the Mid-Term Action Plan in which we have
set out specific initiatives while steadily pushing ahead
with our business fortification strategies intended to foster
businesses that will become future revenue sources
In fiscal 2013 ending March 31 2014 the final year of
the plan we will target net sales of yen120000 million
operating income of yen12000 million and net income of
yen7000 million
As for shareholder returns the Topcon Group places a
high priority on dividend payouts and targets a consoli-
dated payout ratio of 20 In line with this policy we plan
to distribute a full-year cash dividend of yen16 per share in
fiscal 2013 with a consolidated payout ratio of 212
Special feature 1
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 15
MID-TERM ACTION PLAN
In the Mid-Term Action Plan we will reform and enhance our businessstructure in accordance with the TOPCON WAY to establish a corporatestructure that is unaffected by the external business environment
REFORM PROJECTAs part of our reform project we will implement an overall cost reduction strategy centered on the fol-lowing three measures (1) Reduction in the cost of goods sold (2) Optimization of our workforce and(3) Generation of free cash flow Through these measures we aim to generate a total cost reductioneffect of approximately yen10000 million over the next three years
REDUCTION IN COST OF GOODS SOLDWe are reducing the cost of goods sold by
enhancing value analysis and cost reduction efforts and
expanding overseas procurement In particular we will
switch our procurement of goods from domestic sources
on which we have depended to address such issues as
quality assurance to their overseas counterparts through a
review of designs and other initiatives As a result we
expect to raise our overseas procurement ratio of 11 in
fiscal 2010 to 30 in fiscal 2013
OPTIMIZATION OF THE WORKFORCEWe will reassign and reduce the Grouprsquos work-
force Although we have already scaled down our
workforce going forward we will work to reduce fixed
costs while reviewing our distribution of personnel in
Japan and abroad At the same time we are thinking to
consolidate our production bases in Japan
GENERATION OF FREE CASH FLOWThe Topcon Group aims to generate cash flow
through the continuous attainment of profit targets and
pursuit of an optimal SCM (supply chain management)
model We wil l also enhance our management of
accounts receivable and inventories which should signifi-
cantly improve cash flow In these ways we will generate
stable free cash flow as outlined in the Mid-Term Busi-
ness Plan 2013
1
2
3
REFORM PROJECT
Cost Reduction Target
FY 2013
yen10000 million
(vs FY2010)
OPERATING INCOME
FY 2010 FY 2013
yen1700 million gtyen12000 million
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
16 TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure
SALES TRENDS BY REGION (Billions of yen)
0 10 20 30 40 50 60 70
FY2010actualresults
FY2013forecast
Japan America amp Europe Emerging countries
55 45 620
62 38 516
ENHANCEMENT OF THE BUSINESS STRUCTURE ~Reinforcement Strategies by Segment~
We will show the world our identity as ldquoTechnology-driven Topconrdquo which we have inherited throughthe years as a result of our tireless pursuit of technology We will also further reinforce our TM-1 (Time toMarket No 1) activities and challenge ourselves to reach the worldrsquos highest level of monozukuri (superbmanufacturing) by pursuing monozukuri which is the starting point in the manufacturing industry
In the Positioning Business we implement measuresbased on the themes of new market development focus-ing on places such as Asia the Middle East and Africa andnew business expansion At the same time we will takeadvantage of the synergies generated through our integra-tion with Sokkia which we purchased in 2008 Throughthese measures we will aim to achieve net sales ofyen62000 million and operating income of yen6000 million infiscal 2013 as compared with net sales of yen51559 millionand operating income of yen130 million in fiscal 2010
In the Eye Care Business we are working to provideoptimal solutions in areas ranging from early detection totreatment by expanding our business domain to includethe field of preventive medical checkups such as screen-ing tests for diabetes and the field of surgical instruments
in addition to the conventional eye examination and diag-nosis fields We anticipate worldwide growth of thepreventive medical checkup market Therefore consider-ing the potential contribution to earnings from theseoperations we are targeting net sales of yen37000 millionand operating income of yen4000 million in fiscal 2013 com-pared with net sales of yen30946 million and operatingincome of yen307 million in fiscal 2010
Regarding the Finetech Business we will carry out rig-orous business selection and focus efforts andconcentrate on our profitable priority fields Accordinglywe forecast net sales of yen21000 million and operatingincome of yen2000 million in fiscal 2013 compared with netsales of yen19964 million and operating income of yen1362million in fiscal 2010
POSITIONING BUSINESSWe will continue to launch products which meet user needs inthe surveying and construction fields our core operations in thissegment In the precision agriculture and measurement fields wewill create new markets and work to grow those markets throughtechnological innovations With respect to sales in fiscal 2013 weforecast a 270 and 120 upsurge in growth in the mobilemeasurement and 3D measurement markets respectively
Furthermore we will work to raise our sales ratio in emergingcountries from 38 to 45 in fiscal 2013
Construction market We are working to expand andenhance our distributor network and strengthen our part-nerships with construction equipment manufacturerswith the aim to standardize ICT-aided construction tech-nologies in the future In addition we will strengthen ourapproach to the new user segment through the launch ofproducts targeted at low-end markets
Precision agriculture market The rise in demand forincorporating ICT into agriculture is gaining momentumamid the pressing need to increase crop yields per unitarea owing to the decline in cultivated acreage per capitadue to the population growth We will introduce to global
market unique products that integrate our cutting-edgeproprietary technologies and work to achieve their wide-spread adoption
Mobile measurement and 3D measurement markets Theneed for 3D spatial information is increasing in variousfields We will provide products developed by advancingand integrating our proprietary technologies such asmobile mapping systems and 3D laser scanners therebybroadening our customer segments creating new serv-ices and generating fresh demand Our products areplaying an active role in on-site surveys and recoveryactivities of the Great East Japan Earthquake
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Special feature 1 Reform amp Enhancement of Business Structure 17
BUSINESS DIRECTIONS
CONTINUAL REASSESSMENT OF OUR BUSINESS PORTFOLIO
Preventativemedical
checkupsExaminations Diagnosis
IT solutions
Treatment
We connect examination data with images to provide optimal solutionsin areas ranging from early detection to treatment
Current business field
Expansion of business domain
ONSPreventative medical
checkups
Priority fields
ca
sMinimally invasive
treatments
e
PPIT solutions
FY2009
yen14 billion
FY2013
yen21 billion
SemiconductorsOpticaldevices Semi-
conductors
FPDsOptical devices
Substrateinspection
system
Observationand analysis
FPDs
i
EYE CARE BUSINESS
We will broaden our business domain to include thepreventative medical checkup and treatment fieldsAmong others we expect sales of the 3D OCT a main-stay product to double in fiscal 2013 As for thetreatment field we project sales growth of roughly 60in fiscal 2013 owing to the launch of our next-generationlaser equipment
OCT Our current product range meets the needs of largehospitals as well as private clinics ophthalmologists andoptometrists In the future we will work to developaffordable models and cultivate emerging markets aswell as the medical checkup market
Treatment We will strive to increase our market share bydifferentiating our products from those of our competi-tors through the release of next-generation retinal patternlasers Moreover we will provide optimal solutions inareas ranging from early detection to treatment throughsystem integration with retinal imaging devices
IT solutions We will undertake the creation of a new
business model that includes the provision of systemsolutions to centralize the management of various dataand images from ophthalmic diagnostic and eye exami-nation instruments that conform to global medical ITstandards and the development of a remote diagnosticsystem using cloud computing
Expansion of sales in emerging countries We will lay thegroundwork for expanding sales in emerging countriesby accelerating production in China of low-end productssuch as eye examination instruments At the same timewe will strive to increase our market share in emergingcountries for screening-related products on which wehad not previously focused
FINETECH BUSINESS
We will work to bolster our LED substrate (semiconductorpackage) and touch panel operations designating theseas priority business fields We forecast a 200 jump insales of our substrate-related equipment and a 220upsurge in sales of our small hybrid scope SEMs in ournew observation and analysis business field in fiscal 2013
Substrates We will make efforts to expand sales of ourSubstrate 3D Inspection System which inspects sub-strates (a type of semiconductor package) automaticallyusing 3D technology We will develop a system that isequipped with a new type of high-precision sensor andundertake sales promotion of this product by strengthen-ing our coordination with major trading houses engagedin the electronic machinery field We will also launch newproducts for projection steppers in fiscal 2011
LEDstouch panels We will work to expand our operationfor inspection systems for LEDs which are gaining trac-tion for applications for liquid crystal display (LCD)monitor backlights as well as light sources for illumina-tion Furthermore we will boost sales of proximity
aligners for touch panels in response to the growth indemand for smartphones and tablet terminals
Observation and analysisprojectors We plan to commencesales in North America of our small hybrid scope SEM (scan-ning electron microscope) which is the worldrsquos first suchproduct that enables simultaneous observation by combin-ing the advantages of both the optical microscope and SEMWe will work to expand sales of this product in the NorthAmerican market In addition we will also focus on pico pro-jectors as demand for these projectors is expected to surgein tandem with the growing popularity of smartphones andtablet terminals We have already received orders from sev-eral large clients and will work to further boost sales throughthe early establishment of a mass production system
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
WHAT IS GPSGPS is the abbreviation for ldquoGlobal Positioning Systemrdquoa satellite positioning system launched by the UnitedStates for military purposes Roughly 30 GPS satellitesare deployed approximately 20000 kilometers into thesky and GNSS technology is able to track their signalsto determine individual positions on the earth Similarsystems such as Russiarsquos GLONASS the EuropeanUnionrsquos Galileo and Chinarsquos Compass are currently run-ning or are in the testing and deployment stage whileJapanrsquos QZSS (Quasi-Zenith Satellite System) is planningto come on-stream
Some receivers allow for the combined usage of thesemultiple satellite systems They are now being increas-ingly referred to by their generic name Global NavigationSatellite Systems (hereinafter referred to as GNSS whichincludes GPS)
TOPCON GNSS TECHNOLOGYAlthough the precision of general GNSS receiversnamely car navigation systems etc is at the 10-meterlevel Topcon GNSS receivers realize precision at the mil-limeter or centimeter level which is adequate forsurveying and construction work due to the employmentof the following advanced technologiesbull Technology which tracks signals unintended for the
general publicbull Technology with multipath (congestion) controlbull Technology which takes advantage of the carrier phase
itselfbull Technology which implements interferometric position-
ing with receivers at reference stationsTopcon receivers were the first to enable the tracking
