Business & Other Risks
The following section provides an overview of the issues related to the business results and financial position of the Group that may have a material effect on the decisions of investors. The forward-looking statements in this text represent the judgment of management as of March 29, 2017.
1. Dependence on specific customers
Sales to Sony Corporation’s group companies and Nikon Corporation’s group companies comprise approximately 20% and 16% of the Group’s sales, respectively (both figures are for the fiscal year ended December 31, 2016). As a result, changes in the strategies and policies and business relationships of these two companies may significantly affect the Group’s business results.
2. New businesses
It is the Group’s policy to foster and expand new businesses. In the event that the Group decides to scale back or withdraw from a new business due to intensifying price competition, rapid technological innovation, drastic changes in market needs and so forth, the Group’s business results may be significantly affected.
3. Dependence on specific suppliers
The Group procures raw materials, components, etc. from numerous external suppliers. For the procurement of glass materials, in particular, it relies on limited supply sources. If these raw materials, components, etc. are not available in the quantity or price that the Group has planned for any reason, and the Group is unable to produce the products in the planned quantity, etc., it will fail to carry out its responsibility of delivery to customers, and this may significantly affect its business results.
4. Product defects
The Group has developed advanced quality assurance systems. In the unlikely event of the occurrence of a defect in its products that may lead to large-scale product liability, the Group may incur significant expense or lose public confidence, etc., any of which may significantly affect its business results.
5. Intellectual property rights
The Group undertakes investigations, negotiations and applications, and also takes other necessary steps to protect its rights related to intellectual property rights and avoid any related issues. In the event of a dispute over intellectual properties occurring between the Group and a third party, the Group’s business results may be significantly affected.
6. Laws and regulations
The Group strives to comply with international and domestic laws and regulations, government permits, licenses, regulations and so forth that are relevant to the Group’s businesses. In the event of a violation of laws or regulations or the filing of a suit due to unintended reasons, the Group’s business results may be significantly affected.
7. Impairment loss
In cases where the market value of the Group’s assets declines significantly or where the profitability of its business deteriorates, impairment loss will be recorded according to the accounting standards for impairment of assets, and this may significantly affect the Group’s business results.
8. Effects of exchange rate fluctuations
The Group conducts transactions with overseas subsidiaries in foreign currencies, and some of the transactions with international and domestic business partners in foreign currencies. Accordingly, fluctuations in exchange rates may significantly affect the competitiveness of the Group’s products in overseas markets, its export profit, business results, etc.
9. Other risks
In addition to the above, if there arise unanticipated political or economic factors, changes in tax systems or tax rates that have adverse effects, or events of social turmoil, etc. due to acts of terrorism, wars, natural disasters, contagious diseases or other factors in the countries or regions where the Group conducts business, this may significantly affect the Group’s business results.