-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FJvaFvxImf3i5DG82MNt9pkQscjZfiutkwoLOKf67X+3FyShL0+EyNHYWE0sU3H8 wdE9xKTn+qRZ7hVSmCD/LQ== 0000317891-03-000019.txt : 20030502 0000317891-03-000019.hdr.sgml : 20030502 20030502100833 ACCESSION NUMBER: 0000317891-03-000019 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030501 FILED AS OF DATE: 20030502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RICOH CO LTD CENTRAL INDEX KEY: 0000317891 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 000000000 STATE OF INCORPORATION: M0 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-68279 FILM NUMBER: 03678240 BUSINESS ADDRESS: STREET 1: 15-5 1-CHOME MINAMI-AOYAMA STREET 2: MINATO-KU CITY: TOKYO 107-8544 JAPAN STATE: M0 ZIP: 00000 MAIL ADDRESS: STREET 1: 15-5 1-CHOME MINAMI-AOYAMA STREET 2: MINATO-KU CITY: TOKYO 107-8544 JAPAN STATE: M0 ZIP: 00000 6-K 1 r6kh15may1.txt FLASH REPORT 3-31-2003 FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of May, 2003 Commission File Number 2 - 68279 RICOH COMPANY, LTD. ----------------------------------------------- (Translation of Registrant's name into English) 15-5, Minami-Aoyama 1-Chome, Minato-ku, Tokyo 107-8544, Japan ------------------------------------------------------------- (Address of Principal Executive Offices) (Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.) Form 20-F X Form 40-F __ (Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): __ ) (Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): __ ) (Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.) Yes __ No X (If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-__ ) - -------------------------------------------------------------------------------- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Ricoh Company, Ltd. ------------------------------ (Registrant) By: /S/ Zenji Miura ------------------------------ Zenji Miura Senior Vice President General Manager of Finance & Accounting Division May 1, 2003 - -------------------------------------------------------------------------------- [LOGO] RICOH FLASH REPORT Year ended March 31, 2003 (Results for the Period from April 1, 2002 to March 31, 2003) Three months ended March 31, 2003 (Results for the Period from January 1, 2003 to March 31, 2003) PERFORMANCE OUTLINE (CONSOLIDATED) (1) Year ended March 31, 2003, 2002 and 2004 (Forecast)
(Billions of yen) - --------------------------------------------------------------------------------------------- ------------------------------- Year ended Year ended Year ended March 31, 2003 March 31, 2002 March 31, 2004 (Results) (Results) Change (Forecast) Change - --------------------------------------------------------------------------------------------- ------------------------------- Domestic sales 896.0 902.6 -0.7% 912.0 1.8% Overseas sales 842.3 769.6 9.4% 893.0 6.0% Net sales 1,738.3 1,672.3 3.9% 1,805.0 3.8% Gross profit 745.3 699.9 6.5% 786.0 5.5% Operating income 133.6 129.6 3.1% 147.0 10.0% Income before income taxes 123.4 113.9 8.4% 137.0 11.0% Net income 72.5 61.6 17.7% 79.0 8.9% - -------------------------------------------------------------------------------------------- ---------------------------- Exchange rate (Yen/US$) 121.96 125.10 -3.14 120.00 -1.96 Exchange rate (Yen/EURO) 121.00 110.60 10.40 120.00 -1.00 - -------------------------------------------------------------------------------------------- ---------------------------- Net income per share (yen) 99.79 88.27 11.52 106.38 6.59 Net income per share-diluted (yen) 96.81 82.46 14.35 - - - -------------------------------------------------------------------------------------------- ---------------------------- Return on equity (%) 11.2 10.4 0.8 - - Income before income taxes on total assets (%) 6.6 6.4 0.2 - - Income before income taxes on net sales (%) 7.1 6.8 0.3 7.6 0.5 - -------------------------------------------------------------------------------------------- ---------------------------- Total assets 1,884.9 1,832.9 51.9 - - Shareholders' equity 657.5 633.0 24.4 - - Interest-bearing debt 484.6 561.4 -76.7 - - - -------------------------------------------------------------------------------------------- ---------------------------- Equity ratio (%) 34.9 34.5 0.4 - - - -------------------------------------------------------------------------------------------- ---------------------------- Shareholder's equity per share (yen) 885.41 870.63 14.78 - - - -------------------------------------------------------------------------------------------- ---------------------------- Cash flows from operating activities 185.7 105.1 80.6 - - Cash flows from investing activities -98.1 -81.4 -16.7 - - Cash flows from financing activities -67.1 36.2 -103.3 - - Cash and cash equivalents at end of period 189.2 170.1 19.0 - - - -------------------------------------------------------------------------------------------- ---------------------------- Capital expenditures 73.9 75.6 -1.7 75.0 1.0 Depreciation for tangible fixed assets 69.5 73.7 -4.2 70.0 0.4 R&D expenditures 83.5 80.7 2.7 85.0 1.4 - -------------------------------------------------------------------------------------------- ---------------------------- Number of employees (Japan) (thousand people) 39.5 40.0 -0.5 - - Number of employees (Overseas) (thousand people) 35.1 34.2 0.9 - - - -------------------------------------------------------------------------------------------- ----------------------------
RICOH COMPANY, LTD. * The Company bases the forecast estimates for March 31, 2004 above upon information currently available to management, which involves risks and uncertainties that could cause actual results to differ materially from those projected. 1 (2) Three months ended March 31, 2003 and 2002
(Billions of yen) - --------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended Change March 31, 2003 March 31, 2002 - --------------------------------------------------------------------------------------------------------------------- Domestic sales 236.2 238.1 -0.8% Overseas sales 224.5 212.7 5.5% Net sales 460.7 450.9 2.2% Gross profit 199.7 184.4 8.3% Operating income 38.9 40.0 -2.8% Income before income taxes 37.8 35.5 6.3% Net income 21.1 18.3 15.7% - --------------------------------------------------------------------------------------------------------------------- Exchange rate (Yen/US$) 119.04 132.50 -13.46 Exchange rate (Yen/EURO) 127.63 116.21 11.42 - --------------------------------------------------------------------------------------------------------------------- Net income per share (yen) 29.17 25.89 3.28 Net income per share-diluted (yen) 28.39 24.22 4.17 - --------------------------------------------------------------------------------------------------------------------- Return on equity (%) 3.2 3.0 0.2 Income before income taxes on total assets (%) 2.0 2.0 0.0 Income before income taxes on net sales (%) 8.2 7.9 0.3 - --------------------------------------------------------------------------------------------------------------------- Capital expenditures 18.8 19.0 -0.1 Depreciation for tangible fixed assets 18.1 20.3 -2.2 R&D expenditures 22.4 22.1 0.2 - ---------------------------------------------------------------------------------------------------------------------
(3) Three months ended June 30, 2003 (Forecast) and 2002
(Billions of yen) - --------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended June 30, 2003 June 30, 2002 Change (Forecast) (Results) - --------------------------------------------------------------------------------------------------------------------- Domestic sales 228.5 224.8 1.6% Overseas sales 213.5 203.4 5.0% Net sales 442.0 428.2 3.2% Gross profit 194.5 186.4 4.3% Operating income 37.0 35.9 3.0% Income before income taxes 34.5 32.2 6.9% Net income 20.0 19.5 2.5% - --------------------------------------------------------------------------------------------------------------------- Exchange rate (Yen/US$) 120.00 127.01 -7.01 Exchange rate (Yen/EURO) 120.00 116.56 3.44 - --------------------------------------------------------------------------------------------------------------------- Capital expenditures 17.5 17.6 -0.1 Depreciation for tangible fixed assets 17.0 16.9 0.0 R&D expenditures 20.0 18.4 1.5 - ---------------------------------------------------------------------------------------------------------------------
(4) Half year ended September 30, 2003 (Forecast) and 2002
(Billions of yen) - --------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended September 30, 2003 September 30, 2002 Change (Forecast) (Results) - --------------------------------------------------------------------------------------------------------------------- Domestic sales 459.0 449.5 2.1% Overseas sales 436.0 407.2 7.1% Net sales 895.0 856.8 4.5% Gross profit 385.5 360.6 6.9% Operating income 70.0 61.3 14.1% Income before income taxes 66.0 55.6 18.5% Net income 37.0 33.5 10.4% - --------------------------------------------------------------------------------------------------------------------- Exchange rate (Yen/US$) 120.00 123.08 -3.08 Exchange rate (Yen/EURO) 120.00 116.95 3.05 - --------------------------------------------------------------------------------------------------------------------- Capital expenditures 37.5 38.4 -0.9 Depreciation for tangible fixed assets 34.0 33.8 0.1 R&D expenditures 41.0 40.2 0.7 - ---------------------------------------------------------------------------------------------------------------------
2 INDEX Page Ricoh Company, Ltd. and Consolidated Subsidiaries . Performance Outline 1 . Ricoh Company, Ltd. and Consolidated Subsidiaries -Flash Report 4 . Group Position 5 . Policies 6 . Performance 9 . Consolidated Performance 1. Consolidated Statements of Income 17 2. Consolidated Sales by Category 18 3. Consolidated Balance Sheets 20 4. Retained Earnings 20 5. Consolidated Statements of Cash Flow 21 6. Segment Information 22 7. Significant Accounting Policies (Consolidated) 26 8. Notes to Consolidated Financial Statements 27 Appendix A 1. Consolidated Quarterly Performance Outline A1 2. Consolidated Sales by Product Category A2 3. Forecast of Consolidated Sales by Product Category A4 Appendix B Schedules A5 RICOH COMPANY, LTD. AND CONSOLIDATED SUBSIDIARIES FLASH REPORT (CONSOLIDATED. YEAR ENDED MARCH 31, 2003) DATE OF APPROVAL FOR THE FINANCIAL RESULTS FOR THE YEAR ENDED MARCH 31, 2003, AT THE BOARD OF DIRECTORS' MEETING: MAY 1, 2003 1. RESULTS FOR THE PERIOD FROM APRIL 1, 2002 TO MARCH 31, 2003 (1) Operating Results (Millions of Yen) - ------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 - ------------------------------------------------------------------------------- Net sales 1,738,358 1,672,340 (% change from the previous fiscal year) 3.9 8.7 Operating income 133,654 129,695 (% change from the previous fiscal year) 3.1 23.4 Income before income taxes 123,470 113,950 (% change from the previous fiscal year) 8.4 16.6 Net income 72,513 61,614 (% change from the previous fiscal year) 17.7 15.8 Net income per share-basic (Yen) 99.79 88.27 Net income per share-diluted (Yen) 96.81 82.46 Return on equity (%) 11.2 10.4 Income before income taxes on total assets (%) 6.6 6.4 Income before income taxes on net sales (%) 7.1 6.8 - ------------------------------------------------------------------------------- Notes: i. Equity in income of affiliates: (Yen) 2,403 million (Yen) 1,891 million in previous fiscal year) ii. Some changes in accounting method have been made. iii. Average number of shares outstanding (consolidated): 726,659,698 shares; 698,025,167 shares (previous previous fiscal year) iv. Percentage changes in net sales, operating income, income before income taxes, and net income based on the previous fiscal year. v. Net income per share is calculated as required by SFAS No. 128. (2) Financial Position (Millions of Yen) - -------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 - -------------------------------------------------------------------------------- Total assets 1,884,922 1,832,928 Shareholders' equity 657,514 633,020 Equity ratio (%) 34.9 34.5 Equity per share (Yen) 885.41 870.63 - -------------------------------------------------------------------------------- Note: Number of shares outstanding as of March 31, 2003: 742,608,635 shares (727,086,738 shares as of March 31, 2002) (3) Cash Flow (Millions of Yen) - -------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 - -------------------------------------------------------------------------------- Cash flows from operating activities 185,742 105,138 Cash flows from investing activities -98,199 -81,421 Cash flows from financing activities -67,143 36,235 Cash and cash equivalents at end of period 189,243 170,172 - -------------------------------------------------------------------------------- (4) Items relating to the scale of consolidation and the application of the equity method: Number of consolidated subsidiaries: 334; nonconsolidated subsidiaries: 37; affiliated companies: 24 (5) Changes in accounting method, etc.: Consolidated subsidiaries: 13 additions; 10 removals Companies accounted for by the equity method: 4 additions; 16 removals Notes: Consolidated financial statements of the Company and its consolidated subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America.
