annual report 2009

REVIEW OF OPERATIONS

GENERAL RESULTS

TO OUR SHAREHOLDERS

IMAGING COMPANY

IMAGING HIGHLIGHTS

INSTRUMENTS

PRECISION EQUIPMENT

FINANCIAL STATEMENTS

CORPORATE STRUCTURE

CORPORATE GOVERNANCE

RISK MANAGEMENT

NIKON INITIATIVES

FIVE-YEAR SUMMARY

NikoN achieved record-high sales aNd earNiNgs iN the year eNded March 2008. We Will coN-tiNue to bolster our techNolog-ical capabilities, MaNufacturiNg aNd sales to f urther establish a “stroNg NikoN.”We focused oN tWo MaiN reforM Measures: rapid respoNses to chaNges iN the busiNess eNvi-roNMeNt, aNd collaborative de-velopMeNt of products by the desigN aNd MarketiNg depart-MeNts. We achieved record-high levels of sales for the fifth coN-secutive fiscal year, operatiNg iNcoMe for the third year, aNd Net iNcoMe for the fourth year.

business initiatives and results for the year ended March 2008We would like to begin with an over-view of developments in our three main internal companies. In IC step-pers and scanners, the Precision Equipment Company began full-scale shipments of the latest cutting-edge model of ArF immersion scanner in Japan and overseas, and introduced the i-line stepper with signifi cantly im-proved precision and throughput. Unit sales of LCD steppers and scanners were down considerably from the year ended March 2007 as panel display manufacturers scaled back investment in reaction to the year ended March 2007.However, with the positive response to the leadingedge models of IC scan-ners the Precision Equipment Com-pany posted sales on par with the year ended March 2007, and managed to hold profi t decline to a minimum. The Imaging Company strengthened its product lineup with the introduction of the D3 and D300 flagship models, and the entry-level D60 model of digi-tal SLR (single-lens reflex) cameras, successfully opening new markets. We also made a strong market introduc-tion for new models of compact digital cameras, recording increases in sales. Camera sales exceeded market ex-pansion as a result, and the Imaging Company posted record levels of sales and operating income.

The Instruments Company achieved growth in biological microscopes and measuring instruments, but sales of industrial instruments such as semi-conductor inspection equipment and industrial microscopes were sluggish as companies restrained capital invest-ments. The year ended March 2008 marked the 90th anniversary of Nikon, and was a year in which we worked to-ward realizing our newly formulated management vision, “Our Aspiration: Meeting needs. Exceeding expecta-tions.” Specific initiatives were the core measures of the medium term management plan: (1) strengthen the competitiveness of core businesses by securing superiority in state-of-the-art technologies and developing high-value-added products; (2) boost cost-competitiveness through manufactur-ing innovations; and (3) create new businesses, including the glass busi-ness. We also made further progress with establishing internal controls, and based on the Nikon Corporate Social Responsibility Charter formulated in April 2007, conducted highly transpar-ent management emphasizing CSR.As a result, we reported record-high levels for both revenue and earnings. Net sales rose 16.2% from the year ended March 2007 to ¥955,792 mil-lion, with operating income up 32.5% to ¥135,169 million, and net income increasing 37.7% to ¥75,484 million. Nikon’s financial position was also strengthened by a positive net cash position (cash and cash equivalents less interest-bearing debt) at the end of the year ended March 2008, revers-ing the negative position of the previ-ous fiscal year.

forecast for the year ending March 2009, and progress of the Medium term Management planWe expect conditions for IC steppers and scanners to be difficult during the year ending March 2009 due to restraints on capital investment, but anticipate a recovery for LCD step-pers and scanners due to growth in the market for LCD televisions. We

expect the digital camera market to continue to expand, but remained concerned over economic slowdown and lagging consumption due to the impact of the subprime loan crisis in the United States and the earthquake in China, and so anticipate sluggish market growth and increasingly fierce competition. Business conditions are becoming harsher in the year end-ing March 2009, but we are seeking to realize further increases in revenue and earnings through greater product competitiveness and cost reductions. Nikon will retain a sense of alertness in its business and organizational op-erations, seeking quick and accurate responses to the drastically chang-ing business environment, as it works to establish a “Strong Nikon” able to produce sustainable growth.Specifically, we will move forward with the principles of the medium term management plan: Strengthen the competitiveness of

core businesses by securing superior-ity in state-of-the-art technologies and developing high-value-added prod-ucts. Create and foster new businesses

becoming new pillars that support our group through appropriate investment of our resources.

Innovate manufacturing and strengthen sales capabilities. Increase cash flow through improve-

ment of asset efficiency.In the three years through the year ending March 2011, we plan to carry out capital investments totaling ¥160 billion and R&D spending totaling ¥220 billion to produce next-genera-tion products, develop core and basic technologies, and improve productiv-ity.

Thank you for your continued support of Nikon.

