Topcon Corporation

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Topcon Corporation

75-1 Hasunuma-cho
Itobashi-ku
Tokyo,
Japan
Telephone: (81 03) 3966 3141
Fax: (81 03) 3558 0705
Web site: http://www.topcon.co.jp

Public Company
Incorporated: 1932 as Tokyo Optical Co. Ltd.
Employees: 3,630
Sales: ¥102.79 billion ($916.10 million) (2006)
Stock Exchanges: Tokyo
Ticker Symbol: 7732
NAIC: 334519 Other Measuring and Controlling Device Manufacturing; 333314 Optical Instrument and Lens Manufacturing

Topcon Corporation is one of the world's leading manufacturers of optics-based instruments, and is also the world's leading producer of positioning systems. The company's largest and fastest-growing division is its Positioning unit, which produces surveying systems, GPS surveying systems, laser instruments, imaging measurement systems, and equipment automation. That unit, grouped under subsidiary Topcon Positioning Systems Inc., generated more than 46 percent of Topcon's total sales of ¥102.79 billion ($916.10 million) in 2006. The next largest division, Ophthalmic & Medical Instruments Division, produces a wide range of diagnostic instruments including lens finishing instruments, refraction instruments, retinal cameras and tonometers, lens trial units, laser photocoagulators, and operation microscopes. In 2006, this division accounted for more than 30 percent of group sales. Topcon's Industrial Instruments Division manufactures equipment for the production of semiconductors, flat panels, electron beam and optical measurement instruments, including water surface analyzers, chip defect inspection systems, proximity aligners, among others. The Optical Devices Division produces optical parts for DVD and CD equipment and projectors, as well as high-precision lenses and Infrared optical parts. These divisions account for 12.5 percent and 9.6 percent of group sales, respectively. Japan remains Topcon's primary market, at 35 percent of revenues, and North America adds nearly 30 percent to group sales. The company is also strongly present in the European market, and China alone represents nearly 10 percent of the company's sales. In support of its international presence, Topcon operates research and production facilities in Japan, the United States, and China, and additional research facilities in the Netherlands and Russia.

JAPANESE OPTICS LEADER IN THE PREWAR ERA

Topcon Corporation's roots lie in the period leading up to World War II, and the efforts by the Japanese military government to develop the country's industrial and technological independence. In 1932, K. Hattori and Co., the future Seiko Corporation, agreed to a request from the Japanese Ministry of War to merge its surveying instruments operations with the lens production business of Kogaaku Kikkai Co. Limited. The resulting company was named Tokyo Kogaku Kikai Kabushikikaisha, or Tokyo Optical Co. Ltd. Tokyo Optical was charged with developing and producing optical instruments, including binoculars, cameras, surveying instruments, and optics-based weaponry for the Japanese army. The company also became an important producer of camera lenses for the fast-growing Japanese camera market, launching production of its first lenses in 1933. In that year, as well, the company moved to its permanent headquarters, at Shimura-motohasunumacho, Itabashi-ku, in Tokyo.

Backed by ever-increasing orders from the Japanese government, Tokyo Optical quickly grew into Japan's leading optics company, helping to drive the rapid increase in lens and optics technology made by the country during that period. The company's development of highly precise lenses played a prominent role in the country's postwar dominance of the global camera industry.

Following the Japanese surrender in 1945, Tokyo Optical was forced to shut down its operations. By the end of that year, however, the company had negotiated the right to resume business and focused on developing products for the civil sector. The company then launched production of binoculars, as well as other surveying instruments. At this time, the United States became the company's most important market, and by the end of the 1950s, Topcon had helped establish Japan as the dominant maker of binoculars in the United States.

Tokyo Optical also entered the market for ophthalmic and medical instruments, creating a dedicated division for these products in 1947. In that year, as well, the company began producing light meters for the photography market. This led the company to begin developing its own camera line, starting with the Topcon 35A launched in the early 1950s. The name "Topcon" appeared to have been derived from the name given to one of the company's early camera lenses. By then, the company had gone public, listing on the Tokyo and Osaka Stock Exchanges in 1949.