and multiple signals from satellites of not only theUnited Statesrsquo GPS but also the Russian GLONASS sys-tems Topcon GNSS technology is constantly beingenhanced to also track EUrsquos Galileo and any other satel-lite constellations including QZSS when it is deployedThrough the use of additional satellite constellationsTopcon receivers allow for reliable positioning even inenvironments where there are an insufficient number ofsatell ites such as mountainous areas and areasbetween tall buildings if only a single constellation wasused In addition Topcon has developed MillimeterGPSTM products which enhance the vertical accuracy aGNSS weakness by combining GNSS with laser tech-nologies and offers the worldrsquos highest precision GNSSsurveying system
TOPCONrsquoSTECHNOLOGICALPROWESS
Topcon GNSS technology boastsmillimeter precision
Topcon contributes to gains in operational effi-ciency in various areas through its exclusiveGNSS (Global Navigation Satellite Systems)technology which boasts millimeter precision
Special feature 2
18 TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
SurveyingMobile
measurement
ConstructionPrecision
agriculture
GNSS
POSITIONING BUSINESS ACTIVITIESLet us now turn to the types of markets in the position-ing business in which Topcon GNSS technology isflourishing
SurveyingGNSS technology enables high-precision and high-effi-ciency surveying GNSS surveying determ ines thedistance and direction between two points through thesimultaneous reception of radio waves at those twopoints transmitted from the same satellite and analysis ofrelevant observational data Accordingly the systemmakes it possible to survey long distances without a lineof sight between the two points as long as radio wavesfrom the same satellite are able to be tracked at thosetwo points Topcon contributes to high-precision and high-efficiency surveying through its production and sales ofGR-3 and various other GNSS receivers
ConstructionIn the construction field GNSS is used as a machine con-trol system sensor The use of GNSS technology tomanage position information can increase productivity atconstruction job sites by enabling the automation of doz-ers motor graders excavators and paving equipmentThis is referred to as 3D machine control and allowsdirect operation of the equipment from the engineeringplan data
Moreover with Topcon exclusive 3D Squared Technol-ogy lower precision machines such as dozers are able tograde with the precision that rivals a motor grader andmotor graders are able to grade with high precision athigh speeds that have not been possible in the past
Mobile measurementIn the mobile measurement field we are pursuingglobal expansion for Topcon IP-S2 and IP-S2 Lite whichcapture and accumulate various types of data by simplyhaving various types of sensors mounted on a vehicleand driving
Planners engineers and surveyors can carry out theirtasks without being at the site as the integration of coor-dinate digital imaging and scanning data tracked fromGNSS receivers enables the capture of on-site geo-graphic information This high-quality data including 360degree video geographic and 3D position informationhelps improve communities save lives when disastersoccur and improve public safety in general IP-S2 and IP-S2Lite applications are versatile and expected to grow evenfurther going forward
Precision agricultureThe application of GNSS and machine control technologyincreases the efficiency of agricultural work Topconrsquosprecision agriculture products allow farmers to preciselycontrol the minute details of seeding spraying and har-vesting to maximize yields and effectively extend growingcycles Moreover they dramatically reduce operatingcosts by allowing farmers more efficient use of theirmachinery and reducing the amounts of fertilizer waterand pesticides needed This also greatly improves envi-ronmental quality as pesticide and chemical oversprayand run-off is virtually eliminated
TOPCON Annual Report 2011 | Special Feature 2 Topconrsquos Technological Prowess 19
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
EYE CARE BUSINESS
FINETECH BUSINESS
Fields Major Products Market Conditions
bullSurveyingGISMeasurement
bullConstruction
bullPrecision Agriculture
bullMobile Measurement
bullHuge impact of the strong yen
bullGradual recovery in the American andEuropean markets
bullExpanding markets in emergingcountries
bullGradual recovery in the constructionmarket
bullSteady growth in the precisionagriculture and measurement markets
bullPreventative MedicalCheckups
bullExamination
bullDiagnosis
bullTreatment
bullStagnating capital investment inAmerica and Europe
bullExpanding medical checkup market inJapan
bullIn Asia steady growth in the Chinesemarket and an expanding market inIndia
bullCurbed capital investment in theophthalmic field resulting in fewerprojects
bullSluggish capital investment in theoptometric equipment marketplaceleading to competition in low-priced anddifferentiated products
bullExpanding screening market
bullSemiconductors
bullFPDs
bullOptical Devices
bullObservation and Analysis
bullSurvey-grade GNSSreceivers
bullTotal stations
bullOptical surveyinginstruments
bullMachine control systems
bullConstruction laserinstruments
bullPrecision agriculturesystems
bullMobile surveyingmappingsystems
bull3D laser scanners
bull3D optical coherencetomography systems
bullRetinal cameras
bullOphthalmic digital imagefiling systems
bullAuto refractometersAutokerato-refractometers
bullSlit lamps
bullComputerized tonometers
bullLens edgers
bullLens meters
bullOphthalmic laserphotocoagulators
bullSemiconductor equipment
bullSubstrate equipment
bullFPD equipment
bullElectron microscopes
bull3D image measurements
bullOptical units
bullResumption of capital investment in theelectronics sector
bullBrisk demand for smartphones andtablet terminals
bullContinued strong demand for greendevices (LEDs Power-ICs) and solidstate drives
bullAccelerated penetration of LEDbacklights for LCDs
bullProliferation of touch panel-equippedproducts
POSITIONING BUSINESS
AT A GLANCE
20 TOPCON Annual Report 2011 | At a Glance
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
503
302
195
60000
40000
20000
0 073 083 093 103 113
12000
6000
8000
10000
0
4000
-2000
2000
-4000
-6000 073 083 093 103 113
40000
30000
10000
20000
0 073 083 093 103 113
6000
4000
2000
0 073 083 093 103 113
25000
20000
10000
15000
5000
0 073 083 093 103 113
2000
0
1000
-2000
-1000
-3000
-4000 073 083 093 103 113
StrengthsStrategies Sales Composition Ratio Net Sales Operating Income() (Millions of yen) (Millions of yen)
Strengths We are utilizing in variousareas precise 3D position dataacquired by combining the opticaltechnologies developed since ourfounding and cutting-edge technolo-gies that include GPS position inglasers and image processing
Strategies We are cultivating signifi-cantly growing markets in emergingcountries while working to expand ourbusiness into new fields ranging fromsurveying to machine control 3D meas-urement and precision agriculture
Strengths We will provide total health-care solutions through our expandedproduct lineup ranging from examinationand diagnostic systems (hardware)which take advantage of optomechatronictechnology to image processing soft-ware
Strategies We are broadening ourbusiness domain which covers the exami-nation and diagnostic equipment fieldsour core operations to include preventa-tive medical checkups and treatmentFurthermore we are developing productsin affordable price ranges and cultivatingmarkets in emerging countries
Strengths We offer products featuringa wide range of wavelengths rangingfrom electron beam to infrared accord-ing to our customersrsquo needs
Strategies We will work to bolster ourLED substrate (semiconductor pack-age) and touch panel operationsdesignating these potentially prof-itable high-growth fields as prioritybusinesses
TOPCON Annual Report 2011 | At a Glance 21
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
POSITIONINGBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
70000
50000
20000
60000
30000
40000
10000
0
7000
5000
2000
6000
3000
4000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
22 TOPCON Annual Report 2011 | Positioning Business
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the Position-ing Business came to yen51559 million up 45 year on yearThis rise is attributable to the overall market expansion particu-larly in the United States and contributions from increasedsales in unconventional new fields such as precision agricul-ture and mobile surveyingmapping systems These positivefactors offset the impact of the rapid appreciation of the yenMoreover operating income improved to yen130 million (up yen123million year on year) owing to increased net sales in addition tothe impact of reductions in cost of goods sold and other costs
As for the US market sales of our machine control sys-tems and other core products rose from the previous fiscalyear thanks to the recovery (albeit a moderate one) in con-struction demand following the bottoming out of the countryrsquossluggish market an incipient sign of an economic upturn Salesof precision agriculture products also increased mainly in theUS market via both our own sales networks and the OEMsupply channel amid growing demand Meanwhile in JapanEurope and other industrialized countries demand picked upalthough more moderately than in the United States Howeverthese markets led others in the expansion of sales in such newfields as mobile mapping and 3D measurement
We have also steadily increased sales in the growingmarkets of emerging countries Aiming to further expandsales and acquire market share as well as strengthen ourbusiness operations in these markets in fiscal 2010 weestablished new companies in China the UAE and IndiaTogether with our existing sales companies we workednot only to market our optical surveying systems and otherconventional products but also made efforts to stimulatenew demand for our machine control and other high value-added products
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast a slightdecrease in net sales to yen51000 million (representing a year-
Change the WorldWe are globally developing
our positioning systems
which are continually leading and
changing the world
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Launched high-speed ldquo3D-MC2rdquomachine control system
Topcon launched the ldquo3D-MC2rdquo(3D-MC Squared) machine con-trol system for constructionwork which allows dozers todeliver smooth grading evenat high speeds
The 3D-MC2 has dramat-ically improved the high-speed grading accuracy of 3D machine control systemsthrough the use of its newly-developed MC2 sensorsThe sensor combines its built-in accelerometer and gyrosensor with GPS positioning data allowing for high-accuracy control which enables the minute control ofdozer blades as designed
The system shortens work periods by reducing inef-ficiencies from repeated earth moving therebyimproving work productivity as well as leading to lowerfuel expenses and CO2 emissions
Topcon will contribute to the promotion of ICT-aidedconstruction which is aimed at enabling high-efficiencyand high-precision operations during constructionprocesses through the provision of innovative prod-ucts and systems
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
America
Europe
Japan
Growing Countries
Construction
Precision Agriculture
SurveyingGIS
3D Measurement
By Market
20113 20123 20143
TOPCON Annual Report 2011 | Positioning Business 23
on-year decline of 11) Our projection is mainly based on ourforecast of a sustained weakness in the economic recoveriesin industrialized countries in fiscal 2011 and inevitable adjust-ments of our production and development schedules due tothe repercussions from the Great East Japan Earthquakewhich are likely to offset the impact of the anticipated growthin demand in emerging countries However we forecast arapid recovery in operating income to yen1300 million (a 10-foldyear-on-year upsurge) through efforts to accelerate company-wide business restructuring and the reduction of cost of goodssold and other costs extending from the previous fiscal year
Furthermore we will focus on generating synergiesfrom Sokkiarsquos business integration which commencedthree years ago Specifically we aim to expand our earn-ings through the improvement of operational efficiency andthe reduction of cost of goods sold by releasing new prod-ucts that use our common components and platforms
Regarding our new growing businesses in the precisionagriculture field we will work on stimulating demandworldwide including in emerging countries and achievemarket penetration through the further promotion of OEMsupply As for our 3D measurement and mobile mappingbusiness we will make efforts to expand our operationsthrough various initiatives including alliances
With respect to emerging markets we will strive to