Representative Director, President, CEO and COO

Representative Director, Executive Vice President and CFO

as well as the observation of live cells. Besides seeking to

aggressively develop highly creative new products that

match the needs of the market and the times, Nikon

will expand business and boost profi tability by further

strengthening sales and marketing competencies.

Nikon is also proactive in its stance towards enter-

ing new markets in which we can apply our technical

advantages. For example, we are presently planning to

advance into the fi eld of industrial consumption mate-

rials with our glass materials and component related

businesses. This fi eld is expected to contribute to higher,

more stable profi ts for the Nikon Group.

Initiatives to shorten development lead-time and reduce manufacturing costsOne of the key factors behind greater-than-expected

profi tability in Precision Equipment and Imaging

Products was the shortening of development lead-time.

Promoting simplifi ed design and module standardiza-

tion enabled us to boost profi t-earning capability in

Precision Equipment, while we were successful in drasti-

cally cutting development lead-time for digital cameras

in Imaging Products. As a result, we are well on the way

to establishing a structure that allows swift response to

fast-changing market needs.

Moving ahead, we will strive to further reduce manu-

facturing costs through the inauguration of a company-

wide project that aims to trim both lead-time and cost.

Activities such as these are expected to help expand

Nikon’s profi tability.

Increase capital investment and R&D investment to drive future growth One of the focus points of the medium term manage-

ment plan is to increase capital investment and R&D

investment. In the three-year period that the plan cov-

ers, Nikon plans to raise capital investment by 20%

and R&D investment by 60% compared with the prior

three years. Apart from investment in the development

of next-generation steppers and scanners in Precision

Equipment, and of second-generation digital cameras

in Imaging Products, we will work to strengthen com-

petitiveness in the bioscience fi eld in Instruments while

aggressively channeling funds into R&D for new busi-

nesses and elemental technologies.

Bolster corporate governanceAmid continued globalization of the business environ-

ment, increasing management effi ciency and transpar-

ency, and strengthening the monitoring and supervision

of business execution are integral to achieving stable

corporate growth over the medium- to long-term. At

Nikon, corporate governance is viewed as a top manage-

ment priority, and as such, we are working hard to create

and enhance crucial organizational controls and systems.

Initiatives taken to strengthen corporate governance are

outlined on pages 22-23 of this Annual Report.

Finally, as members of top management, it is our duty

to relay the fact that Nikon is now undergoing immense

change. Another key objective of the medium term man-

agement plan is to foster a free and open-minded corpo-

rate culture so that motivation levels are optimum and the

opinions of all employees, including young engineers, are

more readily heard at the management level.

Although we achieved record profi ts in the year ended

March 2006, this marks but one step towards our goal of

new innovation. Numerous issues remain if we are to lift

the bar even further, but with the collective and unifi ed

efforts of all management and employees, we are confi -

dent we can meet the expectations of shareholders and

investors.

We look forward to your continued guidance and sup-

port as we strive to achieve the objectives we have set.

Michio KariyaPresident, Member of the Board,

Chief Executive Offi cer & Chief Operating Offi cer

Ichiro TeratoExecutive Vice President,

Member of the Board & Chief Financial Offi cer

04

as well as the observation of live cells. Besides seeking to

aggressively develop highly creative new products that

match the needs of the market and the times, Nikon

will expand business and boost profi tability by further

strengthening sales and marketing competencies.

Nikon is also proactive in its stance towards enter-

ing new markets in which we can apply our technical

advantages. For example, we are presently planning to

advance into the fi eld of industrial consumption mate-

rials with our glass materials and component related

businesses. This fi eld is expected to contribute to higher,

more stable profi ts for the Nikon Group.

Initiatives to shorten development lead-time and reduce manufacturing costsOne of the key factors behind greater-than-expected

profi tability in Precision Equipment and Imaging

Products was the shortening of development lead-time.

Promoting simplifi ed design and module standardiza-

tion enabled us to boost profi t-earning capability in

Precision Equipment, while we were successful in drasti-

cally cutting development lead-time for digital cameras

in Imaging Products. As a result, we are well on the way

to establishing a structure that allows swift response to

fast-changing market needs.

Moving ahead, we will strive to further reduce manu-

facturing costs through the inauguration of a company-

wide project that aims to trim both lead-time and cost.

Activities such as these are expected to help expand

Nikon’s profi tability.

Increase capital investment and R&D investment to drive future growth One of the focus points of the medium term manage-

ment plan is to increase capital investment and R&D

investment. In the three-year period that the plan cov-

ers, Nikon plans to raise capital investment by 20%

and R&D investment by 60% compared with the prior

three years. Apart from investment in the development

of next-generation steppers and scanners in Precision

Equipment, and of second-generation digital cameras

in Imaging Products, we will work to strengthen com-

petitiveness in the bioscience fi eld in Instruments while

aggressively channeling funds into R&D for new busi-

nesses and elemental technologies.