INTERNATIONAL EXPANSION IN 1970

By 1957, Topcon had developed its own single-lens reflex camera, the Topcon R. The company continued building its camera technology, launching the Topcon RS in 1962, followed by the Topcon RE Super in 1963. That model became the first in the world to feature the TTL full-aperture metering system, and it became a global success for the company. By then, Tokyo Optical had become affiliated with Toshiba Corporation (still called Tokyo Shibaura Electric Co. at the time), which acquired nearly 41 percent of Topcon's stock in 1960. Backing from Toshiba enabled the company to develop new measuring instruments and more sophisticated optics-based technologies.

By the end of the 1960s, demand for the company's products forced it to expand its production capacity, and in 1969 the company opened a new factory in Fukushima. That subsidiary later became known as Optonexus Co. The increased capacity, coupled with growing international demand, then encouraged the company to establish its first overseas offices. The company added a European presence in the Netherlands in 1970, which was shortly followed by a U.S. subsidiary, Topcon Instrument Corporation (later Topcon Medical Systems Inc.).

In Japan, meanwhile, the group strengthened its operations through the creation of a number of subsidiaries, including a dedicated sales subsidiary for its surveying instruments, a new subsidiary for its developing medical instruments sales, and a subsidiary focusing on repairs. Also during the 1970s, the company launched the production of glass lenses.

COMPANY PERSPECTIVES

Management Philosophy: TOPCON widely contributing to human society through corporate activities.

Corporate management policies: 1. TOPCON aims to be a leading global company. 2. TOPCON earns profits through fair corporate activities and returns profits to its employees, shareholders and the society. 3. TOPCON strives to create an environment in which its employees can demonstrate their independent creativity to the maximum. 4. TOPCON pursues a policy of customer first and will continue to supply high-performance and high-quality products to its customers at appropriate prices. 5. TOPCON will achieve its growth as a good corporate citizen through solidarity with the regional.

Despite these efforts, the 1970s marked a period of slowed growth for the company, brought on in part by the global recession of the time. As a result, the company restructured its operations in the late 1970s, and exited the 35mm camera market altogether in 1980. Instead, the company focused its growth on its optical parts development, based on Toshiba's technology. Tokyo Optical also expanded its international sales presence, adding a subsidiary in Singapore in 1979.

The restructuring paid off, and in the early 1980s the company launched a new expansion effort, constructing a number of new factories, including a facility established in Hong Kong in 1985. The company also expanded its presence in the Netherlands, seeking to increase its share of international sales. Renewed growth enabled the company to move its stock listing to the Tokyo and Osaka main boards in 1986.

Tokyo Optical changed its name to Topcon Corporation in 1989, signaling the start of a new corporate philosophy and growth strategy. The company added a new international subsidiary that year, in Australia. The following year, the company returned to the United States, buying a manufacturer of chairs and stands, converting its production to Topcon's ophthalmic and medical instruments. Also in 1990, the company formed a joint venture company, establishing Topcon in South Korea for the first time. By the end of 1991, the company had added two more sales subsidiaries, in Thailand and Malaysia. Meanwhile, Topcon also had moved to expand its in-house design capacity, establishing an engineering department at its Tokyo headquarters in 1991.

Into the first half of the 1990s, Topcon took steps to increase its range of technologies. The company acquired electron beam capacity in 1991; the company also began negotiations to bring its surveying instruments to the Chinese mainland. These talks resulted in the creation of a sales joint venture in 1994. By then, the company had expanded its Hong Kong production plant in order to boost its supply of equipment, particularly photo copiers. By the middle of the decade, the company had established a factory in mainland China as well.

POSITIONING LEADER FOR THE NEW CENTURY

The 1990s also saw the company enter a new market, that of positioning systems. The company began this process by acquiring Advanced Grade Technology, based in California, in 1994. The company then founded a new subsidiary, Topcon Laser Systems, Inc., and invested heavily in developing new high-value positioning products. This effort resulted in the group's creation of a national observation system, supplied to the Japanese government's Geographical Survey Institute in 1994.