further expand sales and capture add itional marketshare We will not only expand sales of our optical sur-veying systems and other conventional products butalso boost sales of high value-added products such asmachine control systems and those for 3D measurementapplications centering on our new Chinese UAE-basedMiddle Eastern and Indian companies established in2010 To this end we will cultivate sales personnel at ourcompanies and distributors and thereby promote theexpansion of our operations and the creation of marketsfor our new businesses
We will broaden our business areas and continue to grow in theglobal market through our expansion into fields ranging fromsurveying to civil engineering construction and architecture as wellas the measurement and precision agriculture fields by evolving anddeveloping our core technologies and fusing these with new ones
SATOSHI HIRANODirector Executive Officer
General Manager Positioning Business Unit
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
24 TOPCON Annual Report 2011 | Eye Care Business
EYE CAREBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
40000
20000
30000
10000
0
4000
2000
3000
1000
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in the EyeCare Business came to yen30946 million down 19 yearon year Operating income totaled yen307 million (downyen1656 m i l l ion year on year) due to such factors asdecreased net sales and the impact of exchange rates
Looking at sales conditions by region sales in Japanremained firm due to the increased sales of our screening-related products for diagnosing diabetes and glaucomareflecting increased awareness of preventative medicine Inaddition sales in the Asian region especially in China andIndia continued to expand However sales in Europe andAmerica were generally sluggish as hospitals and otherfacilities continued to curb capital investment following theLehman shock
In the optometric market our sales which had hit bot-tom following a protracted slump are headed toward arecovery primarily in emerging countries
In the ophthalmic field we aim to provide optimal solu-tions in all areas ranging from early detection to treatmentby expanding our business fields to include preventativemedical checkups and treatment in addition to our conven-tional mainstay eye exam equipment and diagnosticinstruments To this end we purchased the operations forthe PASCAL (PAttern SCAn Laser) photocoagu latordesigned to treat retinal diseases and glaucoma from theUS-based OptiMedica Corporation in fiscal 2010 markingour full-scale entry into the ophthalmic treatment market
Performance OutlookFor fiscal 2011 ending March 31 2012 we forecast netsales of yen32000 million (up 34 year on year) and operat-ing income of yen1500 million (up 3886 year on year) Ourprojections are based on forecasts of continued firm salesin Japan sustained sales growth in China India and otherAsian countries and a moderate sales recovery in Europeand America
We provide optimal solutions in
areas ranging from early detection to
treatment and are expanding
our business fields to include the
preventative medical checkup market
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Acquired assets of a US ophthalmic laserphotocoagulator manufacturer and set up a subsidiary (in August 2010)
Topcon acquired the retina andglaucoma treatment laser pho-tocoagulator business fromOPTIMEDICA which developsmanufactures and sells oph-thalmic laser photocoagulatorsFurthermore it establishedUS-based Topcon MedicalLaser Systems Inc (TMLS) tomanage the operations
OPTIMEDICA was foundedin the United States in 2004The Companyrsquos PASCAL photocoagulator is minimallyinvasive and enables the shortening of treatment dura-tions through the use of proprietary mu lti-spotsimultaneous laser pulse technology It has thereforeearned high marks from and the trust of both patientsand physicians
Topcon acquired the sales and distribution rights forthe PASCAL photocoagulator in Japan and Europe in2008 and has since built a track record in sales of theproduct The Company purchased the above-men-tioned technological assets and made its full-scaleentry into the therapeutic device market in response toan expected increase in treatment for diabetic retinopa-thy age-related macular degeneration glaucomaretinal detachment and other ocular fundus-related dis-eases accompanying the aging of the population
TOPCON Annual Report 2011 | Eye Care Business 25
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
Europe
America
Japan
Asia
Ophthalmology
Optometry
Preventative Medical Checkup
By Market
20113 20123 20143
In fiscal 2011 we will implement priority measures to (1)enhance our optical coherence tomography (OCT) productlineup (2) reinforce and expand our business in the treat-ment instruments field (3) ensure that our products andservices conform to global medical IT standards anddevelop our remote medical systems using cloud comput-ing and (4) expand sales in emerging economies etc
First of all regarding our 3D OCT product line we willwork to increase earnings by expanding our product lineupincluding high-end products for large hospitals and labora-tories and products for the US market as well asdeveloping affordable models for the medical checkup andscreening markets and emerging economies
Secondly with respect to the treatment field we willwork to offer more variations of our PASCAL retinal photo-coagulators which are minimally invasive and allow forshortened treatment durations We will also strive toincrease sales of the system by emphasizing its ability tolighten the burden on physicians and patients alike
Moreover we will switch production of some of our
products from Japan to China to meet the needs of themedical checkup screening and other low-end marketswhich are growing primarily in emerging countries Goingforward we will gradually expand our lineup and promptlyrespond to the demand in fast-growing emerging markets
We will provide optimal solutions in areas ranging from earlydetection to treatment through the expansion of our business fields toencompass not only our existing examination and diagnostic fieldsbut also the preventative medical checkup and treatment fields
HIROSHI FUKUZAWADirector Senior Managing Executive Officer
General Manager Eye Care Business Unit
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
26 TOPCON Annual Report 2011 | Finetech Business
FINETECHBUSINESS
NET SALES AND OPERATING INCOME(Millions of yen)
25000
10000
15000
20000
5000
0
2500
1000
1500
2000
500
020113 20133 (plan)20123 (plan) 20143 (plan)
Net Sales (left) Operating Income (right)
FY2010 FINANCIAL RESULTS ANDPERFORMANCE OUTLOOK
FY2010 Financial ResultsIn fiscal 2010 ended March 31 2011 net sales in theFinetech Business surged 431 year on year to yen19964million This is largely attributable to the growing use ofLED backlights for liquid crystal displays (LCDs) and thesharp increase in sales of proximity aligners for touch pan-els lum inance meters and chip defect inspectionequipment due to the rapid expansion of the demand forsmartphones and other tablet terminals
Operating income totaled yen1362 million (up yen1927 millionyear on year) as a result of the impact of increased net sales
In our Finetech Business we conduct continualreassessments of our business portfolio giving priority tosecuring profits Specifically we are suspending the devel-opment of new products with low profitability and lowgrowth potential and scaling down or withdrawing fromsuch businesses
Meanwhile regarding the segmentrsquos four main businessareas of semiconductors substrates (semiconductor pack-ages) FPDs and optical devices we are focusing onpotentially profitable high-growth markets such as semi-conductors substrates and FPD touch panels For suchpriority fields we are promoting new product develop-ment and expanding our overseas sales production andRampD bases as well as advancing other measures tostrengthen this business
Performance OutlookIn fiscal 2011 ending March 31 2012 we forecast adecrease in net sales of yen170 billion (representing a year-on-year decline of 148) This is primarily due to a projectedslowdown in demand in the semiconductor and FPD fieldswhich were brisk in the first half of the previous fiscal yearOperating income is expected to fall sharply to yen200 million (ayear-on-year decline of 853) owing to decreased net sales
We are developing the Finetech
Business by focusing on LEDs
substrates (semiconductor packages)
touch panels and other growth markets
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Launched (in June 2010) the Spectroradiometer(SR-LEDW) which is capable of measuring a wide dynamic range from ultra-high to ultra-low luminance
Topcon released the Spectro-radiometer (SR-LEDW) whichcan measure a wide range ofluminance from ultra-lowluminance which controlsblack image representation inFPDs to ultra-high luminanceindispensable for analyzingLED quality
The Spectroradiometer plays a vital role in testingLED quality during the development and manufacturingprocesses of LCD TVs equipped with LED backlightsand LED chip modules In these processes a spectro-radiometer capable of inspecting a vast number ofLEDs in a short period of time is needed
The newly launched SR-LEDW has made it possibleto measure a broad range of luminance levels while atthe same time reducing measuring time with its newauto mode which automatically sets the optimummeasuring conditions
The Spectroradiometer is used as a standard instru-ment for measuring luminance and chromaticity levelsby not only leading FPD manufacturers but also compa-nies in various other industries
TOPCON Annual Report 2011 | Finetech Business 27
T O P I C S
REGIONAL AND MARKET TRENDS
By Region
North America
Europe
Japan
EmergingCountries
Semiconductor
FPD
Optical Devices
By Market
20113 20123 20143
WorldrsquosNo1
Amid a severe market environment in fiscal 2011 we planto gear up for the recovery of demand in the Finetech Busi-ness through the continued cultivation of our four mainbusiness areas Specifically we will push forward with thedevelopment of highly competitive products in coordinationwith the Canada-based Topcon 3D Inspection LaboratoriesInc and other overseas RampD centers As for production andsales we will shift such operations from Japan to other loca-tions in Asia to strengthen our competitiveness
In addition regarding our new products we plan toexpand sales of palm-sized pico projectors We believe wecan expect a rapid expansion of the market for this productin line with the growth in sales of smartphones and othertablet terminals
Furthermore a new field we are working to develop inaddition to our four main business areas is the observationand analysis field By leveraging our strength as an opticalmanufacturer we developed a new hybrid scope SEM (scan-
ning electron microscope) which combines the advantagesof both the optical microscope and SEM and launched it inthe North American market in June We intend to developthis product as a mainstay in the observation and analysisfield by fiscal 2013 ending March 31 2014
We are continuously reassessing our business portfolio and will pushforward with new product development and other measures tostrengthen business particularly in business fields related to LEDssubstrates (semiconductor packages) touch panels and otherpotentially high-growth and highly profitable markets
KANJI IKEGAYAExecutive Officer
General Manager Finetech Business Unit
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
North America
Topcon Positioning Systems IncUSA
Topcon Medical Systems IncUSA
Topcon Medical Laser Systems IncUSA
Cacioppe Communications Companies IncUSA
TPS Columbus OfficeUSA
TPS Olathe OfficeUSA
TPS Kansas OfficeUSA
TPS Calgary OfficeCanada
Topcon Canada IncCanada
Topcon 3D Inspection Laboratories IncCanada
EuropeAfrica
Topcon Europe Positioning BVThe Netherlands
Topcon Europe Medical BVThe Netherlands
Topcon Deutschland GmbHGermany
IBS Lasertechnik GmbHGermany
Topcon SARLFrance
Topcon Espantildea SASpain
InlandGEO SLSpain
InlandGEO Canarias SLSpain
InlandGEO LDAPortugal
Topcon Scandinavia ABSweden
Topcon (Great Britain) LtdUK
Topcon Polska Sp ZooPoland
Tierra SpAItaly
DESTURA srlItaly
GEOTOP srlItaly
Sokkia NVBelgium
DynaRoad OyFinland
Topcon Technology CenterRussia
KEE Technologies Africa (Pty) LtdSouth Africa
P
E
F
Research amp Development
Manufacture
Sales amp Marketing
Positioning Business
Eye Care Business
Finetech Business
Topcon 3D Inspection Laboratories IncDevelops 3D inspection systems for semiconductor wafer or substrate packages
Topcon Medical Systems IncManufactures eye care products and develops network solutions for the image filing systems IMAGEnet EMR and EyeRoute (a web-based network system)
Topcon Positioning Systems IncDevelops and manufactures GNSS and MC products also develops software for surveying equipment at its Ohio Calgary and Olathe offices
Topcon Medical Laser Systems IncDevelops and manufactures laserphotocoagulation systems for treatment of the eye
P E
F
E
PP
P
E
P
E
P
P
P
P
3D I ti
Topcon Medical L
E
P