Bolster corporate governanceAmid continued globalization of the business environ-

ment, increasing management effi ciency and transpar-

ency, and strengthening the monitoring and supervision

of business execution are integral to achieving stable

corporate growth over the medium- to long-term. At

Nikon, corporate governance is viewed as a top manage-

ment priority, and as such, we are working hard to create

and enhance crucial organizational controls and systems.

Initiatives taken to strengthen corporate governance are

outlined on pages 22-23 of this Annual Report.

Finally, as members of top management, it is our duty

to relay the fact that Nikon is now undergoing immense

change. Another key objective of the medium term man-

agement plan is to foster a free and open-minded corpo-

rate culture so that motivation levels are optimum and the

opinions of all employees, including young engineers, are

more readily heard at the management level.

Although we achieved record profi ts in the year ended

March 2006, this marks but one step towards our goal of

new innovation. Numerous issues remain if we are to lift

the bar even further, but with the collective and unifi ed

efforts of all management and employees, we are confi -

dent we can meet the expectations of shareholders and

investors.

We look forward to your continued guidance and sup-

port as we strive to achieve the objectives we have set.

Michio KariyaPresident, Member of the Board,

Chief Executive Offi cer & Chief Operating Offi cer

Ichiro TeratoExecutive Vice President,

Member of the Board & Chief Financial Offi cer

04

IMAGING

3-inch, 920,000-dot super-density, 170-degree color LCD monitor The D3’s large, super-density color LCD monitor delivers bright, crisp image playback, with enlargement up to 27x (Large-size images in FX format), making on-the-spot image confirmation easier and more pre-cise. And the 170-degree wide-angle viewing makes image review and Live View modes even more useful in challenging conditions.

Two types of information display Choose from black letters or white letters, according to lighting conditions, to ensure your information display is legible. The menu is formatted large and clear for easy recognition. You can also set the camera so the color of letters switches automatically, depending on the brightness of the large, 3.0-inch LCD monitor.

Electronic Virtual Horizon The D3’s super-density color LCD monitor, teamed with Nikon’s innova-tive Electronic Virtual Horizon delivers instant and accurate confirmation of the D3’s position relative to “horizontal level.” You can also level the D3 while looking through the viewfinder using the handy analog scale.

Twin CF card slotsNow you can use two CF cards simultaneously for a number of func-tions: recording two full CF cards of data; recording the same data simultaneously onto two cards for backup protection; recording RAW and JPEG simultaneously to separate cards; transferring data from one card to another.

Long-life batteryThe D3 uses the same EN-EL4 or EN-EL4a rechargeable batteries that have been field-proven over many years with the D2 series D-SLRs. What’s more, because the D3’s power consumption and power manage-ment systems have been engineered for greater operating efficiency, you can expect even longer battery life – a welcome bonus for professionals.

Improved ergonomics Features mean nothing if they’re difficult to access. That’s why all D3 buttons and dials have ideal sizes and clear functions. The layout shares the same logical consistency as Nikon’s previous professional D-SLRs, along with further improvements, such as Command Dials with a 5-degree inclination for natural rotation using your index finger.

Function button Designate frequently used features to the Function Button. Up to 13 functions are available. You can also do the same with the Preview Button and the AF/AE Lock Button.

Countermeasures against dust, moisture and electromagnetic interference The D3 goes the extra mile to protect against invasive moisture, dust and even electromagnetic interference. A comprehensive series of O-rings and other specialized seals, combined with additional Nikon engineering, keeps you shooting when lesser cameras would fail.

100% frame coverageThe D3’s large prism mirror gives you the FX-format visual advantage when you shoot. Not only is the viewfinder image brighter, but the finder screen is also carefully designed for you to sense focus more intuitively, be it manual or autofocus.

Magnesium alloy bodyRugged, durable and precise magnesium alloy construction protects the D3’s incomparable technologies and its ability to perform in demanding real-world conditions. An amazingly strong-yet-lightweight magnesium alloy is used for the D3's body, exterior cover, chassis, and mirror box, to assure superb, reliable performance and longer life.

Reliability and operability

2928

Nikon D3 is more than just another new camera, it’s an innovative way of approaching photography

Imagine being able to work at ISO 25600, yet keep all the natu-ral tonal grada-tion you need in the low-sensitivity range, as well. The D3 tackles real-world shoot-ing scenarios like noth ing that ’s come before –

choose from a selection of cap-ture formats, such as the new FX format for shoot-ing at 9 fps, or the ultra-versa-tile DX format at up to 11 fps (5.1 megapixels), with consistent frame-advance speed at every aperture setting.

The D3 goes the extra mile to protect against invasive moisture, dust and even electromagnetic interfer-ence. A comprehensive series of O-rings and other specialized seals, combined with additional Nikon engi-neering, keeps you shoot-ing when lesser cameras would fail.

