Nikon Corporation Business report

Risk Factors Nikon depends on international markets for significant portion of its production and sales, exposing its business operations to changes in labor laws, export and import laws, tax systems and regulations. in as such, conducting business activities is bound to risk of losses due to changes in political and economic climates in overseas markets, inability to hire qualified personnel due to complexities of labor laws and policies, and loss of business due to ineffective logistics-related functions as a result of poor or inefficient infrastructure in these countries, to mention a few. In a bid to counter such risks, the company has created a business strategy that focuses on establishing unique business environment that captures mitigation channels for unexpected circumstances. Notably, the company has business divisions such as Precise Equipment Business, Healthcare business, imaging products business, etc.

, and the diversification of end products in a bid to leverage the company’s aggregate demand and supply in overseas markets within a given business cycle. Accounting Framework The company continues to adhere to its corporate philosophy of “Trustworthiness and Creativity” by timely disclosing investor and financial information, and in observing the rules and regulation of the Tokyo Stock Exchange and in the Timely Disclosure Network. The dissemination of information takes the forms of briefing sessions, quarterly and annual results and publications, public announcements and news releases. In context, the company has adopted the consolidated financial statements as the major accounting policy in its annual securities report in the bid to improve international comparability of the financial information disclosed to the capital market.

In addition, the choice of the standard seeks to strengthen management foundations in accounting standards within its groups of companies and line of businesses. Consolidated Financial Statements (1) Consolidated Statement of Financial Position (Millions of yen) As of March 31, 2017 As of March 31, 2018 Changes ASSETS Current assets Cash and cash equivalents 319,046 388,438 69,392 Trade and other receivables 96,221 104,526 8,304 Inventories 220,400 235,553 15,153 Other current financial assets 9,163 10,958 1,795 Other current assets 14,183 12,430 (1,752) (Subtotal) 659,013 751,905 92,892 Non-current assets held for sale Total current assets Non-current assets Property, plant and equipment － 2,277 2,277 659,013 754,182 95,169 121,827 118,761 (3,066) Goodwill and intangible assets 67,752 60,985 (6,766) Net defined benefit assets 5,489 5,706 217 Investments accounted for using the equity method 11,696 9,387 (2,309) Other non-current financial assets 85,343 91,841 6,498 Deferred tax assets 62,883 53,355 (9,528) Other non-current assets Total non-current assets 4,349 4,126 (222) 359,338 344,161 (15,177) Total assets 1,018,351 1,098,343 79,992 As of March 31, 2017 As of March 31, 2018 Changes LIABILITIES/ EQUITY LIABILITIES Current liabilities Trade and other payables 112,870 118,701 5,831 Bonds and borrowings 23,601 12,200 (11,401) Income tax payables 3,567 11,567 8,000 Advances received 111,395 176,631 65,237 Provisions 6,926 6,820 (107) Other current financial liabilities 31,213 28,879 (2,334) Other current liabilities Total current liabilities Non-current liabilities Bonds and borrowings 52,347 34,959 (17,388) 341,918 389,756 47,838 114,477 113,140 (1,337) Net defined benefit liabilities 8,624 7,995 (628) Provisions 4,131 4,844 713 Deferred tax liabilities 5,193 3,978 (1,216) Other non-current financial liabilities 2,991 2,490 (501) Other non-current liabilities Total non-current liabilities 2,868 2,599 (269) 138,283 135,046 (3,237) Total liabilities 480,201 524,802 44,601 Foreign Exchange Exposure The company’s report lack tables showing the impacts of foreign exchange but justifies the overseas business as constituting 87.