F
P
E
P E
P
P E
E
P
P
P
P E
P
E
P
P
P
P
P
P
P
P
E
E
GLOBAL NETWORK
Topcon boasts an effective development and manu-facturing network that utilizes outstanding humanand other resources worldwide to grasp the needsof various customers throughout the world to whichwe promptly respond In addition Topcon is glob-ally expanding its sales centers and conducts salesand provides services based on the needs of eachparticular locale
28 TOPCON Annual Report 2011 | Global Network
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
AsiaOceaniaMiddle East
Topcon Singapore Positioning Sales Pte LtdSingapore
Topcon Singapore Medical Pte LtdSingapore
Sokkia Singapore Positioning Sales Pte LtdSingapore
Topcon Instruments (Malaysia) Sdn BhdMalaysia
Topcon Instruments (Thailand) Co LtdThailand
Topcon Sokkia India Pvt LtdIndia
Sokkia Korea Co LtdKorea
Topcon Optical (HK) LtdChina
Topcon (Beijing) Opto-Electronics Development CorporationChina
Topcon Optical (Dongguan) Technology LtdChinaSales of Finetech products only
Topcon Corporation Beijing OfficeChina
Topcon Corporation Shanghai OfficeChina
Topcon Semiconductor Taiwan OfficeChina
Topcon Precision Agriculture Pty LtdAustralia
Topcon Positioning Systems (Australia) Pty LtdAustralia
Topcon Positioning Middle East and Africa FZEUAE
Topcon Corporation Dubai OfficeUAE
Topcon Corporation Beirut OfficeLebanon
Japan
Topcon Corporation
Sokkia Topcon Co Ltd
Topcon Sales Corporation
Topcon Medical Japan Co Ltd
Sokkia Sales Co Ltd
Topcon Technohouse Corporation
Sapporo Topcon Sales Co Ltd
Topcon Yamagata Co Ltd
Optonexus Co Ltd
Fukushima Sokkia Co Ltd
NGR Inc
Tierra SpADESTURA srlTelematics-related development
Topcon (Beijing) Opto-ElectronicsDevelopment CorporationTopcon Optical (Dongguan) Technology LtdDevelops and manufactures positioning and eye care products in Beijing also manufactures projectors and DPPC related products in Dongguan
Topcon Europe Medical BVDevelops and manufactures differentiated products targeted for Europe also engages in development of the eye care system
Topcon Technology CenterDevelops GNSS signals receivers software and hardware
P
P
P E F
P E
PP E
P E
P EP E
P EP
P E
P E E
E
P
P E
P E
P E
P E F
P
FP E F
P
ToDeso
Topcon Precision Agriculture Pty LtdTopcon Positioning Systems (Australia) Pty LtdDevelops and manufactures precision agriculture products as well as undertakes MC software development
TDpd
ToDeToDeeypro
Topcon CorporationTopconrsquos headquarters comprehensively oversees the development and manufacturing of all business sectors Sokkia Topcon manufactures total stations Topcon Yamagata manufactures eye care products Fukushima Sokkia manufactures positioning-related parts for the Topcon Group
P
E
E
P
E
P
P E
P E
P
P
P E F
P E
P E F
E F
E F
F
P
P
P E F
E
P
F
P
P E F
P E F
P
F
P
P
P
E F
P
P
C i
P
F
TOPCON Annual Report 2011 | Global Network 29
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Environment Qualityassurance
Customersatisfaction
Humanrights andemployee
satisfaction
Socialcontribution
Topcon CSR Committee
Risk-ComplianceCommittee
GlobalEnvironmentConference
QSCommittee
CSActivities
Employmentof Persons with
Disabilities
SocialContributions
Activities
Observinglaws and
regulations
Secretariat(Div in charge of CSR)
Linkage
Committee members (Heads of each division)
Chairman of Topcon CSR Committee(Executive Officers in charge of CSR)
President
STRUCTURE FOR PROMOTING CSR (As of July 1 2011)
EnvironmentalProtectionCommittee
ExportControl
Programs
InformationSecurity
Committee
BCPCommittee
WelfareCommittee
Safety andHealth
Committee
GenderEqual
Society
Companyrsquos Committees
BASIC POLICY FOR CSRTopcon defines the basic policies for carrying out CSR
activities that conform to the UN Global Compact in which
Topcon has participated since October 2007
1 Topcon will locate CSR activities in the center of
business and work on it intentionally in order to
build share and implement the sense of values and
standards suitable for global enterprise
2 Topcon will to the extent of our influence support
and implement the rules and regulations that are
globally approved regarding Human Rights Labor
Standards Environment andor Anti-Corruption as
declared in the Global Compact
3 Topcon will make a social contribution voluntarily
and actively through developments production
sales and services of useful products
4 Topcon will promote an environmental management
through the creation of environmentally-conscious
business process and through providing environmen-
tally-conscious products and services
5 Topcon will strive to establish CSR activities in
every officer and employeersquos daily work and to infil-
trate and establish them within global Topcon
Group companies
6 Topcon will acquire understanding and confidence
of all the stakeholders of Topcon Group companies
by providing with information actively
CSR
STRUCTURE FOR PROMOTING CSR Topconrsquos CSR activities are conducted in line with the poli-
cies decided by the Topcon CSR Committee headed by an
executive officer in charge of CSR and are implemented
globally throughout the Topcon Group with the collabora-
tion of CSR-related business divisions and committees
which include the Risk Compliance Committee the Busi-
ness Continuity Planning (BCP) Committee and the Quality
amp Safety (QS) Committee
The Topcon Group promotes the CSR activities based on the TOPCON WAY the Grouprsquos highest commonvalues and its Code of Business Conduct These are also in compliance with the ten principles of the UnitedNationrsquos Global Compact The Grouprsquos common policies and the organization structure are established tosupport these CSR activities
30 TOPCON Annual Report 2011 | CSR
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Appointment and termination
Appointment and termination
Appointment and termination
Appointment and termination Appointment and termination
Report
Report
Report
Report
Report
Approval forappointment and termination
Agenda placement and report on important matters
AuditReport
Audit
Audit
Internal auditing
Directions
Directions
Operating Divisions and Group Companies
General Meeting of Stockholders
Board of DirectorsDirectors 6(External 0)
Accounting AuditorBoard of AuditorsCorporate Auditors 4
(External 2)
Executive Officers Meeting (Discusses important matters)
Executive Officers 15 (Manages daily activities)
Representative Director
Corporate Audit Div(Internal auditing)
CORPORATE GOVERNANCE STRUCTURE (As of June 24 2011)
Board of Auditors and accounting audits by the accounting
auditors and internal audits by the Corporate Audit Division
RISK COMPLIANCETopcon has established Basic Rules for Risk Compliance and
has created a risk management structure which includes the
designation of crisis management representatives to enable
a timely and appropriate response for each risk situation that
arises for the Company and its subsidiaries
In addition to the ordinary organizational channels the
Company has also introduced the Internal Reporting Sys-
tem to enable direct notification of risk-related information
from the person who identified the risk which contributes
to the quick discovery of risk information and a rapid and
appropriate response to the risk incident as well as helping
to raise awareness of risk management among directors
and employees at the Company and its subsidiaries The
Internal Reporting System is administered by the Corporate
Audit Division an internal auditing organization
The Company has established the Basic Regulation for
Personal Data Protection concerning protection of private
information and the Basic Regulation for Information Security
regarding confidential information and associated regulations
thereof and seeks to keep employees of the Company and
subsidiaries fully informed of these regulations Such regula-
tions provide for the protection of the information itself while
also enabling a timely and appropriate response in the event
that risk arises related to the information
CORPORATE GOVERNANCETopcon utilizes an executive officer system for the execution of
daily business operations The Company separates the supervi-
sory function of the directors and the Board of Directors from the
business execution function of the executive directors to main-
tain a system enabling a timely and appropriate response to rapid
changes in the business environment The Board of Directors
convenes monthly (and as otherwise necessary) to deliberate
basic management policies items required by laws and regula-
tions or articles of incorporation and important matters
concerning other management issues as well as to receive
reports with the aim of fortifying the supervisory functions
Directors auditors and executive officers attend Execu-
tive Officers Meetings which are held weekly in principle to
discuss a wide range of topics as well as analyze the busi-
ness environment deliberate medium-term business plans
budgets and other items share business execution status
reports and other information deliberate important decision-
making items for the Company and ensure thorough
compliance (legal compliance) activities thereby ensuring
the fairness and transparency of management decisions
Moreover the Company maintains a Corporate Audit Divi-
sion an internal auditing organization directly overseen by
the President to ensure legal appropriate and effective
business execution The Company endeavors to ensure
comprehensive audits based on a mutually cooperative
effort and efficient auditing system for accounting audits
and business audits by the Corporate Auditors and the
TOPCON Annual Report 2011 | CSR 31
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
32 TOPCON Annual Report 2011 | CSR
bull Implementation of corporate governance amp CSR seminars
Items
Responsibilities toBusiness Partners
EnforcingEnvironmentManagementSystemProvidingEnvironmentallyConscious Prod-ucts and Services
Promoting Envi-ronmentalCommunication
Responsibilities toStockholders andInvestors
bull Disseminating the Corporate Governance Principles and theldquoTOPCON WAYrdquo
bull Holding seminars on the Corporate Governance Principles andCSR
Key Goals and Plans for FY2010 Key Goals and Plans for FY2011
Legend in the ldquoSelf-Assessmentrdquo column 100 met Partly not met or there is room for improvement
For more detailed information on the Grouprsquos CSR activities please refer to the Topcon Group CSR Report httpglobaltopconcomcsr
The Topcon CSR Committee reviews year-by-year achievements regarding our CSR activities and sets goalsand plans for the next year In fiscal 2010 Topcon carried out a wide range of activities including aformulation of the Corporate Governance Principles and the ldquoTOPCON WAYrdquo a review of the businesscontinuity plan (BCP) health promotion for employees and so on
CSR INITIATIVES AND TARGETS
bull Formulated the Corporate Governance Principlesbull Formulated the ldquoTOPCON WAYrdquobull Updated in-house training programs and held seminars for new
managers
bull Issued a reference leaflet on Topcon Code of Business Conduct andposted it on the bulletin board of the in-house database
Key Achievements in FY2010
bull Reviewing the BCP and holding BCP training
bull Holding Risk-Compliance seminars
bull Took measures regarding the Great East Japan Earthquake and reviewedthe BCP action plan (Conducted an earthquake emergency drill and drewup anti-flu checklist)
bull Held Risk-Compliance seminars and improved content of the in-houseRisk-Compliance bulletin board
bull Formulated basic regulations on public relations management andregulations on prevention of bribery of domestic and foreign publicofficials etc
bull Holding topic-by-topic compliance seminars (Continued) bull Held seminars for all qualified
bull Developing and releasing new products through promotion ofTM-1 activities (Continued)
bull Conducted TechnologyQuality innovation project to shorten developmenttimes and improve quality
bull Improving the total quality assurance system across groupcompanies
bull Conducted quality-first drives by declaring TechnologyQuality Month andholding quality forums
bull Improving pre-verification capabilities in upper stream andprevention of quality problems bull Held process improvement seminars for engineering departments
bull Promoting prompt feedback of customer information bull Promoted speedup in the feedback of quality information from callcenters and group companies
bull Extending applications of the RoHS compliance assurancesystem to overseas suppliers
bull Conducted as planned4 companies (2 companies in 2010A and 2010B each)
bull Improving physical and mental checkup items and implementationof preventive measures (restricts working hours etc) based ontheir results
bull Gave interviews with industrial medical advisors after checkups andrestricted working hours
bull Implementation of no-smoking programs (smoking cessationsupport)