Five incredible new NIKKOR lenses Great cameras demand great lenses, so to

get the best performance out of Nikon’s new

FX-format, as well as being able to use every

existing AF NIKKOR lens, NIKKOR design-

ers developed five exceptional new lenses,

including the world’s first f/2.8 ultrawide-

angle zoom lens, with groundbreaking optical

technology to match. • New optical design maximizes Nikon FX-format potential

• Use of ED glass and large-diameter Precision Glass Mold (PGM) aspherical lens elements deliver both high resolution and minimized aber-ration

• Nano Crystal Coat further reduces ghost and flare effects, contributing to even greater overall image integrity

• Anti-dust and anti-moisture performance that match D3 reliability

• Lens barrel designed with superior ergonomics• Silent Wave Motor (SWM) for fast and quiet

autofocusing• M/A mode equipped• Internal focusing system• Add AF-S VR Zoom-Nikkor 70-200mm f/2.8G

IF-ED, and you are covered from 14 to 200 mm at f/2.8

• New optical designs maximize Nikon FX-format potential

• VR II reduces vibration effects equivalent to approx. 4 stops – employed for the first time in super telephoto lenses

• New tripod mode: effectively reduces vibration when super telephoto lenses are mounted on a tripod

• Three ED glass elements offer high resolution and contrast

• Light and durable magnesium alloy lens barrel• Focus Preset function to immediately focus on a

predetermined point at the push of a button

• Nano Crystal Coat minimizes ghost and flare, contributing to clearer images

• Meniscus protection glass to reduce ghost effects on the imaging sensor

• Anti-dust and anti-moisture performance to match D3 reliability

• Silent Wave Motor (SWM) for fast and quiet autofocusing

• A/M mode is equipped as well as M/A mode• Minimum shooting distance in autofocus: 2.9 m

(400mm), 4.0 m (500mm), and 5.0 m (600mm)

High-performance ultrawide-angle zoom and standard zoom lenses – AF-S NIKKOR 14-24mm f/2.8G ED and AF-S NIKKOR 24-70mm f/2.8G ED

Super telephoto lenses with improved vibration reduction – AF-S NIKKOR 400mm f/2.8G ED VR, AF-S NIKKOR 500mm f/4G ED VR, and AF-S NIKKOR 600mm f/4G ED VR

AF-S NIKKOR 14-24mm f/2.8G ED

AF-S NIKKOR 24-70mm f/2.8G ED

AF-S NIKKOR 400mm f/2.8G ED VR

AF-S NIKKOR 500mm f/4G ED VR

AF-S NIKKOR 600mm f/4G ED VR

• Lens: AF-S NIKKOR 14-24mm f/2.8G ED • Image quality: 14-bit RAW (NEF) • Exposure: [M] mode, 1/200 second, f/16 • White balance: Auto • Sensitivity: ISO 200 • Picture Control: Standard

36 37

1 IX-Nikkor lenses cannot be used. 2 Vibration Reduction (VR) supported with VR lenses. 3 Spot metering meters selected focus point. 4 The camera’s exposure metering and flash control systems do not work properly when shifting and/or tilting the lens, or when an aperture other than the maximum aperture is used. 5 Electronic rangefinder cannot be used with shifting or tilting. 6 Manual exposure mode only. 7 Can be used with AF-S and AF-I lenses only. 8 With maximum effective aperture of f/5.6 or faster; when TC-20E II/TC-20E is used with AF-S VR 70-200mm f/2.8G, AF-S VR 300mm f/2.8G, AF-S 300mm f/2.8D II, AF-S VR 400mm f/2.8G or AF-S 400mm f/2.8D II, or TC-14E II/TC-14E is used with AF-S VR 200-400mm f/4G, three top and three bottom points among 15 focus points in the center may function as line sensors. 9 When focusing at minimum focus distance with AF 80-200mm f/2.8, AF 35- 70mm f/2.8, AF 28-85mm f/3.5-4.5 <New>, or AF 28-85mm f/3.5-4.5 lens at maximum zoom, in-focus indicator may be displayed when image on matte screen in viewfinder is not in focus. Adjust focus manually until image in viewfinder is in focus. 10 With maximum aperture of f/5.6 or faster. 11 Some lenses cannot be used. 12 Range of rotation for AI 80-200mm f/2.8 ED tripod mount is limited by camera body. Filters cannot be exchanged while AI 200-400mm f/4 ED is mounted on camera. 13 If maximum aperture is specified using [Non-CPU lens data], aperture value will be displayed in viewfinder and top control panel. 14 Can be used only if lens focal length and maximum aperture are specified using [Non-CPU lens data]. Use spot or center-weighted metering if desired results are not achieved. 15 For improved precision, specify lens focal length and maximum aperture using [Non-CPU lens data]. 16 Can be used in manual exposure modes at shutter speeds slower than 1/125 s. 17 Exposure determined by presetting lens aperture. In aperture-priority auto exposure mode, preset aperture using lens aperture ring before performing AE lock or shifting lens. In manual exposure mode, preset aperture using lens aperture ring and determine exposure before shifting lens. 18 Exposure compensation required when used with AI 28-85mm f/3.5-4.5, AI 35-105mm f/3.5-4.5, AI 35-135mm f/3.5-4.5, or AF-S 80-200mm f/2.8D. See teleconverter manual for details. 19 Requires PK-12 or PK-13 auto extension ring. PB-6D may be required depending on camera orientation. 20 Use preset aperture. In aperture-priority auto exposure mode, set aperture using focusing attachment before determining exposure and taking photograph.