2. FORECAST OF OPERATING RESULTS FROM APRIL 1, 2003 TO MARCH 31, 2004 (Millions of Yen) - --------------------------------------------------------------------------------------- Half year ended Year ended September 30, 2003 March 31, 2004 - --------------------------------------------------------------------------------------- Net sales 895,000 1,805,000 Operating income 70,000 147,000 Income before income taxes 66,000 137,000 Net income 37,000 79,000 - ---------------------------------------------------------------------------------------
Note: Net income per share (Consolidated) 106.38 yen In accordance with Japanese regulations, Ricoh has issued forecast for its financial results for the fiscal year ending March 2004. These forecast are forward-looking statements based on a number of assumptions and beliefs in light of the information currently available to management and subject to significant risks and uncertainties. 4 GROUP POSITION The Ricoh Group comprises 371 subsidiaries and 24 affiliates. Their development, manufacturing, sales, and service activities center on office equipment business and other businesses (optical equipments, semiconductors and measuring equipments). Ricoh Company, Ltd., a parent company, heads development. The parent company and subsidiaries or affiliates maintain an integrated domestic and international manufacturing structure. Below, we have listed our main product areas and the positions of key subsidiaries and affiliates. (Office Equipment Business) In this business category, Ricoh provides products and systems that support the enhancement of the office productivity of customers. Major products include: Digital/analog copiers, MFPs (multifunctional printers), laser printers, facsimile machines, digital duplicators, optical disks. Ricoh also provides solution systems including personal computers and servers, utilizing its information technology. Another business Ricoh also provides are support, service, and related supplies, as well as useware including IT environment setup and network administration. [Main Subsidiaries and Affiliates] Production Japan... Tohoku Ricoh Co., Ltd., Ricoh Elemex Corporation, Ricoh Unitechno Co., Ltd., Hasama Ricoh Inc., Ricoh Microelectronics Co., Ltd., and Ricoh Keiki Co., Ltd. The Americas... Ricoh Electronics, Inc. Europe... Ricoh UK Products Ltd., Ricoh Industrie France S.A. Other regions... Ricoh Asia Industry (Shenzhen) Ltd., Shanghai Ricoh Facsimile Co., Ltd., and Sindo Ricoh Co., Ltd. Sales and Service Japan... Ricoh Tohoku Co., Ltd., Ricoh Chubu Co., Ltd., Ricoh Kansai Co., Ltd., Ricoh Chugoku Co., Ltd., Ricoh Kyushu Co., Ltd., Tokyo Ricoh Co., Ltd., Osaka Ricoh Co., Ltd. and 43 other sales companies nationwide, Ricoh Technosystems Co., Ltd., NBS Ricoh Co., Ltd., Ricoh Leasing Co., Ltd., and Ricoh Logistics System Co., Ltd. The Americas... Ricoh Corporation, Savin Corporation, and Lanier Worldwide, Inc. Europe... Ricoh Europe B.V., Ricoh Deutschland GmbH, Ricoh UK Ltd., Ricoh France S.A., Ricoh Espana S.A., Ricoh Italia S.p.A., and NRG Group PLC Other regions... Ricoh China Co., Ltd., Ricoh Hong Kong Ltd., Ricoh Asia Pacific Pte, Ltd., Ricoh Australia Pty, Ltd., and Ricoh New Zealand Ltd. (Other Businesses) Manufacturing and marketing optical equipment, semiconductors and measuring equipment, and providing leasing and logistics services [Main Subsidiaries and Affiliates] Production Japan... Ricoh Optical Industries Co., Ltd., Ricoh Elemex Corporation Overseas... Taiwan Ricoh Co., Ltd. Sales Ricoh Corporation, NRG Group PLC Other Ricoh Leasing Co., Ltd., Ricoh Logistics System Co., Ltd., and Coca-Cola West Japan Co., Ltd. (affiliated company) (Chart of Business System) The chart of group position is omitted. 5 POLICIES (1) Basic Management The Ricoh Group's vision is to be a winner in the 21st century. Under that banner, we aim to continue to provide high reliability and build new value so that we can contribute to productivity improvement and knowledge creation for individuals working anytime, anywhere, providing high reliability and new value creation. Our proactive approach covers not only products and services for traditional office setups but also customers working at any time and place in a broadband environment. Our three-year 14th medium-term management plan, which ends in March 2005, has five basic objectives: i. Realize a "vital and motivated culture" ii. Strengthen technologies to become the World No.1 product manufacturing company iii. Build "Customer-Friendly" and "Environmentally-Friendly" company iv. Strengthen each business unit and revolutionize group business structures v. Strengthen management constitution for competitive advantage (2) Medium-Term Management Strategies We are meeting the challenges of digital networking in our core competence of office equipment. We have accordingly endeavored since our 13th medium-term management plan to not only manufacture such equipment as copiers and printers but also overhaul our operational structure so we can help our customers improve or enhance productivity through our offerings. In the years ahead, demand should continue to rise for productivity enhancement. At the same time, further advances in digital networking will generate greater reliance on color-based documents and expand the amount of information, making it increasingly critical for customers to more efficiently manage their TDV (Total Document Volume) from copiers and printers. Our 14th medium-term management plan thus focuses on building total document volume (which includes increasing added value per page) and thereby broadening our revenues and earnings base. Our basic strategy has three goals: i. Replacing monochrome products with color models Provide a full lineup of compact color machines at prices comparable to those of monochrome models, thus securing new markets by meeting new demand for color. ii. Expanding sales of high-speed models Attract more customers through fast machines providing competitive advantages in terms of purchase price, maintenance charges, and reliability. iii. Deploy printing solutions Suggest ways for customers to optimize the total output costs of their copiers and printers, thus expanding equipment sales and building total document volume. Following are Ricoh's major basic strategic achievements in fiscal 2003. In terms of replacing monochrome products with color models, the Company continued to win top marks in Japan and abroad for its IPSiO Color 8000 series (Aficio AP 3800C overseas) of fast color laser printers, which deliver color performance at monochrome speed and price. During the term, we released the Imagio Neo C240/C320 series of multifunctional printers (MFPs) for regular offices, which helped expand our share of the domestic color copier market. We also started selling this series overseas as the Aficio 1224C/1232C. In high-speed models, the imagio MF105Pro (Aficio 1050 overseas) digital copier was very well received domestically and abroad for its affordable pricing maintenance fees and reliability. This machine attracted more customers seeking high-volume copying and output. We continued to make progress in printing solutions. In the European and U.S. markets in particular, we drew on a global service and support structure that optimizes total printing costs for copiers and printers to steadily increase the number of major accounts worldwide. During the term, we established Ricoh China Co., Ltd., as a holding company to broaden our operations in the highly promising Chinese market. Ricoh has already achieved impressive results to date in China, and the new subsidiary is strategically expanding our business by integrating sales, production, and development. 6 Ricoh is striving to bolster its technological capabilities so it can become the world No. 1 product manufacturing company, providing the most competitive products and services. Specific focuses include technologies to develop next-generation, high-speed color imaging equipment and designing and developing hardware and software that allow users to freely and simply connect and operate various office machines. We are also pursuing the creation of environmentally friendly offerings. In the year under review, we set up four research centers within the Research and Development Division to support the development of basic technologies, including one specializing in photonics and another concentrating on environmental technologies. We also established operations within the Software Research and Development Division. During the term, we decided to make Tohoku Ricoh Co., Ltd., a wholly owned subsidiary. This was in line with our goal of reinforcing Group development and design capabilities to ensure an integrated strategic approach while delivering cost-competitive offerings. (3) Basic Stance and Policies on Corporate Governance In driving to boost competitiveness, Ricoh is committed to management transparency based on its corporate philosophy and ethics. We have taken the following steps to maintain good corporate governance: i. Management organization and other corporate governance structures related to decision-making, execution, and auditing .. Adopting an auditor system .. Introducing an executive officer system, transferring authority to divisions to clarify their roles .. Maintaining a board of 13 directors, including two external officials, to handle major decisions on Group management .. Strengthening auditing of individual divisions and establishing The group Management Committee to formulate and implement optimal strategies for the entire Group .. Maintaining legally required auditing through four auditors, including two external ones, and instituting independent internal auditing through the auditing office .. Having accounts auditors conduct assessments at appropriate times [Chart of Ricoh's corporate governance system] The chart of Ricoh's corporate governance system is omitted. ii. Conflicts of interest among external directors and auditors None iii. Corporate governance initiatives implemented in past year Ricoh established a Corporate Social Responsibility Office to help the Company serve communities even better. 7 (4) Challenges Economic prospects remain unclear in the United States, which drives the global economy. At the same time, the Japanese equity markets remain in the doldrums, and we estimate that the global economy will continue to suffer low growth. On top of that, competition is very intense in the color and digital networking fields. The Ricoh Group's prime priorities in continuing to achieve growth in such a tough operating environment are to create new customer value while further improving management efficiency, thereby bolstering corporate competitiveness. It is critical for us to become the world No. 1 product manufacturing company so we can identify new needs and provide superior value. To that end, we will redouble efforts to provide new value through out customer satisfaction-oriented management while solidifying our technological clout so we can deliver new value through our products and services. In building and providing such value, Ricoh aims to meet its goals of being people-friendly and environmentally-friendly. In other words, we are pursuing ease of use so customers can take full advantage of products and services that are becoming increasingly complex as digital networking progresses. We are also endeavoring to reinforce our environmental management as part of our mission without compromising profitability. We are making steady progress in streamlining efficiency through process reforms in all Group fields as part of a drive to improve capital efficiency and earnings. In addition, we aim to slash costs and thereby raise price competitiveness, thus realizing a low-cost management structure that can provide high efficiency in deflationary environments. It is also most important management challenge to prevent the sorts of scandals that have occurred in Japan and abroad recently that have shaken community trust. The Group is addressing this issue in line with its commitment to its responsibilities as a member of society, striving to serve the interests of its customers and other stakeholders while strengthening its management organization. (5) Dividend Policy Ricoh endeavors to ensure stable dividends by improving profitability while increasing retained earnings to reinforce its corporate structure and cultivate new businesses. Ricoh uses those retained earnings to strengthen core businesses and invest in new fields from medium- and long-term perspectives. (6) Thinking and Policies on Reducing Minimal Investment Lots Ricoh plans to keep close tabs on investment patterns and its shareholder composition, and will consider taking steps to alter the minimum lot requirement if need be. Ricoh believes that reducing the minimum number of shares required to invest in Ricoh could help attract a broader range of investors to the equity markets while enhancing the liquidity of its shares. However, many investors already trade in Ricoh's shares, so management has concluded that there is no immediate need to reduce the minimum investment lot. 8 PERFORMANCE *Overview In fiscal 2003, ended March 31, 2003, consolidated net sales increased 3.9%, to (Yen)1,738.3 billion. This was the ninth consecutive revenue growth. The average exchange rates prevailing during the term were (Yen)121.96 to the dollar (up (Yen)3.14) and (Yen)121.00 to the euro (down (Yen)10.40). The sales increase would have been 2.7% without the impact of foreign exchange. Domestic sales were down 0.7%, to (Yen)896.0 billion. On the positive side sales increased for printing systems such as MFPs (multifunctional printers) and laser printers. Sales were also favorable for useware, document management, and other areas of the solutions business. In contrast, sales of standalone analog equipment fell amid the shift toward MFPs, while sales were off for personal computer and servers due primarily to the sluggish domestic information technology demand. Sales declined for measuring equipment as a result of slow demand cycle. Domestic sales accounted for 51.5% of net sales, down 2.5 percentage points. Overseas sales increased 9.4%, to (Yen)842.3 billion. Sales were steady despite an economic slowdown in the United States and the turmoil in the Middle East. The Company continued to perform well in Europe, where the economic environment stabilized, and in other areas. In terms of sales by product lines, sales of core digital equipment increased solidly, while sales of strategic focused printing systems increased significantly in Europe and the United States. Optical disc and semiconductors operations enjoyed favorable sales. Without the foreign exchange effect, overseas sales would have gained 6.8%. These sales represented 48.5% of net sales, up 2.5 percentage points. Gross profit increased 6.5%, to (Yen)745.3 billion. In both Japan and abroad, sales were up for high-margin, high-value-added products, notably MFPs and laser printers. The Company contributed to reduce costs continuously, while operations were affected by the yen's depreciation against the euro. The Company incurred additional costs owing to cover quality problems on some metering equipment. Selling, general and administrative expenses increased 7.3%, to (Yen)611.6 billion, reflecting strategic spending on research and development and on basic systems development. As other cost and expense item, the company increased accrued expenses due to the introduction of a total compensation system for social insurance premiums. The Company has valued long-lived assets appropriately, adapting the expected present value current value approach of future cash flow. As a result of the above factors, operating income increased 3.1%, to (Yen)133.6 billion. Interest and dividend income decreased due primarily to sluggish financial markets. On the other hand, foreign exchange losses reduced, while the Company constrained interest-bearing debt by reinforcing cash management systems in Japan, the United States, and Europe. Ricoh has valued its holding marketable securities appropriately in accordance with generally accepted accounting principle. As the result, income before income taxes, minority interests and equity in earnings of affiliates increased 8.4%, to (Yen)123.4 billion. The Company remesured its deferred tax assets and liabilities in response to the introduction of a corporate enterprise tax system and other change in tax laws. Ricoh posted losses on minority holdings in measuring equipment affiliates. The profit impact from the transfer of the substitutioned portion of Employees' Pension Fund to the Japanese Government will be recognized when the autual transfer could be made later in this year. Net income surged 17.7% for the year, to (Yen)72.5 billion, the 11th consecutive increased and the ninth consecutive record high. In terms of the business segment, operating income increased due primarily to increase in sales of high-margin, high-value-added products and export increase to overseas. In other businesses, Ricoh posted a decline in its measuring equipment business due to spending to cover quality problems, while a recovery in revenues and earnings from semiconductor operations. In terms of the geographic segment, operating income decreased in Japan due to increase of overseas production under its policy of optimally locating manufacturing operations closer to customer markets and domestic sales decrease. However net sales and operating income increased internationally as sales expanded for digital equipment and networkable systems and strategy of locating production mentioned above. Year-end cash dividends per share are proposed (Yen)7.00 per share. Combined with interim dividends of the same amount, total dividends for fiscal 2003 will be (Yen)14.00. [Graph 1] Consolidated performance The graphs are omitted. The data in the omitted graphs can be shown at the schedule 1. 9 *Consolidated Sales by Product Line Office Equipment (sales up 2.4%, to (Yen)1,520.5 billion) To support customers more efficiently manage their TDV(total document volume), the Ricoh Group offers its solution proposal for these customers optimize their total printing costs. To realize this business target, the Ricoh is progressing digitalization, networking, colorlization and high speeding, shifting away from standalone analog equipments. As a result of these efforts, Ricoh greatly expanded sales of printing systems such as MFPs and laser printers, while increasing revenues from useware, software, and other solutions businesses. In Japan, sales of personal computer and servers declined due primarily to poor economic conditions and sluggish information technology demand. Overseas sales increased, particularly in Europe and other regions. Demand was slow in the United States due primarily to the economic slowdown and the turmoil in the Middle East, while the yen's rise against the dollar also affected operations. Nonetheless, the Company performed solidly as a result of its strengthened sales networks in the United States. Sales of office equipment thus advanced 2.4%, to (Yen)1,520.5 billion. Imaging Solutions (sales down 8.0%, to (Yen)859.7 billion) In the digital imaging systems, the Company strengthened its lineup with new offering in digital plain-paper copier (PPC) lineup, which covers from the low-end model such as Imagio MF 1340/1540 series (Aficio 1013/1015 overseas) to the high-speed model such as Imagio MF 105 Pro (Aficio 1050 overseas). Domestically, sales of digital imaging systems decreased due to the depressed economy and the shift toward printing systems. Overseas, sales of fax machines and other decreased, although digital PPC sales increased in Europe and other regions. As a result of these factors, overall sales of digital imaging systems decreased 4.2%. In other imaging systems, sales fell 16.8%, reflecting the trend away from analog type equipments to digital type equipment and MFPs. In the imaging solutions field, its sales increased 8.0%, to (Yen)859.7 billion, reflecting Ricoh's strategies. Imaging solutions accounted for 49.5% of consolidated net sales, down 6.3 %. Networking Input/Output Systems (sales up 34.6%, to (Yen)463.3 billion) In the printing systems, Ricoh released high speed, more networkable and color offerings and further expanded sales of printing equipments to meet customer needs. In MFPs, the sales of the Imagio Neo 750/600 series (Aficio 1075/1060 overseas), the Imagio Neo 105 Pro (Aficio 1050 overseas) contributed to the sales growth. In laser printers, the IPSiO Color 6000/7100 (in Japan) and AP 3800C (in overseas) increased its sales volume. Overall sales of printing systems thus increased 36.6%. Sales of other input/output systems increased 21.2%. Although up a year earlier, domestic sales of CD-R/RW decreased due to a shift toward new standard DVD. In contrast, sales of DVD in the United States and CD-R/RW shipments to other regions increased favorably. As a result of above, sales in networking input/ output systems increased 34.6%, to (Yen)463.3 billion. Networking input/output systems accounted for 26.7% of net sales, up 6.1 %. Network System Solutions (sales down 4.6%, to (Yen)197.4 billion) Ricoh has strengthened its solution business, such as useware, document management and software. These areas allow the Company to help customers optimize their total printing costs. Sales in Japan and overseas increased well. In contrast, sales of personal computers and servers continued to decline in Japan, reflecting sluggish information technology spending. Other Businesses (sales up 16.5%, to (Yen)217.7 billion) Sales in other business increased 16.5%, to (Yen)217.7 billion. This improvement reflected a recovery in the domestic semiconductor business, as well as solid results in Europe and other regions. On top of that, the Company enjoyed steady gains in leasing and other operations. In contrast, sales decreased for measuring equipments due to stagnant demand cycle. [Graph 2] Consolidated sales by product line The graphs are omitted. The data in the omitted graphs can be shown at the schedule 2. 10 * Consolidated Sales by Geographic Area Japan (sales down 0.7%, to (Yen)896.0 billion) Although the domestic economy remains very unfavorable, Ricoh responded to the customer needs, by pursuing product and sales strategies of products, which led to gains in sales of printing systems such as MFPs and printers. In the solutions business, which encompasses useware and document management, the Company's proposals for improving customers' total cost performance were well received, leading to higher sales in this area. At the same time, sales of standalone analog equipments fell amid the shift toward MFPs and color models, while personal computers and servers sales also decreased. In other businesses, sales of measuring equipments decreased due to poor demand cycle, although demand in semiconductor operations began to recover. As the results, sales in Japan decreased 0.7%, to (Yen)896.6 billion. Domestic operations accounted for 51.5% of net sales, down 2.5 percentage points. The Americas (sales up 0.6%, to (Yen)343.9 billion) Ricoh further broadened and reinforced its sales network, especially in North America, against a background of a slower U.S. economy, the turmoil in the Middle East and severe competition. The Company stepped up sales of new printing systems that matched a customer demand shift away from analog offerings toward networked digital PPCs and color models, and strove to expand sales to major accounts. Sales were solid for new standards DVD. Sales in the Americas increased 0.6%, to (Yen)343.9 billion. After factoring out the yen's appreciation against the dollar, it gained 3.2%. Europe (sales up 13.9%, to (Yen)354.4 billion) With European economies remaining relatively stable, sales of digital PPCs and printing systems increased. Ricoh strengthened its sales network continuously reinforced its brand clout. These efforts helped the Company to maintain its top share of the European market for copiers and MFPs. The yen's depreciation against the euro also contributed to higher sales. As the results, sales in Europe increased 13.9%, to (Yen)354.4 billion. Others (sales up 23.4%, to (Yen)143.9 billion) In China and other Asian markets, a full-fledged shift in business equipment to digital networked and color models led to an increase in sales of digital PPCs and printing systems. Demand for optical discs also continued to improve, while semiconductor sales remained solid. Sales in Others increased 23.4%, to (Yen)143.9 billion. During the term, Ricoh established a new regional headquarter in Shanghai to reinforce its operations in the promising Chinese market. Ricoh aims to further integrate its production, sales, and services while focusing even more on customer needs to strengthen its revenues and earnings in China. [Graph 3] Consolidated sales by geographic area The graphs are omitted. The data in the omitted graphs can be shown at the schedule 3. 11 *Segment Information BUSINESS SEGMENT Office Equipment In core imaging solutions and printing systems, Ricoh released low-end through fast models with high value added offerings that manage everything from document input / to output to document sharing and administration. Sales thus increased steadily. The laser printers also increased its sale in Japan and abroad, particularly for color models. Sales of useware, software, and other solutions business areas increased match to customer needs. Optical disc sales were favorable, particularly in the Americas and other areas. As the results, sales of business equipment therefore advanced 2.4%, to (Yen) 1,520.5 billion. Ricoh spent strategic expenditures to research and development and basic systems development. On the other hand, increase in sales of high-value-added products, ongoing cost reductions in production and administrative areas, and the yen's depreciation were favorably effected to the profitability. Operating income 5.2%, to (Yen) 190.7 billion, the operating margin rose 0.3 percentage point, to 12.5%. Capital expenditures decreased from the previous fiscal year, despite higher spending on new production lines and investment on research and development. Total assets decreased due primarily to the decrease in tangible fixed assets, collection of account receivables and inventories reduction. OTHER BUSINESSES In the semiconductor business, the Company enjoyed a recovery in domestic demand and buoyant sales overseas. Leasing and other businesses performed steadily. As a result, sales of other businesses increased 15.6%, to (Yen) 220.5 billion. At the same time, Ricoh posted operating losses of (Yen) 2.2 billion, mainly to cover extraordinary expenses in the metering equipment business.