bull 46 employees quit smoking as a result of no-smokingsmoking-cessationpromotion (Smoking rate decreased from 33 to 30)
bull Implementation of management training programs on safetyassurance obligations bull Conducted as part of training for new managers
bull Drawing up a Basic Policy on Human Resource Development bull Collated existing related policies and re-declared a human resourcedevelopment policy to group companies
bull Providing environmentally conscious and resource-savingproducts and products and services useful for improvingmedical care health care and life in general (Continued)
bull Provided products that would help address social issues (global warmingpopulation aging resource depletion)
bull International volunteer assistance bull Conducted as planned
bull Assisting of medical and academic institutes (product donationand sponsor seminars) (Continued) bull Conducted as planned
bull Increasing the number of companies to be auditedEnvironmental auditing 10 group companies
bull Increased the number of companies to be auditedEnvironmental auditing 11 group companies
bull Providing environmentally conscious productsOver 60 of sales
bull Provided environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions)Total emissions relative to 1990 (per unit of sales) 25reduction (less than 906)
bull Implemented measures against global warming (Reduction in CO2
emissions)Total emissions relative to 1990 (per unit of sales) 195 reduction (973)
bull rdquoEffective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 20reduction (less than 1108)rdquo
bull Effective use of resourcesTotal waste volume relative to 2000 (per unit of sales) 33 reduction(0852)
bull Management of chemical substancesUse of organic solvents 725 reduction (less than 3275 kg)
bull Management of chemical substancesUse of organic solvents 756 reduction (2910 kg)
bull Strengthening of cooperation with administration and localresidents
bull Strengthened cooperation with administration and local residentsAssisted with public projects and cooperated with civic groups
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst
coverage
bull Improved Web contentbull Increased analyst coverage by two firms
bull Issuing Topcon Group CSR Report (Continued) bull Issued Topcon Group CSR Report
bull Issuing group media of CSR (CSR INFO-LINK) (Continued) bull Continued publications
bull Participating in the GC-JN working group (CSR Report etc) bull Participated in the GC-JN working group CSR Report in-house GCawareness-raising working group etc
bull Posting corporate information on the website in a timely fashion bull Posted corporate information in a timely fashion
bull Social contribution activities in collaboration with NPOs bull Cooperated with NPOs specialized in social contributions and laborissues
bull Issuing a reference leaflet on Topcon Code of Business Conductand disseminating it throughout the Topcon Group
bull Reviewing the BCP (Continued)bull Drawing up and implementing the BCP based on expected
summertime power shortage
bull Compliance with the statutory employment rate for persons withdisabilities
bull Reviewing the content of and continuing Risk-Complianceseminars
bull Held seminars for all qualified
bull Developing and releasing new products through promotion of TM-1activities (Continued)
bull Improving the total quality assurance system across groupcompanies (Continued)
bull Improving pre-verification capabilities in upper stream andprevention of quality problems (Continued)
bull Promoting prompt feedback of customer information (Continued)
bull Further extending applications of the RoHS compliance assurancesystem to overseas suppliers(4 suppliers)
bull Measures for reducing metabolic syndrome cases(special health maintenance guidance in-house plans)
bull Continuing no-smoking programs (Target smoking rate=28)
bull Strengthening cooperation in safety and health matters withgroup companies and improving management levels
bull Continual improvement of the personnel system
bull Continued
bull Continued
bull Continued
bull Continuing environmental auditingEnvironmental auditing 11 companiesIntegrating and extending ISO certification
bull Providing environmentally conscious productsOver 64 of sales
bull Implementation of measures against global warming (Reductionin CO2 emissions) 55 reduction from the previous year (to comply with Tokyometropolitan ordinance)
bull Effective use of resources Continuing zero-emission efforts (Less than the previous year)
bull Management of chemical substancesldquoStrengthening central management (Using less chemicalsubstances than the previous year)rdquo
bull Strengthening of cooperation with administration and localresidents
bull Providing information to stockholders and investorsbull Maintaining external evaluations and increasing analyst coverage
bull Issuing Topcon Group CSR Report (Continued)
bull Issuing group media of CSR (CSR INFO-LINK) (Continued)
bull Participating in the GC-JN working group (CSR Report etc)
bull Posting corporate information on the website in a timely fashion
bull Social contribution activities in collaboration with NPOs
bull Disseminating the reference leaflet on Topcon Code of BusinessConduct across the Topcon Group
Communication
EstablishingEnvironmentallyConscienceBusinessProcesses
Responsibilitiesto Internationaland LocalCommunities
Responsibilities toEmployees
Responsibilities to Customers
RiskCompliance
CorporateGovernance
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Directors Corporate Auditors and Executive Officers 33
DIRECTORS CORPORATE AUDITORS AND EXECUTIVE OFFICERS
President
Norio Uchida
Director Senior Managing ExecutiveOfficer
Hiroshi Fukuzawa
Director Managing Executive Officer
Takayuki Ogawa
Directors Executive Officers
Satoshi Hirano
Hiroshi Koizumi
Shinji Iwasaki
Full-time Auditors
Mamoru Takahashi
Ikuo Kobayashi
External Auditors
Chikahiro Yokota
Tatsuya Kuroyanagi
Managing Executive Officer
Raymond OrsquoConnor
Executive Officers
Shuji Ichimaru
Makoto Iwasaki
Masayuki Momiuchi
Zou Xi Guang
Shigeyuki Sawaguchi
Haruhiko Kobayashi
Kanji Ikegaya
Hiroyuki Nakamura
Yasufumi Fukuma
DIRECTORS CORPORATE AUDITORS EXECUTIVE OFFICERS
Shinji Iwasaki Satoshi Hirano Hiroshi Fukuzawa Norio Uchida Takayuki Ogawa Hiroshi Koizumi
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
PersonalComputer
Motherboard
Substrate
IC chips
GLOSSARY
THE POSITIONING BUSINESS
Total Station
A total station is an instrument that measuresangles and distances with extremely high pre-cision The accuracy of its resolution is at the1 arc-second level in terms of angles (1 arc-second=11296000 degree) A total stationhas the capacity to measure at a distance ofseveral kilometers with accuracy of approxi-mately 2mm Although high-precision measur-ing requires the use of prismatic targetsmany newer total stations can measureobjects directly without a prism Additionallyhigh-end total stations can automaticallysense and track a moving prism while trans-mitting measurement information to a remoteuser These instruments are called robotictotal stations The latest innovation is theaddition of digital imaging and scanning capa-bilities to allow recording of spatial data forfuture measuring and other purposes
3D Measurement
Our 3D measurement technology can calcu-late the 3D position of an object in a singlemeasurement unlike traditional methods inwhich horizontal and vertical measurementsare conducted separately Compared with sur-face information obtained by connectingpoints much higher-density 3D surfaces canbe captured by employing a 3D laser scannercapable of acquiring a large volume of pointscombined with image measurement technol-ogy Creating a real 3D model helps providevarious advantages such as allowing users tonot only see images clearly but also to viewany given cross-sectional profile and improvethe accuracy of volume calculations
THE EYE CARE BUSINESS
MydriasisNon-Mydriasis
Mydriasis is a condition in which the pupils aredilated (open) In order to sufficiently diagnosethe fundus (the back of the eye) mydriaticdrops are used to enlarge the pupils becausethe larger they are the easier it is to examineall parts of the fundus In contrast non-mydria-sis is a condition where it is not necessary todilate pupils with mydriatic drops
Retinal Camera
A retinal camera is an instrument for photo-graphing and recording images from the backof the eye (the fundus) such as the retina Theocular fundus is the only part of the body wherethe microcirculation can be observed directlyand therefore helps in the detection of not onlyophthalmic diseases but also internal diseasessuch as changes in microcirculation stemmingfrom high blood pressure and atherosclerosisand retinopathy a complication of diabetesFurthermore there are two types of retinalcameras mydriatic and non-mydriatic camerasThe mydriatic camera can photograph even thesurrounding areas clearly owing to the use ofmydriatic drops In contrast a flash must beused when capturing images with a non-mydri-atic camera Compared with mydriatic retinalcameras non-mydriatic cameras require lesstime for examination and photographing of thefundus and put a lighter burden on the patientand for these reasons are used by physiciansand during medical check-ups
3D OCT (Optical Coherence Tomography)
The 3D OCT is a diagnostic instrument thatcombines a retinal camera with Optical Coher-ence Tomography (OCT) which produces a 3Dimage of an object based on information fromreflected light employing infrared light Thisinstrument provides 3D cross-sectional imagesof retinal and other layers as well as fundusphotography The 3D OCTenables the early detectionand diagnosis of three majorophthalmic diseases namelyldquoage-related macular degen-erationrdquo ldquodiabetic retinopa-thyrdquo and rdquoglaucomardquo whichare increasing in industrial-ized countries
THE FINETECH BUSINESS
Substrate
A substrate refers to the semiconductor pack-age substrate that serves as the base forsemiconductor chips In the printed-wiringsubstrate field as a whole there is a growingdemand toward miniaturization of wiring pat-terns and substrates in tandem with efforts todownsize and generate high-function andhigh-performance electronic products TheTopcon substrate 3D inspection systemenables high-precision inspection of theheight and positioning of substrate bumps(bump electrodes with a diameter of roughly acouple dozen to a few hundred microns foroutward connections) in submicron units and100 inspection with high-speed scanning
FPD (Flat Panel Display)
FPD is a flat panel display and it refers to liquidcrystal plasma organic electro-luminescencefield emission and other displays It hasreplaced conventional cathode-ray tubes Top-con manufactures proximity aligners (the TMEseries) for LCDs and the optical measurementinstruments that are essential for evaluatingdisplay image quality (color and brightness)
Robotic Total StationQS
Imaging StationIS
3D Laser ScannerGLS-1500
Mydriatic Retinal CameraTRC-50DX
Non-Mydriatic RetinalCamera TRC-NW300
3D OCT-2000
Substrate 3DInspection System
SB-Z500
Proximity AlignerTME series
SpectroradiometerSR-LEDW
Please refer to ldquoTopconrsquos Technological Prowessrdquo (pages 18ndash19) regarding explanations of the terms ldquoGPS (GNSS)rdquo ldquoprecision agricul-turerdquo and ldquomobile measurementrdquo
34 TOPCON Annual Report 2011 | Glossary
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
Contents
ConsolidatedTen-yearSummary
36
Fiscal 2010ManagementrsquosDiscussion andAnalysis
38
ConsolidatedBalance Sheets
42ConsolidatedStatements ofIncome
44
ConsolidatedStatements ofComprehensiveIncome
45
ConsolidatedStatements ofChanges inNet Assets
45
ConsolidatedStatements ofCash Flows
46
FINANCIAL SECTION
TOPCON Annual Report 2011 | Financial Section 35
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
36 TOPCON Annual Report 2011 | Consolidated Ten-year Summary
CONSOLIDATED TEN-YEAR SUMMARYTopcon Corporation and Consolidated Subsidiaries
Operating resultsNet Sales
Positioning BusinessEye Care BusinessFinetech BusinessOverseas
Cost of salesGross profitSelling general and administrative expensesOperating income (loss)Ordinary income (loss)Net income (loss)Capital expendituresDepreciation and amortizationRampD expendituresFree cash flowsNet cash provided by (used in) operating activitiesNet cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities
Financial positionShareholdersrsquo equityTotal assetsInterest-bearing liabilities
Per share data (yen $)Stock price (end of term)Earnings per share (EPS)Net assets per share (BPS)
Management indicatorsOperating income ratio ()Net income ratio ()Ratio of RampD expenditures to net sales ()Overseas net sales ratio ()Return on assets (ROA) ()Return on equity (ROE) ()Price earnings ratio (PER) (times)Price book-value ratio (PBR) (times)Equity ratio ()Total assets turnover ratio (timesyear)DE ratio ()Dividend payout ratio ()Fixed assets turnover ratio (timesyear)Inventory turnover ratio (timesyear)Current ratio ()Interest coverage ratio (times)