Function Compatibility Chart

Camera setting Focus Exposure Metering mode mode system

S M (with electronic M P A Lens/accessory C rangefinder) S M 3D Color

Type G or D AF Nikkor2

AF-S, AF-I Nikkor ✓ ✓ ✓ ✓ ✓ ✓ — ✓

3

PC-Micro Nikkor 85mm f/2.8D4 — ✓

5 ✓ — ✓

6 ✓ — ✓

3

AF-S / AF-I Teleconverter7 ✓

8 ✓

8 ✓ ✓ ✓ ✓ — ✓

3

Other AF Nikkor ✓

9 ✓

9 ✓ ✓ ✓ — ✓ ✓

3 (except lenses for F3AF)

AI-P Nikkor — ✓10 ✓ ✓ ✓ — ✓ ✓

3

AI-, AI modified Nikkor or Nikkor Series E lenses

12

— ✓10 ✓ — ✓

13 — ✓

14 ✓

15

Medical-Nikkor 120mm f/4 — ✓ ✓ — ✓16 — — —

Reflex-Nikkor — — ✓ — ✓13 — — ✓

15

PC-Nikkor — ✓5 ✓ — ✓

17 — — ✓

AI-type Teleconverter18

— ✓8 ✓ — ✓

13 — ✓

14 ✓

15

PB-6 Bellows Focusing Attachment

19

— ✓8 ✓ — ✓

20 — — ✓

Auto extension rings (PK-series 11A, 12, or 13; PN-11)

— ✓8 ✓ — ✓

13 — — ✓

CPU

lens

es1

Non

-CPU

lens

es11

: Exceptional new lenses, full coverage

...Nikon’s original FX-format CMOS image sensor with 36.0 (H) x 23.9 (V) mm image size; 12.1 effective megapixels......Compatible with three image-sensor formats – FX format (36 x 24), 5:4 (30 x 24) and DX format (24 x 16)......Sensitivity range ISO 200 to 6400 at normal setting for exceptionally high-quality images; can be set to ISO-equivalent 25,600......Incorporates Nikon’s original EXPEED digital image process-ing concept......Nikon’s original Scene Recognition system, utilizing the 1,005-pixel RGB sensor, greatly improves autofocus, auto exposure and auto white balance performance......New 51-point autofocus system features 15 cross-type sensors that maximize the potential of lenses with apertures as small as f/5.6......High-speed con-tinuous shooting at approx. 9 frames per second [FX format (36 x 24)/5:4 (30 x 24)]/

approx. 11 fps [DX format (24 x 16)] *1......Newly employed Picture Control System enables creation of desired picture with preferred tones......Accurate focal-plane con-trast AF*2 available with built-in Liveview mode......Wireless Transmitter WT-4*3 (op-tional) realizes wireless connection of cameras with a PC, enabling thumbnail display of images taken with up to five of them, and downloading of images selected......CF card double slot accepts two CF cards......Quick response with approx. 0.12 sec. startup time and 37 ms Shutter-release time lag......Viewfinder with approx. 100% frame coverage and approx. 0.7x magnification in FX format......High-definition (920,000 dots), 170˚ viewing angle, 3-inch VGA LCD monitor with tempered glass......Active D-Lighting optimizes tone reproduction in both shadows and highlights...

review of the year ended March 2008Sales of digital SLR cameras grew steadily as the result of lineup expan-sion. New models included the D3, the Nikon FX-format flagship model with the in-house developed large CMOS image sensor, providing superior pic-ture quality, wide sensitivity range and high-speed performance; the D300, the top-of-the-line Nikon DX-format model with an even more advanced features and functions; and the D60, offering plenty of features such as ad-vanced built-in dust reduction tech-nologies and a comprehensive set of creative options. Sales of existing prod-ucts also rose considerably, including the mid-range model D80, the entry-level model D40, and its sister model D40X. Sales of interchangeable lenses were also steady with sales of digital SLR camera kits and high-priced lens-es. Production figures for NIKKOR SLR interchangeable lenses surpassed 40 million in July 2007. For the COOLPIX series, Nikon aggressively launched a total of 17 new models on the mar-ket, including the COOLPIX S510 with the world’s fastest power-up response time and smallest body.*2

