Product and Geographic Focus and Cost Reduction in the Imaging Business

「Based on the share transfer agreement entered into with Japan Industrial Partners, Inc. (hereinafter, “JIP”) on 30 September 2020, we transferred 95% of all shares in OM Digital Solutions Corporation held by us, representing 95% of the total number of issued shares, effective 1 January 2021.」

「Based on the share transfer agreement for the transfer of the Imaging Business entered into with OJ Holdings Co., Ltd., a special-purpose company established by Japan Industrial Partners, Inc., on 30 September 2020, we established the new Imaging company on 9 October 2020 and entered into an absorption-type company split agreement on 6 November 2020 to transfer our Imaging Business to the new Imaging company.」

「Based on the corporate transformation plan “Transform Olympus,” announced on 11 January 2019, and the management strategy announced on 6 November 2019, we further advanced the selection and concentration of our business portfolio. We determined that incorporating the Imaging Business as a separate company and developing the business under JIP would be highly significant for the Imaging Business, and consequently entered into a letter of intent with JIP toward realizing this transaction.」

「We had been proceeding with the necessary procedures to execute the agreement for the transfer of these equity interests, but because the final closing conditions were not satisfied, we terminated the equity interest transfer agreement effective 20 January 2020.」

「In the Imaging Business, we have completed the reorganization of production sites and will improve business efficiency to establish a profitable operating structure.」

「On 25 December 2018, we entered into an agreement with Shenzhen YL Technology Co.,Ltd. (hereinafter, “YL”) to transfer to YL all of the equity interests in our Chinese subsidiary Olympus (Shenzhen) Industrial Ltd., located in Shenzhen, China, held by our consolidated subsidiary Olympus (China) Co., Ltd.」

「In May 2018, we resolved to reorganize the production sites of the Imaging Business, suspend operations at our consolidated subsidiary Olympus (Shenzhen) Industrial Ltd., and consolidate production at Olympus Vietnam Co., Ltd. During the cumulative second quarter, we recorded ¥5,898 million in “Other expenses” as costs related to the reorganization of the Imaging Business’s production sites, including economic compensation payments arising from the reorganization.」

「In May 2018, we resolved to reorganize the production sites of the Imaging Business, suspend operations at our consolidated subsidiary Olympus (Shenzhen) Industrial Ltd., and consolidate production at Olympus Vietnam Co., Ltd. During the cumulative first quarter, we recorded ¥5,380 million in “Other expenses” as costs related to the reorganization of the Imaging Business’s production sites, including economic compensation payments arising from the reorganization.」

「To date, we have produced products related to the digital camera business at two locations: OSZ and Olympus Vietnam Co., Ltd. in Dong Nai Province, Vietnam (hereinafter, “Olympus Vietnam”). In light of the above circumstances, we decided to suspend operations at OSZ on 7 May 2018 and consolidate production at Olympus Vietnam. Through this move, we aim to improve production efficiency and profitability and strengthen the global competitiveness of the digital camera business.」

「In the mirrorless interchangeable-lens camera field, sales of flagship mirrorless models launched in the previous fiscal year, including the OM-D E-M1MarkⅡ, remained solid, expanding revenue and increasing sales for the Imaging Business overall. Operating income for the Imaging Business increased year on year, mainly due to ongoing cost reductions.」

「The imaging business's operating results turned from a loss in the same period of the previous year to a profit due to progress in reducing expenses and other factors.」

「Meanwhile, in the compact camera sector, sales in the imaging business as a whole declined because the number of units sold was narrowed in line with market contraction.」

「The imaging business recorded higher operating profit due to progress in reducing expenses and the effects of introducing new products, including the flagship mirrorless interchangeable-lens camera OLYMPUS OM-D E-M1 Mark II.」

「The imaging business recorded an operating loss due to lower revenue despite progress in reducing expenses.」

「In addition to optimizing the scale of the business in line with market contraction, sales in the imaging business declined partly because supply of some products was delayed by the Kumamoto earthquake in April 2016.」

「In the imaging business, we pursued further structural reforms, including efficiency improvements through narrowing the product line and priority sales regions, as well as expense reductions.」