(Billions of yen) ------------------------------------------------------------------------------------------------- Year ended Year ended Change March 31, 2003 March 31, 2002 ------------------------------------------------------------------------------------------------- Office Equipment: Net sales 1,520.5 1,485.3 2.4% Operating income 190.7 181.3 5.2% Operating income on sales(%) 12.5 12.2 0.3% Identifiable assets 1,198.7 1,219.7 -1.7% Capital expenditures 65.7 68.5 -4.1% Depreciation and Amortization 60.6 64.4 -5.8% ------------------------------------------------------------------------------------------------- Other Businesses: Net sales 220.5 190.8 15.6% Operating income -2.2 3.3 - Operating income on sales(%) -1.0 1.8 -2.8% Identifiable assets 176.2 185.1 -4.8% Capital expenditures 7.2 5.6 28.0% Depreciation and Amortization 6.9 7.4 -7.1% -------------------------------------------------------------------------------------------------
12 Geographic Segment Japan In the office equipment business, sales increased for printing systems in Japan, where the Company is pursuing an aggressive marketing strategy. Useware and other solutions businesses also did well. These factors and higher exports and the yen's depreciation increased Japan segment sales 2.1%, to (Yen) 1,274.9 billion. Ricoh shifted toward high-value-added products, pursued cost improvement strategies, and maintained its policy of optimally locating manufacturing operations closer to customer markets. These endeavors failed to offset the impact of extraordinary expenses for the metering business, with operating income declining 18.9%, to (Yen) 86.1 billion. The Americas Ricoh's existing sales channels continued to perform well despite a slower U.S. economy, the turmoil in the Middle East, and intensifying competition. The Company expanded sales of printing systems and strengthened sales approaches to major accounts. In MFPs and color laser printers, sales increased, centered on new offerings. On the other hand, the yen rose against the dollar causing sales in the Americas decreased 2.1%, to (Yen) 339.5 billion. Operating income increased 25.3%, to (Yen) 14.3 billion, on the strength of cost-cutting. Europe All operations in Europe were able to increase sales in all regional markets, centered on PPCs and printing systems, allowing Ricoh to maintain its top share of the European copier and MFPs market. European sales increased 13.6%, to (Yen) 355.9 billion. Operating income increased 49.8%, to (Yen) 18.2 billion, reflecting higher production nearer customers and the yen's depreciation against the euro. Others The demand shift to digital, networkable, and color business equipment has been strong in China and elsewhere in Asia and Oceania, while the Company maintained high production rates along with demand increase to the world. Segment sales thus increased 15.6%, to (Yen) 169.8 billion. Operating income increased 41.0%, to (Yen) 9.9 billion, reflecting higher sales and production. To help expand operations in the promising Chinese market, the newly established regional headquarter will focus on integrating manufacturing, sales, and services, to support strategic growth. [Graph 4] Geographic segment information The graphs are omitted. The data in the omitted graphs can be shown at the schedule 4. 13 *Financial Position (1) ) Assets, Liabilities, and Shareholders' Equity at Year-End
(Billions of yen) ---------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 Change ---------------------------------------------------------------------------------- Total Assets 1,884.9 1,832.9 51.9 Shareholders' Equity 657.5 633.0 24.4 Equity Ratio 34.9% 34.5% 0.4% ----------------------------------------------------------------------------------
In Assets, cash and time deposits increased (Yen) 17.6 billion, to (Yen) 200.3 billion, in line with marketable securities repayment / maturity. Trade receivables decreased (Yen) 24.4 billion, to (Yen) 417.9 billion, reflecting increased collections in Japan and the United States. Inventories reduced (Yen) 16.1 billion, to (Yen) 146.0 billion, due to the impact of supply chain management and other initiatives. Fixed assets decreased (Yen) 10.6 billion, to (Yen) 248.7 billion, as the Company kept capital expenditures at less than depreciation. Finance receivables increased (Yen) 28.4 billion, to (Yen) 476.2 billion, mainly in Japan, while other investments increased (Yen) 75.3 billion, to (Yen) 337.3 billion, reflecting purchases of marketable securities and an increase in deferred income taxes. As the results, total assets increased (Yen) 51.9 billion from the last fiscal year end, at (Yen) 1,884.9 billion. In Liabilities, trade payables increased (Yen) 3.0 billion from a year earlier, at (Yen) 280.7 billion. Interest-bearing debt decreased (Yen) 76.7 billion, to (Yen) 484.6 billion, due to redemptions and conversions of convertible bonds and efforts to reduce borrowings. Other current liabilities increased (Yen) 9.5 billion, to (Yen) 169.0 billion, while retirement benefit obligations increased (Yen) 89.4 billion, to (Yen) 209.0 billion. As the results, total liabilities increased (Yen) 25.2 billion, to (Yen) 1,174.1 billion. In Shareholder's equity, common stock and additional paid-in capital increased (Yen) 14.9 billion, to (Yen) 135.3 billion and (Yen) 186.5 billion, respectively, as a result of convertible bond conversions. Retained earnings increased (Yen) 49.0 billion, to (Yen) 434.7 billion. Accumulated other comprehensive income declined (Yen) 50.3 billion, due primarily to pension liability adjustments. Total shareholders' equity increased (Yen) 24.4 billion, to (Yen) 657.5 billion.
(2) Cash Flows (Billions of yen) -------------------------------------------------------------------------------------------------------- Year ended Year ended Change March 31, 2003 March 31, 2002 -------------------------------------------------------------------------------------------------------- Cash flows from operating activities 185.7 105.1 80.6 Cash flows from investing activities -98.1 -81.4 -16.7 Cash flows from financing activities -67.1 36.2 -103.3 Cash and Cash Equivalents at End of Period 189.2 170.1 19.0 --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities increased (Yen) 80.6 billion, to (Yen) 185.7 billion. This reflected higher net income and depreciation and amortization, as well as decreases in trade receivables and inventories, which offset a rise in finance receivables. Net cash used in investing activities increased (Yen) 16.7 billion, to (Yen) 98.1 billion. This was due to capital expenditures spending for new production lines and increased fund investments. As a result of the above factors, free cash flow generated by operating and investing activities increased (Yen) 63.8 billion, to (Yen) 87.5 billion. Although net cash provided by financing activities was (Yen) 36.2 billion in the previous fiscal year, net cash used in such activities was (Yen) 67.1 billion in this fiscal year. This reflected a shift from short-term to long-term borrowings and reductions in interest-bearing debt to harness Group funds more efficiently. Outlays included dividend payments of (Yen) 10.1 billion and expenses of (Yen) 17.2 billion to secure treasury stock. As a result of these factors, cash and cash equivalents at the close of the term increased (Yen) 19.0 billion from a year earlier, to (Yen) 189.2 billion. At the start of the year, Ricoh included short-term investment securities, which are always available-for-sale, such as money management funds, in cash equivalents. The effects of this change were as follows:
(Billions of yen) ------------------------------------------------------------------------------------------- Cash and cash equivalents at term-end March 31, 2003 March 31, 2002 ------------------------------------------------------------------------------------------- Under previous accounting policy 108.1 142.5 Under new accounting policy 189.2 170.1 ------------------------------------------------------------------------------------------- Change 81.1 27.6
14 (3) Cash Flow Indices
------------------------------------------------------------------------------------------------------------------------------- Year ended Year ended Year ended Year ended Year ended March 31, 1999 March 31, 2000 March 31, 2001 March 31, 2002 March 31, 2003 ------------------------------------------------------------------------------------------------------------------------------- Shareholders' equity / Total assets 29.9% 35.1% 32.7% 34.5% 34.9% Market capitalization / Total assets 52.5% 98.7% 92.2% 95.6% 73.0% Interest bearing debt / Operating cash flow 6.1 3.8 5.2 5.3 2.6 Operating cash flow / Interest expense 9.2 13.3 13.2 12.8 27.1 -------------------------------------------------------------------------------------------------------------------------------
Notes: i. All indices are calculated based on consolidated data. ii. Market capitalization equals the stock price at the end of fiscal year multiples by the number of shares outstanding at the end of fiscal year. iii. Operating cash flow is shown in consolidated statement of cash flow. Interest bearing debt equals all debt in consolidated balance sheets. 15 *Expectations * Economic projections and Ricoh Group's strategies for fiscal 2004 There are increasing concerns about the outlook for fiscal 2004 because of the depressed domestic equity market, high unemployment, and the uncertain income environment. In management's view, it will take time for the Japanese economy to recover from its structural deflation. Conditions should remain difficult because of the possibility that the U.S. economy may stagnate, the aftereffects of the war in Iraq, and the impact on the global economy if severe acute respiratory syndrome (SARS) spreads. Under this situation, the Ricoh Group has centered its 14th medium-term term management plan, started in April 2002, on expanding its profit base by expanding total document volume. The basic strategy entails: .. Responding to greater demand for color documents among office users .. Expanding sales of high-speed machines .. Deploying printing solutions The crucial challenges for our customers will be to improve work flow and enhance productivity by better managing total document volumes. We will support such efforts by continuing to formulate proposals to optimize customer's total printing costs and offer products and services that meet more sophisticated needs for color and faster office document production. In addition, we plan to expand operations by integrating production, sales, and service through a management base in the highly promising Chinese market, to complement similar organizations Japan, the United States, and Europe. Ricoh will pursue efficiencies through process reform in each business domain to ensure sustainable earnings growth and cash flows, as part of which it is working on a low-cost management structure that can withstand deflationary environments by further reinforcing price competitiveness. Our performance forecasts for fiscal 2004 are as follows: Exchange Rate Assumptions for the full year ended March 31, 2004 US$ 1 = (Yen) 120.00 ((Yen) 121.96 in previous fiscal year) EURO 1 = (Yen) 120.00 ((Yen) 121.00 in previous fiscal year)
(Billions of yen) - ---------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2004 March 31, 2003 Change (Forecast) - ---------------------------------------------------------------------------------------------- Domestic sales 912.0 896.0 1.8% Overseas sales 893.0 842.3 6.0% Net sales 1,805.0 1,738.3 3.8% (*1) Gross profit 786.0 745.3 5.5% Operating income 147.0 133.6 10.0% Income before income taxes 137.0 123.4 11.0% Net income 79.0 72.5 8.9% (*2) - ----------------------------------------------------------------------------------------------
Notes: *1...Net sales would be tenth consecutive year of growth. *2...Net income would be twelfth consecutive year of growth and tenth consecutive year of record high. * Ricoh bases the forecast estimates for March 31, 2004 above upon information currently available to management, which involves risks and uncertainties that could cause actual results to differ materially from those projected. 16