Maintaining our position as the lead-ing company for digital slr camerasNikon had a 40% share worldwide of shipments of digital SLR cameras dur-ing the year ended March 2008. We recognize that this is the result of our efforts to meet customer expectations with a wide variety of products, from high-end to entry-level models.The entry-level model D40, launched in December 2006, was the trigger for Nikon’s gain in momentum, as it pro-vides more people to enjoy photogra-phy with digital SLR cameras. The D40, with its affordable price, has helped expand the market due to its popular-ity among those who use digital SLR cameras for the first time. In Novem-ber 2007, Nikon launched the D3, the flagship model of the Nikon FX-format camera, and D300, the flagship mod-el of the Nikon DX-format camera. The “full lineup” product strategy is

to strengthen the Nikon brand with fl aship models, while also broadening the market and new customers with greater sales of entry-level models. Nikon is expanding in both directions, maintaining its position as the leading imaging company. We plan to continue developing more attractive products, and further strengthen our lineup.

establishing a brand image for oo-lpiX compact digital cameras Brand awareness for COOLPIX still lags behind that for digital SLR cam-eras. One of the issues involved in in-creasing this awareness is generating a premium for the COOLPIX brand. To accomplish this requires novel and innovative ideas for each product cat-egory, and the development of unique features. Nikon will continue to devel-op new products with advanced basic performance and original functions, such as models equipped with wireless LAN (Wi-Fi) feature to link the camera to the Internet.

accelerating product developmentNikon creates project teams for digi-tal camera planning and development that cut across the design, marketing and production departments. We cate-gorize customers throughout the world into detailed segments, drawing on sales data and customer surveys from around the world to develop products for each segment, or to quickly deter-mine the segment for which a product is best suited and commercialize it.

helping people enjoy pictures MoreThe way people enjoy images and photography has changed radically with the transition from film to digital, technological advancements such as the Internet and large-screen flat-pan-el televisions, and shifts in lifestyles. Nikon has continued to develop prod-ucts aimed at allowing more peopleto easily take beautiful photos.

At the heart of

theimage

Capture NX 2 easy-to-use software lets you make in-tuitive photo enhancements which are immediately vis-ible on your monitor. Simply place the Control Point on the area that you want to edit and U Point Technology will analyze color elements such as hue, saturation and brightness, as well as recog-nize similar areas where an edit would best be applied.

NET SALES*

53,280

4,085

59,252

5,123

59,043

4,081

* YEARS ENDED MARCH 31

* YEARS ENDED MARCH 31

OPERATING INCOME*

mln¥70,000

60,000

50,000

40,000

30,000

20,000

10,000

006 07 08

06 07 08

mln¥6 ,000

5,000

4,000

3,000

2,000

1,000

0

SHARE OF NET SALES

SHARE OF OPERATING INCOME

61,3%¥ 586 billion

62,2%¥ 84 billion

Focus your imagination with powerful, easy-to-use tools

to deal with selection tools, layers or lengthy training.

Control Points make Capture NX 2 intuitive to operate

U PointTM

at the area of the image that you want to modify, then moving it left or right. Each control point achieves adjustment of color and brightness (red, green, blue, hue, saturation, contrast and warmth) of an image area that shares the same values as other parts of the selected area.

to adjust components, and you can make re-adjustments at any time regardless of those previously made and the order in which

Capture NX 2/Capture NX 2 Upgrade

2 3

Compact Digital Camera LineupAutumn/Winter 2008

7 5 y e a r s o f superior lens optics = Nikkor

C o o l p i xQuick response ultra-compact design elegance

90 TS-E f/41/320sISO 800Nikon D3

400mm f/5.6 1.0s ISO 250 Nikon D200 80-400mm VR lens

The dedicated Plan series objectives yield flat and sharp images right up to the periphery of the view-field. With phase contrast and darkfield in addition to brightfield observations possible as well as image capture, this compact model is the perfect choice for educational usage and clinical laboratory inspections.

The dedicated plan series 4x, 10x, 20x, 40x, 60x, 100x (Oil) objective lenses fea-ture superior image flatness. Chromatic aberration and field curvature are corrected over the entire viewfield.

INSTRUMENTSNew infinity corrected microscope to provide outstanding optical performance with elegant ergonomic touches.

