HOYA : Quarterly Report for the three months ended Sep.30,2018

October 31, 2018

Quarterly Report

2nd Quarter : 3 months ended September 30, 2018 Interim (1st Half) : 6 months ended September 30, 2018

Consolidated (HOYA CORPORATION and Consolidated Subsidiaries)

Part .1

2nd Quarter : from April 1 to September 30, 2018

• 1. Quarterly Consolidated Financial Highlights : p.1

• 2. Results of Operations : p.2

• 3. Quarterly Consolidated Financial Statements

  • (1) Quarterly Consolidated Statement of Financial Position : p.4

  • (2) Quarterly Consolidated Statement of Cash Flows : p.6

  • (3) Quarterly Consolidated Statement of Comprehensive Income : p.7

  • (4) Segment Information : p.8

• 4. ＜Reference＞Supplementary data for 2nd Quarter : p.11

Part .2

Interim (1st Half) : from April 1, 2018 to September 30, 2018

• 1. Interim Consolidated Financial Highlights : p.12

• 2. Interim Consolidated Financial Statements

  • (1) Interim Consolidated Statement of Financial Position : p.13

  • (2) Interim Consolidated Statement of Cash Flows : p.15

  • (3) Interim Consolidated Statement of Comprehensive Income : p.16

  • (4) Segment Information : p.17

• 3. ＜Reference＞Supplementary data for the Interim Period : p.20

Notes:

• 1. HOYA's fiscal year (FY) : from April 1 to March 31 of the following year.

• 2. These financial statements are excerpt translation of Japanese "Kessan Tanshin "and have been prepared for the references only of foreign investors.

HOYA CORPORATION

This report is provided solely for the information of professional analysts who are expected to make their own evaluation of the company. This report contains forward-looking statements that are based on management's assumptions and beliefs in light of the information currently available to it and therefore you should not place undue reliance on them.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from that anticipated in these statements. These factors include changes in economic conditions, trends in our major markets, currency exchange rates, etc.

We accept no liability whatsoever for any direct or consequential loss arising from any use of this report.

Part.1

October 31, 2018

1. Quarterly Consolidated Financial Highlights

HOYA CORPORATION and Consolidated Subsidiaries

1. Performance for the three months ended September 30, 2017 and 2018 (All operations *Notes)

( The yen amounts shown therein are rounded off to the nearest million.)Three months endedVariance

(1)Revenue and Profit before tax

Sep. 30, 2017 Sep. 30, 2018

(%)Revenue 135,772 142,018 4.6

Profit before tax

Ratio of profit before tax(%) Profit for the quarter

32,868 38,405 16.8 24.2% 27.0%

Ratio of profit for the quarter(%)

26,767 31,231 16.7 19.7% 22.0%

Profit attributable to owners of the Company

Ratio of profit attributable to owners of the Company(%) Basic earnings per share (yen)

27,166 20.0%

31,333 15.3 22.1%

70.11 82.53

Diluted earnings per share (yen)

69.92 82.37

As of

(2)Financial Position

Total assets

Total equity

Equity attributable to owners of the Company

Ratio of assets attributable to owners of the Company Assets attributable to owners of the Company per share (yen)

Jun. 30, 2018	Sep. 30, 2018
662,134	717,197
547,296	591,800
542,847	587,057
82.0%	81.9%
1,430.21	1,546.13

Three months ended

(3) Conditions of Cash Flows

Sep. 30, 2017 Sep. 30, 2018

Net cash generated from operating activities Net cash used in investing activities

39,675

40,062

-60,869 -19,616

Free cash flow

-21,194 20,447

Net cash provided by (used in ) financing activities Cash and cash equivalents at end of period

-53,890 331

231,570

252,294

2.Dividends per Share

Year ended/ending

Mar.31,2018 Mar.31,2019

Interim (Yen)

Year-end (Yen)

Annual (Yen)

30.00 45.00 75.00

45.00

N/A N/A

3.Other

Three months ended

Capital expenditure

R&D expenses

Sep. 30, 2017	Sep. 30, 2018
5,450	7,292
5,947	6,595

Notes:

"All operations" means here that the figures are including not only "Continuing operations" but also "Discontinued operations".

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from that anticipated in these statements. These factors include changes in economic conditions, trends in our major markets, or currency exchange rates.

2. Results of Operations

1) General Overview

The performance of the global economy during the second quarter of the consolidated fiscal year under review (three months ended September 30, 2018) varied sharply country to country. While the economy of the U.S. continued to expand, the economies of Europe and China slowed. Likewise, the economy of Japan continues to decelerate. However, fears about the global economy are rising as the protectionist stance of the United States provokes economic friction with other countries around the world.

Given this environment, sales of eyeglass lenses and contact lenses in health care related products in the Life Care segment rose year on year, as did sales of endoscopes within our medical related products domain. The combined performance of these products drove HOYA Group ("the Company") Life Care segment sales higher for the period.