CONSOLIDATED PERFORMANCE 1. CONSOLIDATED STATEMENTS OF INCOME (Three months ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------------------------------ Three months ended Three months ended March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------------------------ Net sales 460,798 450,922 9,876 2.2 Cost of sales 261,031 266,503 -5,472 -2.1 Percentage of net sales (%) 56.6 59.1 Gross Profit 199,767 184,419 15,348 8.3 Percentage of net sales (%) 43.4 40.9 Selling, general and administrative expenses 160,835 144,357 16,478 11.4 Percentage of net sales (%) 35.0 32.0 Operating income 38,932 40,062 -1,130 -2.8 Percentage of net sales (%) 8.4 8.9 Other (income) expense Interest and dividend income 1,134 698 436 62.5 Percentage of net sales (%) 0.2 0.2 Interest expense 1,525 1,670 -145 -8.7 Percentage of net sales (%) 0.3 0.4 Other, net 731 3,536 -2,805 -79.3 Percentage of net sales (%) 0.1 0.8 Income before income taxes, equity income and minority interests 37,810 35,554 2,256 6.3 Percentage of net sales (%) 8.2 7.9 Provision for income taxes 15,235 16,659 -1,424 -8.5 Percentage of net sales (%) 3.3 3.7 Minority interests in earnings of subsidiaries 1,724 931 793 85.2 Percentage of net sales (%) 0.4 0.2 Equity in earnings of affiliates 336 351 -15 -4.3 Percentage of net sales (%) 0.1 0.1 Net income 21,187 18,315 2,872 15.7 Percentage of net sales (%) 4.6 4.1 - ------------------------------------------------------------------------------------------------------------------------------------ Reference : Exchange rate US$ 1 (Yen) 119.04 (Yen) 132.50 EURO 1 (Yen) 127.63 (Yen) 116.21 (Full year ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------------------------------ Year ended Year ended March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------------------------ Net sales 1,738,358 1,672,340 66,018 3.9 Cost of sales 993,009 972,394 20,615 2.1 Percentage of net sales (%) 57.1 58.1 Gross Profit 745,349 699,946 45,403 6.5 Percentage of net sales (%) 42.9 41.9 Selling, general and administrative expenses 611,695 570,251 41,444 7.3 Percentage of net sales (%) 35.2 34.1 Operating income 133,654 129,695 3,959 3.1 Percentage of net sales (%) 7.7 7.8 Other (income) expense Interest and dividend income 3,772 4,753 -981 -20.6 Percentage of net sales (%) 0.2 0.3 Interest expense 6,853 8,233 -1,380 -16.8 Percentage of net sales (%) 0.4 0.5 Other, net 7,103 12,265 -5,162 -42.1 Percentage of net sales (%) 0.4 0.8 Income before income taxes, equity income and minority interests 123,470 113,950 9,520 8.4 Percentage of net sales (%) 7.1 6.8 Provision for income taxes 51,984 51,147 837 1.6 Percentage of net sales (%) 3.0 3.0 Minority interests in earnings of subsidiaries 1,376 3,080 -1,704 -55.3 Percentage of net sales (%) 0.0 0.2 Equity in earnings of affiliates 2,403 1,891 512 27.1 Percentage of net sales (%) 0.1 0.1 Net income 72,513 61,614 10,899 17.7 Percentage of net sales (%) 4.2 3.7 - ------------------------------------------------------------------------------------------------------------------------------------ Reference : Exchange rate US$ 1 (Yen) 121.96 (Yen) 125.10 EURO 1 (Yen) 121.00 (Yen) 110.60
17
2-1. CONSOLIDATED SALES BY PRODUCT CATEGORY (Three months ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------------------------ Three months ended Three months ended March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------------------ (Office Equipment) Imaging Solutions: Digital Imaging Systems 166,111 180,519 -14,408 -8.0 Percentage of net sales (%) 36.0 40.0 Other Imaging Systems 54,917 66,107 -11,190 -16.9 Percentage of net sales (%) 12.0 14.7 Total Imaging Solutions 221,028 246,626 -25,598 -10.4 Percentage of net sales (%) 48.0 54.7 - ------------------------------------------------------------------------------------------------------------------------------ Networking input/output systems: Printing Systems 116,450 80,228 36,222 45.1 Percentage of net sales (%) 25.3 17.8 Other Input/Output Systems 10,565 12,484 -1,919 -15.4 Percentage of net sales (%) 2.3 2.7 Total Networking input/output systems 127,015 92,712 34,303 37.0 Percentage of net sales (%) 27.6 20.5 - ------------------------------------------------------------------------------------------------------------------------------ Network system solutions 57,357 58,958 -1,601 -2.7 Percentage of net sales (%) 12.4 13.1 - ------------------------------------------------------------------------------------------------------------------------------ Office Equipment Total 405,400 398,296 7,104 1.8 Percentage of net sales (%) 88.0 88.3 - ------------------------------------------------------------------------------------------------------------------------------ (Other Businesses) Other Businesses 55,398 52,626 2,772 5.3 Percentage of net sales (%) 12.0 11.7 - ------------------------------------------------------------------------------------------------------------------------------ Grand Total 460,798 450,922 9,876 2.2 Percentage of net sales (%) 100.0 100.0 - ------------------------------------------------------------------------------------------------------------------------------ Reference : Exchange rate US$ 1 (Yen) 119.04 (Yen) 132.50 EURO 1 (Yen) 127.63 (Yen) 116.21
(Full year ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------------------------ Year ended Year ended March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------------------ (Office Equipment) Imaging Solutions: Digital Imaging Systems 626,967 654,425 -27,458 -4.2 Percentage of net sales (%) 36.1 39.1 Other Imaging Systems 232,746 279,755 -47,009 -16.8 Percentage of net sales (%) 13.4 16.7 Total Imaging Solutions 859,713 934,180 -74,467 -8.0 Percentage of net sales (%) 49.5 55.8 - ------------------------------------------------------------------------------------------------------------------------------ Networking input/output systems: Printing Systems 408,830 299,231 109,599 36.6 Percentage of net sales (%) 23.5 17.9 Other Input/Output Systems 54,549 45,016 9,533 21.2 Percentage of net sales (%) 3.2 2.7 Total Networking input/output systems 463,379 344,247 119,132 34.6 Percentage of net sales (%) 26.7 20.6 - ------------------------------------------------------------------------------------------------------------------------------ Network system solutions 197,482 206,962 -9,480 -4.6 Percentage of net sales (%) 11.3 12.4 - ------------------------------------------------------------------------------------------------------------------------------ Office Equipment Total 1,520,574 1,485,389 35,185 2.4 Percentage of net sales (%) 87.5 88.8 - ------------------------------------------------------------------------------------------------------------------------------ (Other Businesses) Other Businesses 217,784 186,951 30,833 16.5 Percentage of net sales (%) 12.5 11.2 - ------------------------------------------------------------------------------------------------------------------------------ Grand Total 1,738,358 1,672,340 66,018 3.9 Percentage of net sales (%) 100.0 100.0 - ------------------------------------------------------------------------------------------------------------------------------ Reference : Exchange rate US$ 1 (Yen) 121.96 (Yen) 125.10 EURO 1 (Yen) 121.00 (Yen) 110.60
Each category includes the following product line: Digital Imaging Systems Digital PPCs, color PPCs, digital duplicators and facsimile machines Other Imaging Systems Analog PPCs, diazo copiers, and thermal paper Printing Systems MFPs(multifunctional printers), laser printers and software Other Input/Output Systems Optical discs and system scanners Network System Solutions Personal computers, PC servers, network systems and network related software Other Businesses Optical equipments, measuring equipments and semiconductors 18 2-2. CONSOLIDATED SALES BY GEOGRAPHIC AREA
(Three months ended March 31, 2003 and 2002) (Millions of yen) - --------------------------------------------------------------------------------------------------- Three months Three months ended ended March 31, 2003 March 31, 2002 Change % - --------------------------------------------------------------------------------------------------- (Domestic) 236,250 238,144 -1,894 -0.8 Percentage of net sales (%) 51.3 52.8 (Overseas) 224,548 212,778 11,770 5.5 Percentage of net sales (%) 48.7 47.2 The Americas 89,330 96,506 -7,176 -7.4 Percentage of net sales (%) 19.4 21.4 Europe 99,927 85,328 14,599 17.1 Percentage of net sales (%) 21.7 18.9 Other 35,291 30,944 4,347 14.0 Percentage of net sales (%) 7.6 6.9 Grand Total 460,798 450,922 9,876 2.2 Percentage of net sales (%) 100.0 100.0 - --------------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 (Yen)119.04 (Yen)132.50 EURO 1 (Yen)127.63 (Yen)116.21
(Full year ended March 31, 2003 and 2002) (Millions of yen) - --------------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 Change % - --------------------------------------------------------------------------------------------------- (Domestic) 896,022 902,655 -6,633 -0.7 Percentage of net sales (%) 51.5 54.0 (Overseas) 842,336 769,685 72,651 9.4 Percentage of net sales (%) 48.5 46.0 The Americas 343,940 341,747 2,193 0.6 Percentage of net sales (%) 19.8 20.4 Europe 354,477 311,312 43,165 13.9 Percentage of net sales (%) 20.4 18.6 Other 143,919 116,626 27,293 23.4 Percentage of net sales (%) 8.3 7.0 Grand Total 1,738,358 1,672,340 66,018 3.9 Percentage of net sales (%) 100.0 100.0 - --------------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 (Yen)121.96 (Yen)125.10 EURO 1 (Yen)121.00 (Yen)110.60
19 3. CONSOLIDATED BALANCE SHEETS March 31, 2003 and March 31, 2002
Assets (Millions of yen) - ---------------------------------------------------------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 Change - ---------------------------------------------------------------------------------------------------------------------------------- Current Assets Cash and time deposits 200,330 182,650 17,680 Trade receivables 417,942 442,399 -24,457 Marketable securities 107 22,935 -22,828 Inventories 146,051 162,176 -16,125 Other current assets 58,083 53,508 4,575 Total Current Assets 822,513 863,668 -41,155 Fixed Assets Tangible fixed assets 248,752 259,380 -10,628 Finance receivable 476,293 447,829 28,464 Other Investments 337,364 262,051 75,313 Total Fixed Assets 1,062,409 969,260 93,149 - ---------------------------------------------------------------------------------------------------------------------------------- Total Assets 1,884,922 1,832,928 51,994 - ---------------------------------------------------------------------------------------------------------------------------------- Note: Contents of cash and time deposits: Cash and cash equivalents (*) 189,243 170,172 Time deposits 11,087 12,478 *...Effective from April 1, 2002, Ricoh changed its policy for definition of cash and cash equivalents on its consolidated balance sheets and consolidated statements of cash flow. Results for prior years are restated. (See 7. Significant Accounting Policies (Consolidated) (6)) Liabilities and Shareholders' Investment (Millions of yen) - ---------------------------------------------------------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 Change - ---------------------------------------------------------------------------------------------------------------------------------- Current Liabilities Trade payables 280,798 277,753 3,045 Short-term borrowings 138,713 228,408 -89,695 Other current liabilities 169,072 159,540 9,532 Total Current Liabilities 588,583 665,701 -77,118 Fixed Liabilities Long-term indebtedness 345,902 332,995 12,907 Retirement benefit obligation 209,011 119,572 89,439 Other fixed liabilities 30,653 30,592 61 Total Fixed Liabilities 585,566 483,159 102,407 - ---------------------------------------------------------------------------------------------------------------------------------- Total Liabilities 1,174,149 1,148,860 25,289 - ---------------------------------------------------------------------------------------------------------------------------------- Minority Interest 53,259 51,048 2,211 - ---------------------------------------------------------------------------------------------------------------------------------- Shareholders' Investment Common stock 135,364 120,461 14,903 Additional paid-in capital 186,521 171,628 14,893 Retained earnings 434,748 385,741 49,007 Accumulated other comprehensive income (loss) -94,733 -44,376 -50,357 Treasury stock -4,386 -434 -3,952 Total Shareholders' Investment 657,514 633,020 24,494 - ---------------------------------------------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Investment 1,884,922 1,832,928 51,994 - ---------------------------------------------------------------------------------------------------------------------------------- Note: Other comprehensive income; Net unrealized holding gains on available-for-sale securities 8,582 10,566 -1,984 Pension liability adjustments -89,119 -39,710 -49,409 Net unrealized gains (losses) on derivative instruments -178 -207 29 Cumulative translation adjustments -14,018 -15,025 1,007
Reference: Exchange rate March 31, 2003 March 31, 2002 US$ 1 (Yen)120.20 (Yen)133.25 EURO 1 (Yen)129.83 (Yen)116.14 4. RETAINED EARNINGS
For the year ended March 31, 2003 and year ended March 31, 2002 (Millions of yen) - ---------------------------------------------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 - ---------------------------------------------------------------------------------------------------------------------------------- Retained earnings (beginning balance) 385,741 332,447 Net income 72,513 61,614 Cash dividends 10,178 8,320 Retirement of treasury stock 13,328 - Retained earnings (ending balance) 434,748 385,741 - ----------------------------------------------------------------------------------------------------------------------------------
20