...Optical system...CFI optical system...... Magnification...40–1500x......Illumination...6V-20W halo-gen lamp, FL (field lens) unit, lamp changeable by re-moving the field lens unit......Coarse and fine focusing...Coaxial coarse/fine focusing with cross roller guide in-corporated, 22mm coarse/fine focusing range...Coarse motion: 37.7mm/rotation, Fine motion: 0.2mm/rota-tion with 2μm scale increments, Coarse motion torque adjustable......Eyepiece tube...E2-TB binocular tube (inclination: 30°, 360° rotatable Siedentopf-type, inter-pupillary distance: 47–75mm)...E2-TF trinocular tube F (2-way, inclination: 30°, 360° rotatable Siedentopf-type, interpupillary distance: 47–75mm)......Eyepiece lens...E1-CFI 10x (F.O.V.: 18mm), CFI E 15x (F.O.V.: 12mm) (with rubber eye guard)......Condenser...Abbe condenser, NA 1.25 (aperture diaphragm with position guide mark-ing for respective objectives)...33mm-diameter filters attachable (including standard blue filter)......Nose-piece...Quadruple click-stop, revolving mechanism with multiple ball bearings, elastic nosepiece grip-ring......Dedicated objectives...CFI BE Plan Achromat 4x (NA 0.1/W.D. 25mm)...10x (NA 0.25/W.D. 6.7mm)...20x (NA 0.4/W.D. 3.7mm)...40x (NA 0.65/W.D. 0.6mm)...60x (NA 0.8/W.D. 0.24mm)...100x (NA 1.25/W.D. 0.14mm)...DL 10x (NA 0.25/W.D. 6.7)...DL 40x (NA 0.65/W.D. 0.6)...DL 100x (NA 1.25/W.D. 0.14)......Stage...Double-plate rect-angular mechanical stage, stage size: 155 (W) x 134 (D)mm, removal slide holder, travel area: 76 (W) x 40 (D)mm, vernier provided......Substage...Adjustable verti-cal condenser movement range: 10mm......Optional accessories...Phase contrast attachment (dedicated abbe condenser, sliders, objectives (10x, 40x, 100x), GIF filter, phase centering telescope), object marker, dark-field ring unit, mirror unit, cord hanger, storage case......Power...consumption 50W......Weight...Approx. 6.5kg...

Nikon’s CFI optical system and new dedicated objectives produce high quality images.

Nikon, the global leader in advanced optical technology,

designed the new infinity corrected microscope to provide

outstanding optical performance with elegant ergonomic

touches. With a very small footprint, the Eclipse E100 fits easily

into the minimum storage space. Its revolutionary CFI* optics

achieve flat and sharp images right up to the periphery of the

viewfield. Allowing phase contrast observations as well as

brightfield, the Eclipse E100 is the perfect choice for education

and routine laboratory use.

*Chromatic-aberration Free Infinity

Newly developed objective lenses for flat imagesNikon has developed the new CFI BE Plan objectives, which featuresuperior image flatness, exclusively for the E100. Chromaticaberration and field curvature are corrected over the entire field ofview. Images are clear and bright at every magnification. The E100provides first class optical quality at a modest price.

Anti-mold designAnti-mold paint and an anti-mold tablet are used in the objectivelenses, eyepiece lenses and eyepiece tubes to prevent mold formingin high-humidity environments.

Anti-mold paint

Anti-mold paint

Anti-mold tablet

review of the year ended March 2008In the bioscience business, for fields working with live cells Nikon intro-duced system products including the inverted research microscope ECLIPSE Ti, and the high-speed, high-resolu-tion imaging confocal microscope A1. We also worked to expand sales of the BioStation series of integrated cell culture observation systems. In the in-dustrial instruments business, we con-centrated on marketing of the NEXIV series of CNC video measuring sys-tems and the new AMI-3400 model of automatic macro inspection systems, and announced the APM-3000 series of automated pattern profile monitor-ing systems.

focus on sales of high-end Microscopes Nikon offers microscopes for a wide range of uses, including educational, medical and industrial applications. In the bioscience field, live cell observa-tion is a high-visibility area of research, for which Nikon has developed several high-end products.We are focused particularly on ex-panding sales of the inverted research microscope ECLIPSE Ti and the con-focal microscope A1, enhancing the value of our microscope brand. Rec-ognition of Nikon as a premium brand is rising rapidly, and we are looking to increase our share of high-end prod-ucts in major markets throughout the world. We will also develop systems that combine various highend devices to provide substantial added value, and enhance profitability. Nikon’s technology for the high-profile field of live cell observation is unrivaled. Our products combine superior operabil-ity with short image data acquisition times, and the ability to stably acquire data over long periods. We also offer the Perfect Focus System to automati-cally correct the focus drift of a sample during extended observation, freeing researchers from previously unavoid-able long hours of data acquisition.Rising Demand Anticipated for the Highly Reliable BioStation Series

Nikon offers the BioStation CT (Cell Tracking), cell culture observation sys-tems that simplifies stable cultivation and quality control for live cells, as well as the BioStation IM (cell IMaging), a time-lapse imaging system that takes images of live cells at fixed intervals, and combines them to allow for ob-servation of the cell as a moving im-age. Both of these systems facilitate highly reliable data management. Up to now, cultivated cells could be dam-aged when removed from the incuba-tor for observation, due to the change in the environment at the observation stage. The BioStation CT, because it allows for observation for cultivation of numerous samples without altering the environment, makes possible effi-cient data acquisition over extended periods. It also has a remote obser-vation feature, allowing for operation and observation via a networked com-puter. Nikon will focus on expanding business fields for the promising BioS-tation series.

intense development of industrial products to open New MarketsIn the industrial instruments business, Nikon has on the automotive industry in order to strengthen our earnings base and broaden our business scale, and striving to expand sales of the NEXIV series of CNC video measur-ing systems for use in various inspec-tion processes in automotive industry. Nikon’s measuring systems are non-contact, and are distinctive in their abil-ity to measure height as well as surface area. We are currently developing in-struments to measure automotive and other components in short periods of time. These devices utilize optical sen-sor and image processing technology to determine whether components have been produced to the exact pre-cision of the design. Such high speed and precision in component inspection will allow Nikon to make strong entries into fields other than automotive, and achieve significant earnings growth.