KEY DATES

1932:: The merger of the surveying instruments operations of K. Hattori and Co. and the lens production operations of Kogaku Kikkai creates Tokyo Optical.
1933:: The company launches production of camera lenses, binoculars, and other optical devices, becoming a leader in the Japanese camera market before World War II.
1945:: The company converts production to civil sector products, including binoculars.
1947:: The Ophthalmic & Medical Instruments Division is launched.
1949:: The company goes public on the Tokyo and Osaka Stock Exchanges.
1950s:: The first Topcon-branded 35mm camera is introduced.
1960:: The future Toshiba Corporation acquires a 40 percent stake in Tokyo Optical.
1969:: The company forms a new production subsidiary in Fukushima.
1970:: Subsidiaries in the Netherlands and the United States are created.
1980:: The company exits production of 35mm cameras.
1985:: A production facility is opened in Hong Kong.
1989:: The company changes its name to Topcon Corporation.
1994:: Topcon forms a joint venture in China; Advanced Grade Technology in the United States is acquired to enter the positioning systems market.
2000:: The company acquires Javad Positioning Systems and becomes a world leader in the precision GPS market.
2003:: The company merges the Fukushima plant with Sanya Optical Co., creating Optonexus Co., which then launches mass production of camera lenses for cellular phones in 2005.
2004:: The company founds the production joint venture Topcon (Beijing) Opto-Electronics Corporation.
2006:: The company introduces the low-priced Green Label surveying instruments brand for the mainland Chinese market.

The fast growth of Topcon's positioning systems operations led to a restructuring of the corporation in 1997, at which time the company merged its Electro-optic Devices Division into its Surveying Instruments Division. This left the company with three core divisions, including its Ophthalmic & Medical Instruments Division. By the end of the decade, meanwhile, position systems accounted for nearly one-fourth of company revenues.

That percentage changed dramatically in 2000, when Topcon announced that it was buying rival Javad Positioning Systems. The acquisition gave the company a major boost in the precision GPS receiver market, and by the mid-decade, Topcon had emerged as one of the global leaders in this market.

Topcon continued adding manufacturing capacity in the new decades, relocating and expanding its Hong Kong production plant in the early part of the decade. The company also boosted its U.S. sales network, separating its medical instruments operations from its positioning systems business into two independent companies. Meanwhile, steadily building demand for optical devices encouraged the company to separate these operations into a dedicated division, and in 2003 the company created a new Optical Devices Division. Also that year, the company merged its Fukushima-based manufacturing operations with those of Sanya Optical Co., creating the new subsidiary Optonexus Co. That company then announced its plans to mass-produce lenses for cellular phone-based cameras, starting in 2005.

The rapid growth of the mainland China market led the company to establish a new joint venture production subsidiary there, Topcon (Beijing) Opto-Electronics Corporation, in 2004. With the Chinese market expanding by some 20 percent per year, however, Topcon found itself confronted with a number of lowpriced competitors, often selling copies of its own technology. In defense, the company introduced its own low-priced Green Label brand, to be manufactured at its new Beijing plant.

Moving into the second half of the first decade of the 2000s, Topcon was riding high on the booming positioning systems market, seeing sales of that division jump by more than 60 percent between 2004 and 2006. Global demand for optical devices, including camera lenses and DVD and CD optics, helped that division nearly double its sales during the same period. With its sales topping ¥102,000 million for the first time in 2006, Topcon had emerged as one of the global leaders in the optics and positioning systems markets.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Topcon America Corporation (United States); Topcon (Beijing) Opto-Electronics Corporation; Topcon (Great Britain) Ltd.; Topcon Deutschland GmbH (Germany); Topcon Espana S.A.; Topcon Europe B.V.; Topcon Europe Medical B.V. (Brussels); Topcon Europe Positioning B.V. (Brussels); Topcon Instruments (Malaysia) Sdn. Bhd.; Topcon Instruments (Thailand) Co., Ltd.; Topcon Korea Corporation; Topcon Medical Systems, Inc.; Topcon Optical (Dongguan) Technology Ltd. (China); Topcon Optical (H.K.) Ltd.; Topcon Positioning Systems, Inc. (United States); Topcon S.A. R.L. (France); Topcon Scandinavia AB (Sweden); Topcon South Asia Pte. Ltd. (Singapore).

PRINCIPAL COMPETITORS

Canon Inc.; 3M Co.; Olympus Corporation; Nikon Corporation; Magna Donnelly Corporation; Citizen Watch Company Ltd.; Hoya Corporation; JENOPTIK AG; Alcoa Fujikura Ltd.; BelOMA; KLA-Tencor Corporation; Diaprojector; Bausch and Lomb Inc. Eye-wear Division.