The Information Technology segment reported higher sales of electronics-related semiconductor mask blanks, LCD photomasks and glass substrates for hard disk drives compared with the same period in the prior fiscal year. Imaging-related product sales fell year on year. As a result, the Information Technology segment as a whole reported higher revenues year on year.

As a result, sales for the consolidated second quarter increased 4.6% year on year, reaching 142,018 million yen.

Quarterly profit before tax amounted to 38,405 million yen with 31,231 million yen in profit, representing year-on-year increases of 16.8% and 16.7%, respectively. Profit before tax ratio was 27.0%, representing a year-on-year increase of 2.8 points.

Disclosed figures and change ratios are for businesses with continuing operations. There were no discontinued businesses in the second quarter or in the same quarter of the previous year.

2) Segment Overview

The following discusses results by reportable segment. (Segment sales represent sales to external customers.)

Life Care

While eyeglass lens sales fell in Japan due to the impact of typhoons and earthquakes, performance was strong in the Americas. Adding the positive impact of our purchase of Performance Optics, LLC and other factors, eyeglass lens reported higher sales year on year.

New store openings of our Eyecity contact lens specialty stores, as well as new customer expansion efforts at existing stores, resulted in higher year-on-year sales for contact lenses.

Endoscope sales were higher year on year, supported by strong performance in the U.S. and Europe in response to measures to strengthen our sales systems.

Sales of intraocular lenses for cataracts were lower year on year. In Europe, our highly competitive Vivinex product drove sales higher, while sales were lower in Asia Pacific due to inventory level optimization at sales agents in the region.

As a result, sales for the Life Care segment grew 4.3% year on year, reaching 91,887 million yen. Segment profit rose 16.9% year on year to 16,955 million yen.

Information Technology

Sales of mask blanks for semiconductors rose, owing to active development demand for the next-generation technology of extreme ultraviolet lithography (EUV), as well as strong demand for cutting-edge products.

Sales revenues of photomasks for LCDs rose on the back of recovering research and development demand for LCDs in smartphones and other products, as well as our capture of demand for high-end products.

While our 2.5-inch products make up the majority of sales in this area, falling prices for NAND flash memory led to greater erosion by solid state drives, resulting lower 2.5-inch products sales. Sales revenues of 3.5-inch products grew significantly, adopted for use in data centers, which are the end users of these products. As a result of these and other factors, glass substrates for hard disk drives reported higher sales year.

While contraction of the digital camera market slowed last fiscal year, contraction began again due to the encroachment of smartphones, also affecting our sales. The impact of production adjustments in China led to lower sales of our products for use in surveillance cameras. As a result of these and other factors, our overall Imaging related Products reported lower sales year on year.

As a result, Information Technology segment sales revenues rose 4.6% year on year, reaching 48,974 million yen. Segment profit rose 11.6% year on year to 21,672 million yen.

Other

The HOYA Group Other business segment consists of new businesses and businesses offering information systems services. The Other segment reported sales revenues of 1,156 million yen, an increase of 29.2% year on year. Segment profit rose by a significant margin, reaching 140 million yen.

Subsequent events

Definitive agreement to acquire two medical device companies

The Company has entered into a definitive agreement to acquire two medical device companies: US-based

Mid Labs and Germany-based Fritz Ruck. This acquisition will help to broaden HOYA Surgical Optics' product portfolio and accelerate the growth of IOL sales. The consideration for the acquisition is about 19.2 billion yen and the acquisition date will be by the end of the year ending March 31, 2019. The impact of the consolidated results for the year ending March 31, 2019, is immaterial.

Resolution on cash dividends

On October 31, 2018, a resolution was made by the Company's board of directors for the payment of a cash dividend to shareholders of record on September 30, 2018 of 17,086 million yen (45 yen per common share).

3.Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Statement of Financial Position

(HOYA Corporation and its subsidiaries)

(Millions of Yen)

As of Jun. 30, 2018		As of Sep. 30, 2018		Variance		As of Sep. 30, 2017
Amount	(%)	Amount	(%)	Amount	(%)	Amount	(%)
ASSETS NON-CURRENT ASSETS Property, plant and equipment-net Goodwill Intangible assets Investments in associates Long-term financial assets Other non-current assets Deferred tax assets	105,543 32,916 36,307 1,462 42,662 2,329 9,241	109,454 33,816 37,155 1,450 43,543 2,363 10,061	3,911 899 848 -12 881 34 820	111,580 37,245 43,099 1,520 7,467 2,596 10,353
Total non-current assets	230,461	34.8	237,841	33.2	7,380	3.2	213,859	32.3
CURRENT ASSETS Inventories Trade and other receivables Other short-term financial assets Income tax receivables Other current assets Cash and cash equivalents	72,875 108,872 4,895 923 17,901 226,208	75,826 111,248 16,462 802 22,723 252,294	2,951 2,376 11,567 -120 4,822 26,086	74,364 108,342 17,244 476 16,461 231,570
Total current assets	431,674	65.2	479,356	66.8	47,682	11.0	448,456	67.7
Total assets	662,134	100.0	717,197	100.0	55,062	8.3	662,314	100.0

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