5. CONSOLIDATED STATEMENTS OF CASH FLOW (Full year ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 - ------------------------------------------------------------------------------------------------------------- I. Cash Flows from Operating Activities: 1. Net income 72,513 61,614 2. Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 76,551 73,782 Equity in earnings of affiliates, net of dividends received -1,167 -1,260 Deferred income taxes -9,289 -1,218 Loss on disposal and sales of tangible fixed assets 1,975 1,665 Changes in assets and liabilities-- Decrease (increase) in trade receivables 22,176 -20,006 Decrease in inventories 14,983 21,194 Increase in finance receivables -33,109 -13,620 Increase (decrease) in trade payables 5,632 -19,535 Increase (decrease) in accrued income taxes and accrued expenses and other 11,173 -13,592 Retirement benefit obligation, net 7,806 8,374 Other, net 16,498 7,740 - ------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 185,742 105,138 - ------------------------------------------------------------------------------------------------------------- II. Cash Flows from Investing Activities: 1. Proceeds from sales of plant and equipment 245 756 2. Expenditures for tangible fixed assets -71,984 -75,231 3. Payments for purchases of available-for-sale securities -52,219 -10,025 4. Proceeds from sales of available-for-sale securities 24,513 24,568 5. (Increase) decrease in investments in and advances to affiliates -448 5 6. Decrease (increase) in time deposits 944 -477 7. Other, net 750 -21,017 - ------------------------------------------------------------------------------------------------------------- Net cash used in investing activities -98,199 -81,421 - ------------------------------------------------------------------------------------------------------------- III. Cash Flows from Financing Activities: 1. Proceeds from long-term indebtedness 58,194 71,075 2. Repayment of long-term indebtedness -23,133 -79,640 3. Decrease in short-term borrowings, net -73,393 -39,414 4. Proceeds from issuance of long-term debt securities 11,000 103,500 5. Repayment of long-term debt securities -11,723 -10,000 6. Cash dividends paid -10,176 -8,322 7. Purchase of treasury stocks -17,281 -1,054 8. Other, net -631 90 - ------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities -67,143 36,235 - ------------------------------------------------------------------------------------------------------------- IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents -1,329 2,474 - ------------------------------------------------------------------------------------------------------------- V. Net Increase in Cash and Cash Equivalents 19,071 62,426 - ------------------------------------------------------------------------------------------------------------- VI. Cash and Cash Equivalents at Beginning of Year 170,172 107,746 - ------------------------------------------------------------------------------------------------------------- VII. Cash and Cash Equivalents at End of Period 189,243 170,172 - -------------------------------------------------------------------------------------------------------------
Effective from April 1, 2002, Ricoh changed its policy for definition of cash and cash equivalents on its consolidated balance sheets and consolidated statements of cash flow. Results for prior years are restated. (See 7. Significant Accounting Policies (Consolidated) (6)) 21 6. SEGMENT INFORMATION (1) Industry Segment Information
(Three months ended March 31, 2003 and 2002) (Millions of yen) - ----------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended March 31, 2003 March 31, 2002 Change % - ----------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT: Net sales: Unaffiliated customers 405,400 398,296 7,104 1.8 Intersegment - - - - Total 405,400 398,296 7,104 1.8 - ----------------------------------------------------------------------------------------------------------------------- Operating expenses 352,578 343,831 8,747 2.5 - ----------------------------------------------------------------------------------------------------------------------- Operating income 52,822 54,465 -1,643 -3.0 Operating income on office equipment sales(%) 13.0 13.7 - ----------------------------------------------------------------------------------------------------------------------- OTHER BUSINESSES: Net sales: Unaffiliated customers 55,398 52,626 2,772 5.3 Intersegment 606 827 -221 -26.7 Total 56,004 53,453 2,551 4.8 - ----------------------------------------------------------------------------------------------------------------------- Operating expenses 56,300 51,385 4,915 9.6 - ----------------------------------------------------------------------------------------------------------------------- Operating income -296 2,068 -2,364 - Operating income on sales in other businesses (%) -0.5 3.9 - ----------------------------------------------------------------------------------------------------------------------- CORPORATE AND ELIMINATIONS: Net sales: Intersegment -606 -827 221 - Total -606 -827 221 - - ----------------------------------------------------------------------------------------------------------------------- Operating expenses: Intersegment -573 -830 257 - Corporate 13,561 16,474 -2,913 - Total 12,988 15,644 -2,656 - - ----------------------------------------------------------------------------------------------------------------------- Operating income -13,594 -16,471 2,877 - - ----------------------------------------------------------------------------------------------------------------------- CONSOLIDATED: Net sales: Unaffiliated customers 460,798 450,922 9,876 2.2 Intersegment - - 0 - Total 460,798 450,922 9,876 2.2 - ----------------------------------------------------------------------------------------------------------------------- Operating expenses 421,866 410,860 11,006 2.7 - ----------------------------------------------------------------------------------------------------------------------- Operating income 38,932 40,062 -1,130 -2.8 Operating income on consolidated net sales(%) 8.4 8.9 - -----------------------------------------------------------------------------------------------------------------------
Identifiable assets: (Millions of yen) - ----------------------------------------------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 Change % - ----------------------------------------------------------------------------------------------------------------------- Office Equipment 1,198,706 1,219,723 -21,017 -1.7 Other Businesses 176,296 185,158 -8,862 -4.8 Elimination -6,908 -6,991 83 -1.2 Corporate assets 516,828 435,038 81,790 18.8 - ----------------------------------------------------------------------------------------------------------------------- Total 1,884,922 1,832,928 51,994 2.8 - -----------------------------------------------------------------------------------------------------------------------
Capital expenditure: (Millions of yen) - ----------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended March 31, 2003 March 31, 2002 Change % - ----------------------------------------------------------------------------------------------------------------------- Office Equipment 15,845 18,212 -2,367 -13.0 Other Businesses 2,913 589 2,324 394.6 Corporate 52 203 -151 -74.4 - ----------------------------------------------------------------------------------------------------------------------- Total 18,810 19,004 -194 -1.0 - -----------------------------------------------------------------------------------------------------------------------
Depreciation and Amortization: (Millions of yen) - ----------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended March 31, 2003 March 31, 2002 Change % - ----------------------------------------------------------------------------------------------------------------------- Office Equipment 15,389 17,736 -2,347 -13.2 Other Businesses 2,262 2,016 246 12.2 Corporate 452 634 -182 -28.7 - ----------------------------------------------------------------------------------------------------------------------- Total 18,103 20,386 -2,283 -11.2 - -----------------------------------------------------------------------------------------------------------------------
22
(Full year ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT: Net sales: Unaffiliated customers 1,520,574 1,485,389 35,185 2.4 Intersegment - - - - Total 1,520,574 1,485,389 35,185 2.4 - ------------------------------------------------------------------------------------------------------------------- Operating expenses 1,329,776 1,304,079 25,697 2.0 - ------------------------------------------------------------------------------------------------------------------- Operating income 190,798 181,310 9,488 5.2 Operating income on office equipment sales(%) 12.5 12.2 - ------------------------------------------------------------------------------------------------------------------- OTHER BUSINESSES: Net sales: Unaffiliated customers 217,784 186,951 30,833 16.5 Intersegment 2,755 3,864 -1,109 -28.7 Total 220,539 190,815 29,724 15.6 - ------------------------------------------------------------------------------------------------------------------- Operating expenses 222,772 187,424 35,348 18.9 - ------------------------------------------------------------------------------------------------------------------- Operating income -2,233 3,391 -5,624 - Operating income on sales in other businesses (%) -1.0 1.8 - ------------------------------------------------------------------------------------------------------------------- CORPORATE AND ELIMINATIONS: Net sales: Intersegment -2,755 -3,864 1,109 - Total -2,755 -3,864 1,109 - - ------------------------------------------------------------------------------------------------------------------- Operating expenses: Intersegment -2,726 -3,893 1,167 - Corporate 54,882 55,035 -153 - Total 52,156 51,142 1,014 - - ------------------------------------------------------------------------------------------------------------------- Operating income -54,911 -55,006 95 - - ------------------------------------------------------------------------------------------------------------------- CONSOLIDATED: Net sales: Unaffiliated customers 1,738,358 1,672,340 66,018 3.9 Intersegment - - - - Total 1,738,358 1,672,340 66,018 3.9 - ------------------------------------------------------------------------------------------------------------------- Operating expenses 1,604,704 1,542,645 62,059 4.0 - ------------------------------------------------------------------------------------------------------------------- Operating income 133,654 129,695 3,959 3.1 Operating income on consolidated net sales(%) 7.7 7.8 - ------------------------------------------------------------------------------------------------------------------- Identifiable assets: Millions of yen) - ------------------------------------------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------- Office Equipment 1,198,706 1,219,723 -21,017 -1.7 Other Businesses 176,296 185,158 -8,862 -4.8 Elimination -6,908 -6,991 83 -1.2 Corporate assets 516,828 435,038 81,790 18.8 - ------------------------------------------------------------------------------------------------------------------- Total 1,884,922 1,832,928 51,994 2.8 - ------------------------------------------------------------------------------------------------------------------- Capital expenditure: (Millions of yen) - ------------------------------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------- Office Equipment 65,720 68,513 -2,793 -4.1 Other Businesses 7,213 5,633 1,580 28.0 Corporate 1,023 1,530 -507 -33.1 - ------------------------------------------------------------------------------------------------------------------- Total 73,956 75,676 -1,720 -2.3 - ------------------------------------------------------------------------------------------------------------------- Depreciation and Amortization: (Millions of yen) - ------------------------------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------- Office Equipment 60,687 64,426 -3,739 -5.8 Other Businesses 6,917 7,448 -531 -7.1 Corporate 1,954 1,908 46 2.4 - ------------------------------------------------------------------------------------------------------------------ Total 69,558 73,782 -4,224 -5.7 - ------------------------------------------------------------------------------------------------------------------
23