20053200432003320023
yen 966313665226145338326689563514331162596771496267427834022619595643577809(3452)1352
yen 354138375818927
yen 9304803
39609
744462
69254
12919423
423122534104398661
1874109
yen 714803051824365165964658944272272072304041673184230332902487535630966090(2994)(9122)
yen 310777470419998
yen 6322501
34893
583275
65230 75
25318
416092644100 299484
181082
yen 674062822623958152214360741573258332310027321196
55627612528517372368899(1663)(3964)
yen 301378025829809
yen 143603
32908
410877
6470718
23704
376080 988249264400
138877
yen 69526310702313215324456364442725099229752123
417(3505)35522893427326025513(2911)(3971)
yen 306428744433922
yen 151(3782)
33062
31(50)61
65738
(110) mdash
05350 076
1107mdash
255350
146533
Notes 1 For the sake of convenience the US$ is converted at a rate of yen8315US$ as of March 31 20112 On April 1 2006 shares were split into 2 shares per 1 common share and the per share data prior to 2005 has been modified incorporating the
values after the split
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Consolidated Ten-year Summary 37
20113 20113
yen 102470515593094619964742106140841061392611799
608(1288)44995286
10275(7903)
(934)(6969)4761
yen 3690812481655300
yen 440(1391) 39850
18(13)100 724 (10) (33)
mdash11
296 082
1498mdash
239428
1571mdash
20063
yen 102799478043186423129722625891543883308181306511503678127533081771324316869(4437)(8276)
yen 477808937912350
yen 22007344
51585
1276675
70378
163300 43
535119258204376670
205185
20073
yen 110490536313846418394805755965050839355631527614233854930123287942410196708(5689)(1123)
yen 546899985914068
yen 18009230
59045
1387785
729 90
167 195 30
548 117 257 217 358613
181797
20083
yen 11081850928398282006181027619484886937894109759205773628933746
10178(16185)
6904(23090)23761
yen 5608213936243329
yen 7858352
60549
9970 92
731 65
140 94 13
402 093 773 192 271478
146063
20093
yen 11266658031335032113183684736613900445949(6944)(9326)(9992)26206448
11589(6991)(1267)(5724)5667
yen 3980111970249706
yen 382(10789) 42972
(62)(89)
103 743 77
(208) mdash
09 332 087
1249 mdash
238463
1974mdash
20103
yen 94862493503156113950691385463640226388211405
545133
21096378960911123755(2643)1468
yen 4049012553951501
yen 517144
43717
1501
101 729 01 03
3580 12
323 077
1272 2770 218419
177429
$ 1232358620077372178240102892487738531493827472180216467320
(15499)5410763581
123573(95051)(11238)(83812)57259
$ 4438801501099
665069
$ 5292(0167)4793
Millions of yenThousands ofUS dollars
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
NET SALES
120000
100000
80000
60000
40000
20000
0
(Millions of yen)
093083073 103 113
OPERATING INCOME
20000
15000
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
NET INCOME
10000
5000
0
-5000
-10000
(Millions of yen)
093083073 103 113
38 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
FISCAL 2010 MANAGEMENTrsquoS DISCUSSION AND ANALYSIS
MARKET ENVIRONMENTThe economic environment in fiscal 2010 ended March31 2011 included an improvement in United States busi-ness conditions from extremely severe conditions into arecovery mode while the harsh business conditions per-sisted in Europe At the same time although conditionsvaried for each country China and other emergingeconomies generally showed an expansionary trend InJapan corporate earnings and business conditions werebeginning to show signs of recovery until the outlookturned unpredictable following the Great East JapanEarthquake
Despite these economic conditions the Topcon Groupviews the current period of change as a golden opportunityfor leveraging the Grouprsquos comprehensive strengths andmaking a new start toward ldquoprofitable and sustainablegrowthrdquo With this as our goal we have been advancingreforms to create a corporate structure and a corporateculture that can serve as the foundation for implementingour growth strategies
CONSOLIDATED RESULTSIn fiscal 2010 net sales were strong in the United Statesparticularly in the Positioning Business as well as in Japanand China notably for the Finetech Business although theexchange rate had a stronger negative impact on net salesthan in the previous fiscal year The result was a 80 year-on-year increase in net sales to yen102470 million
Although earnings were affected by the strong yen aswell as increased spending to strengthen our developmentcapabilities and fortify our sales network the increase innet sales generated a 281 year-on-year rise in operatingincome to yen1799 million and an 117 year-on-yearincrease in ordinary income to yen608 million
The Company posted a net loss of yen1288 million due inpart to a loss recorded from the liquidation of subsidiariesand affiliates
SEGMENT INFORMATIONIn the Positioning Business net sales rose 45 year onyear to yen51559 million as the growth in demand in theUS market more than offset the impact of the strong yenThe improved earnings accompanying the rise in net salesboosted operating income to yen130 million an increase ofyen123 million over the previous fiscal year
In the Eye Care Business net sales fell 19 year onyear to yen30946 million largely due to the impact of thestrong yen The business secured operating income ofyen307 million for the year but the decrease in net salesincreased development expenses and other factors result-ed in a yen1656 million decline in operating income from theprevious fiscal year
In the Finetech Business net sales grew 431 year onyear to yen19964 million supported by substantial increas-es in sales of projectors proximity aligners and chipdefect inspection systems The sharp rise in net salesresulted in operating income of yen1362 million an increaseof yen1927 million from the previous fiscal year
FINANCIAL POSITIONAssetsAs of March 31 2011 total assets stood at yen124816 mil-lion a decline of yen723 million from a year earlier 1 Current assets Current assets amounted to yen81571 mil-
lion a decline of yen1576 million from the previous fiscalyear-end due primarily to a decrease in cash and depositsassociated with the purchase of business assets
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOTAL ASSETS
150000
120000
90000
60000
30000
0
(Millions of yen)
093083073 103 113
NET ASSETS
60000
50000
40000
30000
20000
10000
0
(Millions of yen)
093083073 103 113
FREE CASH FLOWS
5000
0
-5000
-10000
-15000
-20000
(Millions of yen)
093083073 103 113
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 39
2 Noncurrent assets Noncurrent assets amounted toyen43245 million an increase of yen853 million from the previ-ous fiscal year-end due mainly to a rise in intangibleassets accompanying the purchase of business assets
LiabilitiesAs of March 31 2011 total liabilities amounted to yen87577million an increase of yen3727 million from a year earlier1 Current liabilities Current liabilities amounted to
yen51910 million up yen5040 million from the previous fis-cal year-end due primarily to an increase in short-termloans payable
2 Noncurrent liabilities Noncurrent liabilities amounted toyen35667 million down yen1313 million from the end ofthe previous fiscal year due mainly to a decrease inlong-term loans payable following reclassificationbecause their due dates had fallen within one year
Net AssetsAs of March 31 2011 total net assets amounted toyen37238 million a decline of yen4450 million due primarilyto the decline in foreign currency translation adjustmentfrom the stronger yen and the decrease in retained earn-ings arising from the net loss for the fiscal year underreview
Cash FlowsCash and cash equivalents (hereafter referred to as ldquonetcashrdquo) at the fiscal year-end stood at yen13770 million adecrease of yen3439 million from the end of the previous fis-cal year The decline was primarily due to a decrease in netcash resulting from payments for the transfer of business
which exceeded factors increasing net cash such asincreases in long-term loans payable and proceeds fromthe transfer of business
Net Cash Provided by (Used in) Operating ActivitiesNet cash used in operating activities amounted to yen934million compared to yen3755 million provided by operatingactivities in the previous fiscal year While cash increaseddue to proceeds from a yen12 million loss before incometaxes and minority interests after addition of the adjust-ment for depreciation and amortization of yen5286 millionthis increase was more than offset by a number of cashdecreasing factors including a yen3741 million increase ininventories a yen1973 million increase in notes andaccounts receivable-trade and a yen420 million decrease inaccrued expenses
Net Cash Provided by (Used in) Investing ActivitiesNet cash used in investing activities totaled yen6969 millioncompared to yen2643 million used in investing activities inthe previous fiscal year The primary factor was yen5141 mil-lion in payments for the transfer of business
Net Cash Provided by (Used in) Financing ActivitiesNet cash provided by financing activities amounted toyen4761 million compared to net cash of yen1468 million pro-vided by financing activities in the previous fiscal yearWhile cash declined due to a yen13615 million repayment oflong-term loans payable this significant increase wasattributable to an increase in long-term loans payable total-ing yen15000 million and a yen4109 million net increase inshort-term loans payable
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
CAPITAL EXPENDITURES
5000
4000
3000
2000
1000
0
(Millions of yen)
093083073 103 113
40 TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis
Capital ExpendituresTotal capital expenditures for the Topcon Group amountedto yen4499 million in fiscal 2010 By business segment capi-tal expenditures for the Positioning Business was yen2112million for the Eye Care Business yen1662 million and forthe Finetech Business yen725 million Expenditures objec-tives were primarily to introduce ERP advance researchand development enhance production systems improveoperating efficiency and renew molds and other items
Dividend PolicyWe place priority on dividend payments to return profit toshareholders Our basic policy regarding the distributionof profits to shareholders is to steadily increase the divi-dend payment amount in l ine with the growth inconsolidated earnings
Regarding dividend payments we make payments twiceyearly in principle as an interim dividend and year-end divi-dend Our Articles of Incorporation allow for the payment ofdividends by resolution of the Board of Directors withoutrequiring the resolution of the General Meeting ofShareholders and provide for a record date for the year-enddividend of March 31 and for the interim dividend ofSeptember 30 each year as well as allowing for the pay-ment of dividends with the record date to be determined
In fiscal 2010 management decided to maintain a con-sistent dividend payment level despite the low level ofconsolidated earnings and distributed an interim dividendpayment of yen2 per share (compared with the yen2 per shareinterim dividend payment in fiscal 2009) and year-end divi-dend payment of yen2 per share (compared with the yen2 pershare year-end dividend payment in fiscal 2009) for a full-year dividend of yen4 per share (compared with a full-yeardividend payment of yen4 per share in fiscal 2009)
BUSINESS RISKSBusiness risks related to business conditions financial sta-tus and other factors that may potentially have significantinfluence on investor decisions include the following
1 Economic Conditions Affecting Product DemandThe Topcon Group conducts business in three segmentsthe Positioning Business the Eye Care Business and theFinetech Business Demand for the Grouprsquos products isinfluenced by the trends in each of the markets in which thesegments conduct business (the construction ophthalmicand semiconductor markets etc) A significant fluctuationin one or more of these markets may thus impact the busi-ness results and financial position of the Group
The Group maintains a high ratio of overseas sales sell-ing products in Japan as well as around the worldincluding the United States Europe China and other Asiancountries Therefore economic conditions in these coun-tries may also impact the business results and financialposition of the Group
2 Overseas Business Development The Group conducts a wide range of business activitiesoverseas including exporting products and undertakinglocal production at overseas sites Accordingly a deteriora-tion in overseas political or economic conditions foreigntrade or foreign currency restrictions revisions to laws andregulations or taxation systems worsening public securityor the occurrence of terrorist actions war or natural disas-ters may obstruct business activities overseas and impactthe business results and financial position of the Group