Closeas you

can get

The main strengths of the Instruments Company are the control, image process-ing and optical technolo-gies Nikon has acquired over many years. Building on a foundation of more than eight decades of mi-croscope production, the In-struments Company applies

the technology developed by Nikon, such as precision control that brings the high-speed, moving stage to a standstill with exceptional precision to produce the products as IC steppers and scanners, and image pro-cessing derived from digital cameras.

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NET SALES*

SHARE OF NET SALES

415,686

34,369

448,825

45,678

586,147

83,974

* YEARS ENDED MARCH 31

* YEARS ENDED MARCH 31

OPERATING INCOME*

SHARE OF OPERATING INCOME

mln¥700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

mln¥ 100,000

80,000

60,000

40,000

20,000

0

06 07 08

06 07 08

6,2%¥ 59 billion

3%

¥ 4 billion

SELLING, GENERAL AND ADMINISTRATIVE EXPENSESCONSOLIDATED STATEMENTS OF INCOME

Millions of yenthousands of u.s. dollars

Net sales ¥ 955,792 ¥ 822,813 $ 9,539,790Cost of sales 551,551 494,663 5,505,047Gross profit 404,241 328,150 4,034,743Selling, general and administrative expenses 269,072 226,143 2,685,613Operating income 135,169 102,007 1,349,130Other income (expenses)Interest and dividend income 2,910 1,724 29,042Interest expense (1,439) (1,633) (14,365)Cash discount (4,509) (3,840) (45,001)Royalty income 529 418 5,284Write-down of inventories (5,450) (1,747) (54,397)

Loss on disposals of inventories (5,304) (6,998) (52,936)

Loss on disposals of property, plant and equipment (923) (804) (9,208)

Millions of yenthousands of u.s. dollars

Net sales ¥ 955,792 ¥ 822,813 $ 9,539,790Cost of sales 551,551 494,663 5,505,047Gross profit 404,241 328,150 4,034,743Selling, general and administrative expenses 269,072 226,143 2,685,613Operating income 135,169 102,007 1,349,130Other income (expenses)Interest and dividend income 2,910 1,724 29,042Interest expense (1,439) (1,633) (14,365)Cash discount (4,509) (3,840) (45,001)Royalty income 529 418 5,284Write-down of inventories (5,450) (1,747) (54,397)

Loss on disposals of inventories (5,304) (6,998) (52,936)

Loss on disposals of property, plant and equipment (923) (804) (9,208)

Loss on impairment of fixed assets (264) (2,634)Loss on sales investment securities (94) (938)Gain on sales of property, plant and equipment 179 825 1,789Gain on sales of investment securities 1,635 24 16,314Gain on transfer of investments in affiliate 67Environmental expenses (894) (8,925)Loss on restructuring of business (1,384) (1,847) (13,812)Equity in earnings of unconsolidated subsidiaries and associated companies

1,309 1,541 13,062

Other-net (4,766) (1,924) (47,578)Other expenses-net (18,465) (14,194) (184,303)Income before income taxes and minority interests 116,704 87,813 1,164,827Income taxes (Note 12)Current 47,750 34,128 476,601Deferred (6,530) (1,153) (65,181)Total income taxes 41,220 32,975 411,420Minority interests 13 ¥ 75,484 ¥ 54,825 $ 753,407

Loss on impairment of fixed assets (264) (2,634)Loss on sales investment securities (94) (938)Gain on sales of property, plant and equipment 179 825 1,789Gain on sales of investment securities 1,635 24 16,314Gain on transfer of investments in affiliate 67Environmental expenses (894) (8,925)Loss on restructuring of business (1,384) (1,847) (13,812)Equity in earnings of unconsolidated subsidiaries and associated companies

1,309 1,541 13,062

Other-net (4,766) (1,924) (47,578)Other expenses-net (18,465) (14,194) (184,303)Income before income taxes and minority interests 116,704 87,813 1,164,827Income taxes (Note 12)Current 47,750 34,128 476,601Deferred (6,530) (1,153) (65,181)Total income taxes 41,220 32,975 411,420Minority interests 13 ¥ 75,484 ¥ 54,825 $ 753,407

Nikon corporationFuji Bldg., 2-3, Marunouchi 3-chome, Chiyoda-kuTokyo 100-8331, Japanwww.nikon.co.jp/eng/ Printed in Czech Republic