(2) Geographic Segment Information (Three months ended March 31, 2003 and 2002) (Millions of Yen) - --------------------------------------------------------------------------------------------------------------- Three months Three months ended ended March 31, 2003 March 31, 2002 Change % - --------------------------------------------------------------------------------------------------------------- JAPAN: Net sales: External customers 249,405 249,481 -76 0.0 Intersegment 83,382 78,886 4,496 5.7 Total 332,787 328,367 4,420 1.3 - --------------------------------------------------------------------------------------------------------------- Operating expenses 310,014 301,329 8,685 2.9 - --------------------------------------------------------------------------------------------------------------- Operating income 22,773 27,038 -4,265 -15.8 Operating income on sales in Japan(%) 6.8 8.2 - --------------------------------------------------------------------------------------------------------------- THE AMERICAS: Net sales: External customers 86,937 94,489 -7,552 -8.0 Intersegment 1,810 3,110 -1,300 -41.8 Total 88,747 97,599 -8,852 -9.1 - --------------------------------------------------------------------------------------------------------------- Operating expenses 83,754 89,089 -5,335 -6.0 - --------------------------------------------------------------------------------------------------------------- Operating income 4,993 8,510 -3,517 -41.3 Operating income on sales in the Americas(%) 5.6 8.7 - --------------------------------------------------------------------------------------------------------------- EUROPE: Net sales: External customers 99,704 84,293 15,411 18.3 Intersegment 936 875 61 7.0 Total 100,640 85,168 15,472 18.2 - --------------------------------------------------------------------------------------------------------------- Operating expenses 93,879 81,759 12,120 14.8 - --------------------------------------------------------------------------------------------------------------- Operating income 6,761 3,409 3,352 98.3 Operating income on sales in Europe(%) 6.7 4.0 - --------------------------------------------------------------------------------------------------------------- OTHER: Net sales: External customers 24,752 22,659 2,093 9.2 Intersegment 18,489 15,889 2,600 16.4 Total 43,241 38,548 4,693 12.2 - --------------------------------------------------------------------------------------------------------------- Operating expenses 40,897 36,015 4,882 13.6 - --------------------------------------------------------------------------------------------------------------- Operating income 2,344 2,533 -189 -7.5 Operating income on sales in other(%) 5.4 6.6 - --------------------------------------------------------------------------------------------------------------- CORPORATE AND ELIMINATIONS: Net sales: Intersegment -104,617 -98,760 -5,857 - Total -104,617 -98,760 -5,857 - - --------------------------------------------------------------------------------------------------------------- Operating expenses: -106,678 -97,332 -9,346 - - --------------------------------------------------------------------------------------------------------------- Operating income 2,061 -1,428 3,489 - - --------------------------------------------------------------------------------------------------------------- CONSOLIDATED: Net sales: External customers 460,798 450,922 9,876 2.2 Intersegment - - - - Total 460,798 450,922 9,876 2.2 - --------------------------------------------------------------------------------------------------------------- Operating expenses 421,866 410,860 11,006 2.7 - --------------------------------------------------------------------------------------------------------------- Operating income 38,932 40,062 -1,130 -2.8 Operating income on consolidated net sales(%) 8.4 8.9 - ---------------------------------------------------------------------------------------------------------------
Identifable assets: (Millions of Yen) - --------------------------------------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 Change % - --------------------------------------------------------------------------------------------------------------- Japan 1,064,857 1,084,387 -19,530 -1.8 The Americas 201,359 228,743 -27,384 -12.0 Europe 174,541 172,408 2,133 1.2 Other 70,458 61,549 8,909 14.5 Elimination -143,121 -149,197 6,076 -4.1 Corporate assets 516,828 435,038 81,790 18.8 - --------------------------------------------------------------------------------------------------------------- Total 1,884,922 1,832,928 51,994 2.8 - ---------------------------------------------------------------------------------------------------------------
24
(Full year ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------------ Year ended Year ended Change % March 31, 2003 March 31, 2002 - ------------------------------------------------------------------------------------------------------------------ JAPAN: Net sales: External customers 954,310 938,946 15,364 1.6 Intersegment 320,596 309,745 10,851 3.5 Total 1,274,906 1,248,691 26,215 2.1 - ------------------------------------------------------------------------------------------------------------------ Operating expenses 1,188,760 1,142,522 46,238 4.0 - ------------------------------------------------------------------------------------------------------------------ Operating income 86,146 106,169 -20,023 -18.9 Operating income on sales in Japan(%) 6.8 8.5 - ------------------------------------------------------------------------------------------------------------------ THE AMERICAS: Net sales: External customers 333,935 338,016 -4,081 -1.2 Intersegment 5,620 8,937 -3,317 -37.1 Total 339,555 346,953 -7,398 -2.1 - ------------------------------------------------------------------------------------------------------------------ Operating expenses 325,228 335,521 -10,293 -3.1 - ------------------------------------------------------------------------------------------------------------------ Operating income 14,327 11,432 2,895 25.3 Operating income on sales in the Americas(%) 4.2 3.3 - ------------------------------------------------------------------------------------------------------------------ EUROPE: Net sales: External customers 352,943 309,086 43,857 14.2 Intersegment 3,019 4,265 -1,246 -29.2 Total 355,962 313,351 42,611 13.6 - ------------------------------------------------------------------------------------------------------------------ Operating expenses 337,693 301,152 36,541 12.1 - ------------------------------------------------------------------------------------------------------------------ Operating income 18,269 12,199 6,070 49.8 Operating income on sales in Europe(%) 5.1 3.9 - ------------------------------------------------------------------------------------------------------------------ OTHER: - Net sales: External customers 97,170 86,292 10,878 12.6 Intersegment 72,664 60,655 12,009 19.8 Total 169,834 146,947 22,887 15.6 - ------------------------------------------------------------------------------------------------------------------ Operating expenses 159,864 139,874 19,990 14.3 - ------------------------------------------------------------------------------------------------------------------ Operating income 9,970 7,073 2,897 41.0 Operating income on sales in other(%) 5.9 4.8 - ------------------------------------------------------------------------------------------------------------------ CORPORATE AND ELIMINATIONS: Net sales: Intersegment -401,899 -383,602 -18,297 - Total -401,899 -383,602 -18,297 - - ------------------------------------------------------------------------------------------------------------------ Operating expenses: -406,841 -376,424 -30,417 - - ------------------------------------------------------------------------------------------------------------------ Operating income 4,942 -7,178 -12,120 - - ------------------------------------------------------------------------------------------------------------------ CONSOLIDATED: Net sales: External customers 1,738,358 1,672,340 66,018 3.9 Intersegment - - - - Total 1,738,358 1,672,340 66,018 3.9 - ------------------------------------------------------------------------------------------ ----------------------- Operating expenses 1,604,704 1,542,645 62,059 4.0 - ------------------------------------------------------------------------------------------------------------------ Operating income 133,654 129,695 3,959 3.1 Operating income on consolidated net sales(%) 7.7 7.8 - ------------------------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS: (Millions of yen) - ------------------------------------------------------------------------------------------------------------------ March 31, 2003 March 31, 2002 Change % - ------------------------------------------------------------------------------------------------------------------ Japan 1,064,857 1,084,387 -19,530 -1.8 The Americas 201,359 228,743 -27,384 -12.0 Europe 174,541 172,408 2,133 1.2 Other 70,458 61,549 8,909 14.5 Elimination -143,121 -149,197 6,076 -4.1 Corporate assets 516,828 435,038 81,790 18.8 - ------------------------------------------------------------------------------------------------------------------ Total 1,884,922 1,832,928 51,994 2.8 - ------------------------------------------------------------------------------------------------------------------
25 7. SIGNIFICANT ACCOUNTING POLICIES (CONSOLIDATED) 1. ITEMS RELATING TO THE SCALE OF CONSOLIDATION AND THE APPLICATION OF THE EQUITY METHOD Consolidated subsidiaries: 13 additions including Ricoh China Co., Ltd. and Shanghai Ricoh Facsimile Co., Ltd. 10 removals including INRG Hong Kong Ltd. Companies accounted for by the equity method: 4 additions including Tohoku Ricoh Hong Kong Co., Ltd. 16 removals including Ricoh San-ai Tourist Co., Ltd. 2. CONSOLIDATED ACCOUNTING POLICIES (SUMMARY) (1) Principles of Consolidation The consolidated financial statements include the accounts of Ricoh and its consolidated subsidiaries. Investments in 20% to 50% owned companies when the company has the ability to exercise significant influence are accounted for on the equity basis. All significant inter-company balances and transactions have been eliminated in consolidation. (2) Securities Ricoh conforms with SFAS No.115, "Accounting for Certain Investments in Debt and Equity Securities," which requires certain investments in debt and equity securities to be classified as either held-to-maturity, trading, or available-for-sale securities. Available-for-sale securities are reported at fair value with unrealized gains and losses, net of related taxes, excluded from earnings and reported in accumulated other comprehensive income (loss). The cost of the securities sold is computed based on the average cost of each security held at the time of sale. (3) Inventories Inventories are mainly stated at the lower of average cost or market. Inventory costs include raw materials, labor and manufacturing overheads. (4) Plant and Equipment Depreciation of plant and equipment is computed principally by using the declining-balance method over the estimated useful lives. Most of the foreign subsidiaries have adopted the straight-line method for computing depreciation. Certain leased buildings, machinery and equipment are accounted for as capital leases in conformity with SFAS No. 13, "Accounting for Leases." (5) Goodwill and Other Intangible Assets In conformity with SFAS No.142, Goodwill is determined to have indefinite life are not amortized. SFAS No. 142 requires to test for impairment at least annually. (6) Cash and Cash Equivalents Effective from April 1, 2002, Ricoh changed its policy for definition of cash and cash equivalents on its consolidated balance sheets and consolidated statements of cash flow. Cash and cash equivalents formerly included cash, negotiable certificates of deposit, time deposits with a maturity of three months or less at the date of purchase. In addition to the above, Ricoh decided to include short-term investment securities in cash equivalents which are available-for-sale at any time, present insignificant risk of changes in value as they are readily convertible into cash and have an original maturity of three months or less, such as Money Management Funds and Free Financial Funds. Ricoh believes this change is preferable, since as the Company expects to utilize such short-term investment securities more significantly in its operating cash management activities. Accompanied by this change, Ricoh restated consolidated balance sheet and consolidated statements of cash flow for prior years. The effect of this change was to increase cash and cash equivalents by (Yen)27,664 million and to decrease equivalently Marketable securities on balance sheet as of March 31, 2002, and net cash used in investing activities increased by (Yen)15,629 million, in consolidated statements of cash flow for the year ended March 31, 2002. (7) Use of Estimates Management of the Company has made a number of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including impairment losses of long-lived assets and the disclosures of fair value of financial instruments and contingent assets and liabilities, to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 26 8. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) FAIR VALUE OF MARKETABLE SECURITIES The securities and the respective cost, gross unrealized holding gains, gross unrealized holding losses and fair value as of March 31, 2003 and March 31, 2002 are as follows:
(Millions of yen) - ------------------------------------------------------------------------------------------------------------------ Year ended March 31, 2003 - ------------------------------------------------------------------------------------------------------------------ Gross unrealized Gross unrealized Cost holding gains holding losses Fair value - ------------------------------------------------------------------------------------------------------------------ Current: Corporate debt securities 107 - - 107 Other - - - - - ------------------------------------------------------------------------------------------------------------------ 107 - - 107 - ------------------------------------------------------------------------------------------------------------------ Noncurrent: Equity securities 6,328 5,148 519 10,957 Corporate debt securities 45,020 5 195 44,830 Other 9,459 10 654 8,815 Nonmarketable securities (at cost) 7,371 - - 7,371 - ------------------------------------------------------------------------------------------------------------------ 68,178 5,163 1,368 71,973 - ------------------------------------------------------------------------------------------------------------------