3 Intensifying Competition (Price and Non-priceCompetition)
Competitors supplying products that are similar to theGrouprsquos products are present in each business segmentThe Group strives to achieve early introduction of newproducts to the market develop new technologies reducecosts and other activities to create a competitive advan-tage for the Group However delayed development of newproducts protracted development of new technologiessharp rises in raw material costs and other factors mayweaken the Grouprsquos growth potential or profitability andthus may impact the business results and financial positionof the Group
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Fiscal 2010 Managementrsquos Discussion and Analysis 41
4 Fluctuations in Interest Rates Foreign ExchangeRates or Other Conditions in Financial Markets
The Group maintains a high ratio of overseas sales in itstotal consolidated sales Since this presents exposure toforeign exchange rate fluctuation risk the Group uses for-ward exchange contracts to maintain an appropriate levelof foreign exchange hedging within the scope of actualdemand Despite these precautions severe fluctuations inforeign exchange markets may impact the business resultsand financial position of the Group The Group also bor-rows funds from financial institutions which presentsexposure to interest rate fluctuation risk Changes in finan-cial market conditions could lead to sharp rises in interestrates Such fluctuations could raise the level of the Grouprsquosinterest rate payments which may impact the businessresults and financial position of the Group
5 Fund ProcurementThe Group procures the necessary funds by taking out loansfrom financial institutions Deteriorating conditions in thefinancial markets or in the Grouprsquos operating performancecould prevent the Group from continuing existing loans ortaking out new loans Such conditions may impact the finan-cial status and operating performance of the Group
The Group also enters into syndicated loan contractswith financial institutions that require the Group to committo a financial covenant In the event that the Group shouldfail to meet any conditions of the covenant and fail toobtain agreement from a significant number of lenders thatthey will not exercise the right of forfeiture of the benefitof time then the Group would forfeit the benefit of timewith respect to all of the obligations associated with thesyndicated loan contracts Such an event may impact thebusiness results and financial position of the Group
Syndicated loan financial covenants (summary)1 At the end of each fiscal year the net asset amount minus the foreign
currency translation adjustment recorded in the consolidated balancesheets must be higher than 75 of the net asset amounts recorded inthe consolidated balance sheets for fiscal year 2009
2 At the end of each fiscal year the consolidated statements of incomemust not show an operating loss for two consecutive terms
6 New Business StrategiesThe Group diligently considers initiatives for new businessesfor the future growth of the Group However new business-es necessarily present various uncertainties Failing todevelop such businesses according to plan may impact thebusiness results and financial position of the Group
7 Procurement of Materials and Other ItemsThe manufacturing activities of the Group in some casesrequire the use of special materials for which suppliers arevery limited or for which it would be difficult to changesuppliers Delays or disruptions in supply of such materialscould lead to a rise in purchase costs and productiondelays which may impact the business results and finan-cial position of the Group
8 Product Quality IssuesThe Group puts every effort into quality control to maintainan optimal quality according to the features of its productsHowever it is virtually impossible to eliminate the possibili-ty that unforeseen conditions could cause quality issuesthat result in a product recall litigation or other actionSuch an event may impact the business results and finan-cial position of the Group
9 Intellectual Property RightsThe Group utilizes a wide range of intellectual propertyrights in its research and recognizes these rights are theproperty of the Group or are being used under a legal licens-ing agreement However the possibility exists that a thirdparty may file an infringement litigation concerning intellec-tual property rights against the Group In the event a disputeover intellectual property rights occurs it may impact thebusiness results and financial position of the Group
10 Laws and RegulationsSome of the products that the Group manufactures for theEye Care Business are medical devices subject to thePharmaceuticals Affairs Act in Japan and laws and regula-tions concerning medical devices in the various countriesin which the Group conducts business Changes in regula-tions may impact the business results and financialposition of the Group
11 Natural Disasters and AccidentsUnforeseen natural disasters or man-made disastersincluding earthquakes acts of terrorism wars and epi-demics that occur in regions where the Group conductsbusiness can cause human casualty property damagesuspension of business activities to the Group Such anevent may impact the business results and financial posi-tion of the Group
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
42 TOPCON Annual Report 2011 | Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETSTopcon Corporation and Consolidated SubsidiariesAs of March 31 2010 and 2011
Assets
Current assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property plant and equipment
Building and structures net
Machinery equipment and vehicles net
Land
Construction in progress
Other
Total property plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
201132011320103
$ 167498
427449
153456
86441
62520
54351
45984
(16689)
981013
66348
32967
35565
2232
24701
161816
135441
71369
206811
56366
17470
46142
33013
(1535)
151458
520085
$ 1501099
yen 13927
35542
12759
7187
5198
4519
3823
(1387)
81571
5516
2741
2957
185
2053
13455
11261
5934
17196
4686
1452
3836
2745
(127)
12593
43245
yen 124816
yen 17373
36034
14029
4372
4364
4073
4371
(1471)
83147
6118
3402
3309
464
2247
15542
13140
2335
15475
5107
487
4093
1885
(200)
11373
42391
yen 125539
Millions of yenThousands ofUS dollars
Note We prepare and present our consolidated financial statements based on the Japanese yen In addition we indicate US dollar amounts based on anexchange rate of yen8315US$ as of March 31 2011 for our readersrsquo convenience It should be added that this conversion rate does not indicate that theyen-denominated figures presented in these consolidated financial statements can be converted at the same rate
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Consolidated Balance Sheets 43
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directorsrsquo retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholdersrsquo equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholdersrsquo equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
201132011320103
$ 162796
339423
63543
14371
8522
35638
624295
325646
4250
83434
717
14907
428955
1053251
123848
176923
202034
(682)
502124
(3603)
31
(54672)
(58244)
3967
447847
$ 1501099
yen 13536
28223
5283
1194
708
2963
51910
27077
353
6937
59
1239
35667
87577
10297
14711
16799
(56)
41751
(299)
2
(4545)
(4843)
329
37238
yen 124816
yen 13614
22869
5834
1227
759
2563
46869
28632
584
7063
57
643
36980
83850
10297
14711
18461
(56)
43414
289
(5)
(3207)
(2923)
1198
41689
yen 125539
Millions of yenThousands ofUS dollars
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
44 TOPCON Annual Report 2011 | Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net sales
Cost of sales
Gross Profit
Selling general amp administrative expenses
Operating Income
Non-operating income
Interest income
Dividends income
Equity in earning of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of land
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary loss
Loss on transfer of business
Loss on liquidation of subsidiaries and affiliates
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on disposal of building
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Loss before minority interests
Minority interests in income (loss)
Net income (loss)
$ 1232358
738531
493827
472180
21646
826
651
710
7559
9748
14522
mdash
5194
4356
24073
7320
mdash
mdash
mdash
3386
2383
838
527
338
mdash
7473
(152)
12185
1159
13345
(13498)
2000
$ (15499)
yen 102470
61408
41061
39261
1799
68
54
59
628
810
1207
mdash
431
362
2001
608
mdash
mdash
mdash
281
198
69
43
28
mdash
621
(12)
1013
96
1109
(1122)
166
yen (1288)
yen 94862
54636
40226
38821
1405
70
194
mdash
647
911
1308
122
16
324
1771
545
1327
783
2111
mdash
496
mdash
53
mdash
53
603
2053
770
1227
1997
mdash
(78)
yen 133
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Consolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in Net Assets 45
Minorityinterests
Totalnet assets
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Income (loss) before minority interestsOther comprehensive income
Valuation difference on available-for-sales securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentsComprehensive income of affiliates accounted for by the equity method attributable to the Company
Total other comprehensive income Comprehensive incomeComprehensive income attributable to
Shareholders of the CompanyMinority shareholders
201132011320103
$ (13498)
(7090)102
(13443)
4 (20427)(33925)
(38580)4654
yen (1122)
(589)8
(1117)
0 (1698)(2820)
(3207)387
yen mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
mdash
Millions of yenThousands ofUS dollars
Balance at March 31 2009
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
yen 10297
mdash
yen 10297
mdashyen 10297
yen 14711
mdash
yen 14711
mdashyen 14711
yen 18717
(370)
133
(19)
(256)
yen 18461
(370)(1288)
(3)
(1662)yen 16799
yen (55)
(0)
(0)
yen (56)
(0)
(0)yen (56)
yen 43671
(370)
133
(0)
(19)
(256)
yen 43414
(370)(1288)
(0)(3)
(1662)yen 41751
yen 2
287
287
yen 289
(589)(589)
yen(299)
yen (58)
52
52
yen (5)
8 8
yen 2
yen (3814)
606
606
yen (3207)
(1338)(1338)
yen (4545)
yen (3870)
946
946
yen (2923)
(1919)(1919)
yen (4843)
yen 1686
(487)
(487)
yen 1198
(868)(868)
yen 329
yen 41487
(370)
133
(0)
(19)
458
201
yen 41689
(370)(1288)
(0)(3)
(2787)(4450)
yen 37238
Millions of yen
Shareholdersrsquo equity Accumulated other comprehensive income
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
Minorityinterests
Totalnet assets
Balance at March 31 2010
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Other
Net change of items other thanshareholdersrsquo equity
Total changes of items during the period
Balance at March 31 2011
$ 123848
mdash$ 123848
$ 176923
mdash$ 176923
$ 222026
(4455)(15499)
(37)
(19991)$ 202034
$(679)
(2)
(2)$(682)
$ 522119
(4455)(15499)
(2)(37)
(19994)$ 502124
$ 3486
(7090)(7090)
$ (3603)
$ (70)
102 102
$ 31
$ (38579)
(16092)(16092)
$(54672)
$ (35163)
(23080)(23080)
$(58244)
$ 14415
(10448)(10448)
$ 3967
$ 501371
(4455)(15499)
(2)(37)
(33529)(53523)
$ 447847
Thousands of US dollars
Capitalstock
Capitalsurplus
Retainedearnings
Treasurystock
Totalshareholdersrsquo
equity
Valuationdifference onavailable-for-
sale securities
Deferredgains or
losses onhedges
Foreigncurrency
translationadjustment
Total accumu-lated other
comprehensiveincome
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Shareholdersrsquo equity Accumulated other comprehensive income
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
46 TOPCON Annual Report 2011 | Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWSTopcon Corporation and Consolidated SubsidiariesFor the fiscal years ended March 31 2010 and 2011
Net cash provided by (used in) operating activitiesIncome (loss) before income taxes and minority interestsDepreciation and amortization Increase (decrease) in allowance for doubtful accountsInterest and dividends incomeInterest expensesLoss on retirement of property plant and equipmentLoss (gain) on sales of property plant and equipmentLoss (gain) on valuation of investment securitiesLoss (gain) on sales of investment securitiesEquity in (earnings) losses of affiliatesIncrease (decrease) in provision for retirement benefitsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesDecrease (increase) in prepaid expensesIncrease (decrease) in notes and accounts payable-tradeIncrease (decrease) in accrued expensesOther netSubtotalInterest and dividends income receivedInterest expenses paidIncome taxes (paid) refundNet cash provided by (used in) operating activities
Net cash provided by (used in) investing activitiesPayments into time depositsProceeds from withdrawal of time depositsPurchase of property plant and equipmentProceeds from sales of property plant and equipmentPurchase of intangible assetsPurchase of investment securitiesProceeds from sales of investment securitiesPurchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in subsidiariesProceeds from transfer of businessPayments for transfer of businessPayments of long-term loans receivableCollection of long-term loans receivableOther netNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payableProceeds from long-term loans payableRepayment of long-term loans payableRepayments of finance lease obligationsPurchase of treasury stockCash dividends paidCash dividends paid to minority shareholdersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
$ (152)63581
(649)(1475)14522 2086 (389)533 250
(710)(1510)
(23739)(44992)(1623)21281 (5059)
(11946)10006 2118
(14684)(8679)
(11238)
(2309)2310
(22849)1613
(10306)(24)
2479
mdash(1916)12224
(61829)(189)252
(3266)(83812)
49424 180396
(163745)(2138)
(2)(4455)(2219)57259 (3569)
(41361)206969
$ 165607
yen (12)5286
(54)(122)
1207 173 (32)44 20
(59)(125)
(1973)(3741)
(135)1769 (420)(993)832 176
(1221)(721)(934)
(192)192
(1899)134
(857)(2)
206
mdash(159)
1016 (5141)
(15)20
(271)(6969)
4109 15000
(13615)(177)
(0)(370)(184)
4761 (296)
(3439)17209
yen 13770
yen 2053 6378
(960)(258)
1307 403
(1302)53 2
122 (574)
(7625)(598)(463)
4163 (184)
1059 3577
310 (1317)1185 3755
(12)233
(2591)2276
(722)(1618)
34
0 (127)
mdashmdash
(90)131 (157)
(2643)
3303 mdash
(1021)(249)
(0)(373)(190)
1468 (91)
2489 14720
yen 17209
201132011320103
Millions of yenThousands ofUS dollars
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Corporate Profile and Stock Information 47
Number ofShares Issued and
Outstanding
92688342
Treasury Stocks
007
Individualand Others
2041
FinancialInstitutions
1529
DomesticCompanies
3767
Foreign Investors
2617
Securities Firms
034
15000
12000
9000
6000
3000
0
(Thousands)
1200
1000
800
600
400
200
(Yen)
Trading Volume
Share Price
200903 201003 201103
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CORPORATE PROFILE AND STOCK INFORMATION(As of March 31 2011)
CORPORATE PROFILE
Corporate Name TOPCON CORPORATION
Headquarters 75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Established September 1 1932
Paid in Capital yen10297 million
Business Outline Positioning Business(Surveying instruments GPS Machinecontrol system 3D measurement GISPrecision agriculture Mobile measurement)Eye Care Business(Ophthalmic examination instrumentsOphthalmic treatment instrumentsOphthalmic IT solutions Optometric instruments)Finetech Business(Semiconductor equipmentFPD equipment Optical devices)
Topcon Group 15 (Domestic)54 (Overseas)
Employees 4727 (Consolidated)1104 (Non-consolidated)
Number of Authorized Shares 160000000
Number of Shares Issued and Outstanding 92688342
Number of Shareholders 19308
Stock Exchange Listings Tokyo Stock Exchange
Securities Code 7732
Number of Shares per unit 100
Transfer Agent for The Chuo Mitsui Trust amp Banking Co Ltdcommon stock 33-1 Shiba 3-chome Minato-ku Tokyo Japan
Ordinary General Meeting Juneof Shareholders
MAJOR SHAREHOLDERS
Number of shares held are rounded down to the hundred and percentage ofshares held are rounded down to the second decimal places
Number of shares Percentage of Shareholder held (Hundreds) total shares
issued ()
Toshiba Corporation 325668 3513
TAIYO FUND LP 151493 1634
State Street Bank and Trust Company 44527 480
The Dai-ichi Life Insurance Co Ltd 40380 435
TAIYO BLUE PARTNERS LP 15339 165
Sumitomo Mitsui Banking Corporation 14644 158
The Bank of Tokyo-Mitsubishi UFJ Ltd 14007 151
Mitsui Sumitomo Insurance Co Ltd 12038 129
Japan Trustee Services Bank Ltd (Trust Account) 11292 121
The Master Trust Bank of Japan Ltd (Trust Account) 9921 107
BREAKDOWN BY TYPE OF SHAREHOLDERS
SHARE PRICE AND TRADING VOLUME
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
48 TOPCON Annual Report 2011 | Japanese and Overseas Group Companies
JAPANESE AND OVERSEAS GROUP COMPANIES(As of August 31 2011)
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
JAPANSokkia Topcon Co Ltd Kanagawa Production of positioning equipment 400 million 10000
Topcon Sales Corporation Tokyo Sales of positioning equipment 269 million 10000
Topcon Medical Japan Co Ltd Tokyo Sales of eye care equipment 100 million 10000
Sokkia Sales Co Ltd Tokyo Sales of positioning equipment 20 million 10000
Topcon Technohouse Corporation Tokyo Sales of finetech equipment 55 million 10000
Sapporo Topcon Sales Co Ltd Hokkaido Sales of positioning equipment 20 million 4000
Topcon Yamagata Co Ltd Yamagata Production of positioning eye care and finetech equipment 371 million 10000
Optonexus Co Ltd Fukushima Production of positioning eye care and finetech equipment 263 million 10000
Fukushima Sokkia Co Ltd Fukushima Production of positioning equipment 200 million 10000
NGR Inc Tokyo Development of finetech equipment 1199 million 2335
Topcon Service Co Ltd Tokyo After sales services for positioning and eye care equipment 57 million 10000
Topcon GS Corporation TokyoOverall services (product sales cleaning security facilities maintenance etc) for Topcon Group companies
20 million 10000
NORTH AMERICA
Topcon America Corporation New Jersey USAHolding company of Topcon Positioning Systems Inc and Topcon Medical Systems Inc etc
USD 85000 thousand 10000
Topcon Positioning Systems Inc California USADevelopment production and sales of positioning equipment
USD 58905 thousand 10000
Topcon Medical Systems Inc New Jersey USADevelopment production and sales of eye care equipment
USD 16094 thousand 10000
Topcon Medical Laser Systems Inc California USADevelopment production and sales of eye care equipment
USD 10000 thousand 10000
Cacioppe Communications Companies Inc
Michigan USA Sales of positioning equipment USD 1 thousand 6021
Sokkia Corporation Kansas USA Sales of positioning equipment USD 15979 thousand 10000
Topcon Canada Inc Quebec Canada Sales of eye care equipment CAD 3872 thousand 10000
Topcon 3D Inspection Laboratories Inc
Quebec Canada Development of finetech equipment USD 150 thousand 10000
EUROPEAFRICA
Topcon Europe BV Capelle The NetherlandsHolding company of Topcon Europe Positioning BV and Topcon Europe Medical BV etc
EUR 5437 thousand 10000
Topcon Europe Positioning BV Capelle The Netherlands Sales of positioning equipment EUR 18 thousand 10000
Topcon Europe Medical BV Capelle The Netherlands Development and sales of eye care equipment EUR18 thousand 10000
Topcon Deutschland GmbH Willich Germany Sales of positioning and eye care equipment EUR 2812 thousand 10000
IBS Lasertechnik GmbH Hamburg Germany Sales of positioning equipment EUR 25 thousand 10000
Topcon SARL Clichy Cedex France Sales of positioning and eye care equipment EUR 1372 thousand 10000
Topcon Espantildea SA Barcelona Spain Sales of eye care equipment EUR 961 thousand 10000
Topcon Positioning Iberia SL Madrid SpainHolding company of InlandGEO SL and InlandGEO Canarias SL etc
USD 0 thousand 10000
InlandGEO SL Madrid Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO Canarias SL Santa Cruz de Tenerife Spain Sales of positioning equipment USD 0 thousand 10000
InlandGEO LDA Lavos Portugal Sales of positioning equipment USD 0 thousand 10000
Figures of less than one unit are rounded down
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TOPCON Annual Report 2011 | Japanese and Overseas Group Companies 49
CapitalInvestment Percentage ofCountryRegion Core Businesses in Capital Voting Rights
Topcon Scandinavia AB Molndal Sweden Sales of positioning and eye care equipment SEK 5250 thousand 10000
Topcon (Great Britain) Ltd Newbury UK Sales of positioning and eye care equipment GBP 2500 thousand 10000
Topcon Polska Sp Zoo Warszawska Poland Sales of eye care equipment PLN 1330 thousand 10000
Tierra SpA Torino ItalyDevelopment production and sales of positioning equipment
USD 2 thousand 5010
DESTURA srl Modena ItalyDevelopment production and sales of positioning equipment
EUR 60 thousand 3000
GEOTOP srl Ancona Italy Sales of positioning equipment EUR 46 thousand 3500
Sokkia BV Capelle The Netherlands Sales of positioning equipment EUR 10373 thousand 10000
Sokkia NV Brussels Belgium Sales of positioning equipment EUR 198 thousand 10000
DynaRoad Oy Helsinki Finland Development and sales of positioning equipment EUR 14 thousand 5000
KEE Technologies Africa (Pty) Ltd Johannesburg South Africa Sales of positioning equipment ZAR 9 thousand 10000
ASIAOCEANIAMIDDLE EAST
Topcon Singapore Holdings Pte LtdAlexandra Terrace Holding company of Topcon Singapore Positioning Singapore Pte Ltd and Topcon Singapore Medical Pte Ltd
USD 1121 thousand 10000
Topcon Singapore Positioning Alexandra TerraceHolding company of Topcon Singapore Positioning
Pte Ltd SingaporeSales Pte Ltd and Sokkia Singapore Positioning USD 3000 thousand 10000Sales Pte Ltd
Topcon Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Singapore Medical Alexandra Terrace Sales of eye care equipment USD 4000 thousand 10000
Pte Ltd Singapore
Sokkia Singapore Positioning Alexandra Terrace Sales of positioning equipment USD 1000 thousand 10000
Sales Pte Ltd Singapore
Topcon Instruments (Malaysia) Kuala Lumpur Malaysia Sales of positioning and eye care equipment MYR 6600 thousand 10000
Sdn Bhd
Topcon Instruments (Thailand) Bangkok Thailand Sales of positioning and eye care equipment THB 19000 thousand 4990
Co Ltd
Topcon Sokkia India Pvt Ltd Noida India Sales of positioning equipment INR 7500 thousand 10000
Sokkia Korea Co Ltd Seoul Korea Sales of positioning equipment KRW 2041700 thousand 10000
NGR Korea Inc Suwon Korea After sales services for finetech equipment KRW 120000 thousand 2335
Topcon Optical (HK) Ltd Hong Kong China Sales of positioning eye care and finetech equipment HKD 24251 thousand 10000
Topcon (Beijing) Opto-Electronics Beijing China
Development production and sales of positioning Development Corporation and eye care equipment
CNY 33108 thousand 7500
Topcon Optical (Dongguan) Dongguan China
Production of positioning eye care and finetech Technology Ltd equipment sales of finetech equipment
USD 12000 thousand 9000
Holding company of Topcon Precision Agriculture TPS Australia Holdings Pty Ltd South Australia Australia Pty Ltd and Topcon Positioning Systems (Australia) USD 10901 thousand 10000
Pty Ltd
Topcon Precision AgricultureSouth Australia Australia
Development production and sales of Pty Ltd positioning equipment
USD 10901 thousand 10000
Topcon Positioning Systems Queensland Australia
Development production and sales of (Australia) Pty Ltd positioning equipment
USD 0 thousand 10000
Topcon Positioning Middle East Dubai UAE Sales of positioning equipment USD 1089 thousand 10000
and Africa FZE
Topcon studies the possibilities of ldquolightrdquo creates new valuestoward the future and contributes to build a rich human society
Topcon will maintain a proactive and responsive attitude by foresee ing any changes and p lace the utmost pr ior i ty on compliance under all circumstances thereby continually striving to be a trustworthy partner to all stakeholders
Topcon will do its utmost to improve quality in all stages from development and design to manufacturing sales and service supp ly p roducts o f the h ighes t qua l i t y and deve lop our customersrsquo businesses
Topcon will build relationships of mutual trust and partnership with sales agents and other business partners and mutually deve lop bus iness through in format ion shar ing and c lose cooperation
Topcon will implement two-way communication with employees and will respect diverse individualities values and the spirit of creation and innovation and maximize the employeesrsquo skills
Topcon as a member of the global and local community will r e s p e c t g l o b a l s t a n d a r d s c o n c e r n i n g h u m a n r i g h t s t h e environment labor standards and anti-corruption measures and contribute to building sustainable markets
Topcon will appropriately disclose information to shareholders in a timely manner work to build a relationship of trust with themand continually strive to improve our corporate value
TOPCON WAY
Topcon Corporation has established the TOPCON WAY
representing the companyrsquos most significant set of common values
through the restructuring and integration of its Business Philosophy
Management Policy and Code of Business Conduct
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan
TO
PC
ON
CO
RP
OR
AT
ION
AN
NU
AL R
EP
OR
T 2011
REFORM AND ENHANCEMENTof Business Structure
ANNUAL REPORT 2011For the year ended March 31 2011
This report was printed with attention to minimizing environmental impact by using ink manufactured from vegetable oil
TOPCON CORPORATION75-1 Hasunuma-cho Itabashi-ku Tokyo 174-8580 Japan
Corporate Communication Dept IR AffairsTEL +81-3-3558-2532 FAX +81-3-3558-9141URL httpwwwtopconcojp
Printed in Japan