(Millions of yen) - ------------------------------------------------------------------------------------------------------------------ Year ended March 31, 2002 - ------------------------------------------------------------------------------------------------------------------ Gross unrealized Gross unrealized Cost holding gains holding losses Fair value - ------------------------------------------------------------------------------------------------------------------ Current: Corporate debt securities 21,338 1,205 12 22,531 Other 404 - - 404 - ------------------------------------------------------------------------------------------------------------------ 21,742 1,205 12 22,935 - ------------------------------------------------------------------------------------------------------------------ Noncurrent: Equity securities 7,457 6,025 469 13,013 Corporate debt securities 20 6 - 26 Other 10,612 205 519 10,298 Nonmarketable securities (at cost) 5,549 - - 5,549 - ------------------------------------------------------------------------------------------------------------------ 23,638 6,236 988 28,886 - ------------------------------------------------------------------------------------------------------------------
*...Effective from April 1, 2002, short-term investment securities, which are available-for-sale at any time, such as Money Management Funds, are included in cash equivalents. Result for prior years are restated. (See 7. Significant Accounting Policies (Consolidated) (6)) (2) PENSION AND RETIREMENT ALLOWANCES PLANS The Company and certain of its subsidiaries have various employees pension fund ("EPF") plans covering substantially all of their employees. The discount rates and the expected long-term rate of return on plan assets of the pension plans for the years ended March 31,2003, and March 31, 2002 are as follows:
- ----------------------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 - ----------------------------------------------------------------------------------------------- Actuarial assumptions: Discount rate (%) 2.20-6.50 2.80-7.25 Expected long-term rate of return on plan assets (%) 1.00-8.75 1.50-9.00 - -----------------------------------------------------------------------------------------------
(3) DERIVATIVE The Company and certain of its subsidiaries enter into various financial instrument contracts in the normal course of business and in connection with the management of their assets and liabilities. The outstanding agreements, carrying amount and estimated fair value of derivative financial instruments as of March 31, 2003, and March 31, 2002 are as follows:
(Millions of yen) - ---------------------------------------------------------------------------------------------- Year ended March 31, 2003 - ---------------------------------------------------------------------------------------------- Carrying Estimated amount Fair value - ---------------------------------------------------------------------------------------------- Interest rate swap agreements, net 3,985 3,985 Foreign currency contracts-net credit -594 -594 Currency options-net credit -466 -466 - ---------------------------------------------------------------------------------------------- Total 2,925 2,925 - ----------------------------------------------------------------------------------------------
(Millions of yen) - ----------------------------------------------------------------------------------------------- Year ended March 31, 2002 - ---------------------------------------------------------------------------------------------- Carrying Estimated amount Fair value - ---------------------------------------------------------------------------------------------- Interest rate swap agreements, net 4,081 4,081 Foreign currency contracts-net credit -8,304 -8,304 Currency options -314 -314 - ---------------------------------------------------------------------------------------------- Total -4,537 -4,537 - ----------------------------------------------------------------------------------------------
27
(4) TRANSACTIONS OF RICOH WITH AFFILIATES (Millions of yen) - -------------------------------------------------------------------------------- March 31, 2003 March 31, 2002 - -------------------------------------------------------------------------------- Account balances: Receivables 6,434 8,513 Payables 1,604 2,858 - -------------------------------------------------------------------------------- (Millions of yen) - -------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 - -------------------------------------------------------------------------------- Transactions: Sales 26,510 25,413 Purchases 19,808 15,584 Dividend income 1,236 1,133 - --------------------------------------------------------------------------------
(5) GOODWILL AND OTHER INTANGIBLE ASSETS Ricoh has adopted SFAS No. 142, "Goodwill and Other Intangible Assets" effective on April 1, 2002. Under SFAS No. 142, goodwill is no longer amortized but required to be reviewed for impairment annually or more frequently if necessary. The Company completed the impairment test for goodwill upon adoption of SFAS No.142 and at the end of its fiscal year and determined no impairment had occurred. Reconciliation of reported net income and basic and diluted net income per share (EPS) to the amounts adjusted for the exclusion of goodwill amortization for the years ended March 31,2003, and March 31, 2002 are as follows:
(Millions of yen) - -------------------------------------------------------------------------------- Year ended Year ended March 31, 2003 March 31, 2002 - -------------------------------------------------------------------------------- Net income: - ----------- Basic net income, as reported 72,513 61,614 Add back: goodwill amortization - 2,514 --------------------------------- Adjusted basic net income 72,513 64,128 Diluted net income, as reported 72,599 62,001 Add back: goodwill amortization - 2,514 --------------------------------- Adjusted diluted net income 72,599 64,515 - -------------------------------------------------------------------------------- Net income per share (EPS): - --------------------------- Basic EPS, as reported 99.79 88.27 Add back: goodwill amortization - 3.60 --------------------------------- Adjusted basic EPS 99.79 91.87 Diluted EPS, as reported 96.81 82.46 Add back: goodwill amortization - 3.34 --------------------------------- Adjusted diluted EPS 96.81 85.80 - --------------------------------------------------------------------------------
(6) SUBSEQUENT EVENTS Wholly owned share of TOHOKU RICOH CO., LTD. The Company and Tohoku Ricoh Co., Ltd. (Tohoku Ricoh) agreed at their respective boards of directors held on December 17, 2002, the Company making Tohoku Ricoh a wholly owned subsidiary through share exchange, and its share exchange contracts were executed. The share exchange was made in accordance with the provision of Paragraph 1 of Article 358 (Simplified Share Exchange) of the Commercial Code of Japan, effective on April 1, 2003. The allocation ratio was 0.345 shares of Ricoh stock per share of Tohoku Ricoh stock. Ricoh's treasury stock purchased prior to this transaction was used for the shares to be allocated for this share exchange, in accordance with Article 210 of the Commercial Code of Japan. Tohoku Ricoh, the Company's consolidated subsidiary already, is a manufacturing and sales company of Ricoh's office equipments and related supplies. The purpose of this share exchange is to enhance competitiveness in their industry, through the integration of both companies' development, design and production functions under the standardized strategies. No significant material effects to Ricoh's consolidated financial position and performance is expected by this execution of the share exchange. 28 - -APPENDIX A- (Year ended March 31, 2003) 1. CONSOLIDATED QUARTERLY PERFORMANCE OUTLINE
(Billions of yen) - ------------------------------------------------------------------------------------------------------------------------- 1Q Change(%) 2Q Change(%) 3Q Change(%) 4Q Change(%) - ------------------------------------------------------------------------------------------------------------------------- Net sales 428.2 4.0 428.5 5.0 420.7 4.8 460.7 2.2 Gross profit 186.4 7.2 174.1 3.7 184.9 6.5 199.7 8.3 Operating income 35.9 13.6 25.4 -10.2 33.3 12.3 38.9 -2.8 Income before income taxes 32.2 18.7 23.4 -7.7 29.9 15.9 37.8 6.3 Net income 19.5 31.2 14.0 3.5 17.8 19.5 21.1 15.7 - ------------------------------------------------------------------------------------------------------------------------- Net income per share (yen) 26.85 - 19.26 - 24.51 - 29.17 - - ------------------------------------------------------------------------------------------------------------------------- Net income per share-diluted (yen) 26.01 - 18.67 - 23.74 - 28.39 - - ------------------------------------------------------------------------------------------------------------------------- Total assets 1,821.9 - 1,826.3 - 1,807.2 - 1,884.9 - Shareholders' equity 648.3 - 663.6 - 671.1 - 657.5 - - ------------------------------------------------------------------------------------------------------------------------- Shareholders' equity per share (yen) 891.78 - 912.98 - 925.98 - 885.41 - - ------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities 54.3 - 44.7 - 13.0 - 73.5 - Cash flows from investing activities -15.4 - -17.9 - -43.3 - -21.5 - Cash flows from financing activities -3.7 - -12.7 - -9.6 - -40.9 - Cash and cash equivalents at end of period 203.0 - 217.4 - 177.5 - 189.2 - - ------------------------------------------------------------------------------------------------------------------------- (2) Capital expenditures and Depreciation (Billions of yen) - ------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 3Q 4Q - ------------------------------------------------------------------------------------------------------------------------- Capital expenditures 17.6 20.8 16.7 18.8 Depreciation for tangible fixed assets 16.9 16.9 17.5 18.1 - ------------------------------------------------------------------------------------------------------------------------- (3) R&D Expenditures (Billions of yen) - ------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 3Q 4Q - ------------------------------------------------------------------------------------------------------------------------- R&D expenditures 18.4 21.7 20.8 22.4 R&D expenditures / Total Sales (%) 4.3 5.1 5.0 4.9 - ------------------------------------------------------------------------------------------------------------------------- (4) Interest income (expenses) net (Billions of yen) - ------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 3Q 4Q - ------------------------------------------------------------------------------------------------------------------------- Interest income (expenses) net -0.7 -1.2 -0.6 -0.3 - ------------------------------------------------------------------------------------------------------------------------- (5) Exchange Rate - ------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 3Q 4Q - ------------------------------------------------------------------------------------------------------------------------- Exchange rate (Yen/US$) 127.01 119.19 122.59 119.04 Exchange rate (Yen/EURO) 116.56 117.34 122.59 127.63 - -------------------------------------------------------------------------------------------------------------------------
A1
2. CONSOLIDATED SALES BY PRODUCT CATEGORY (Three months ended March 31, 2003 and 2002) (Millions of yen) - ------------------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended Change excluding March 31, '03 March 31, '02 Change % exchange impact % - ------------------------------------------------------------------------------------------------------------------------------- (Office Equipment) Imaging Solutions: Digital Imaging Systems 166,111 180,519 -14,408 -8.0 -12,581 -7.0 Percentage of net sales (%) 36.0 40.0 Domestic 66,170 72,674 -6,504 -8.9 -6,504 -8.9 Overseas 99,941 107,845 -7,904 -7.3 -6,077 -5.6 Other Imaging Systems 54,917 66,107 -11,190 -16.9 -10,673 -16.1 Percentage of net sales (%) 12.0 14.7 Domestic 18,822 21,328 -2,506 -11.7 -2,506 -11.7 Overseas 36,095 44,779 -8,684 -19.4 -8,167 -18.2 Total Imaging Solutions 221,028 246,626 -25,598 -10.4 -23,254 -9.4 Percentage of net sales (%) 48.0 54.7 Domestic 84,992 94,002 -9,010 -9.6 -9,010 -9.6 Overseas 136,036 152,624 -16,588 -10.9 -14,244 -9.3 - ------------------------------------------------------------------------------------------------------------------------------- Networking input/output systems: Printing Systems 116,450 80,228 36,222 45.1 36,194 45.1 Percentage of net sales (%) 25.3 17.8 Domestic 51,043 40,087 10,956 27.3 10,956 27.3 Overseas 65,407 40,141 25,266 62.9 25,238 62.9 Other Input/Output Systems 10,565 12,484 -1,919 -15.4 -1,985 -15.9 Percentage of net sales (%) 2.3 2.7 Domestic 1,868 3,641 -1,773 -48.7 -1,773 -48.7 Overseas 8,697 8,843 -146 -1.7 -212 -2.4 Total Networking input/output systems 127,015 92,712 34,303 37.0 34,209 36.9 Percentage of net sales (%) 27.6 20.5 Domestic 52,911 43,728 9,183 21.0 9,183 21.0 Overseas 74,104 48,984 25,120 51.3 25,026 51.1 - ------------------------------------------------------------------------------------------------------------------------------- Network system solutions 57,357 58,958 -1,601 -2.7 -1,580 -2.7 Percentage of net sales (%) 12.4 13.1 Domestic 56,795 58,296 -1,501 -2.6 -1,501 -2.6 Overseas 562 662 -100 -15.1 -79 -11.9 - ------------------------------------------------------------------------------------------------------------------------------- Office Equipment Total 405,400 398,296 7,104 1.8 9,375 2.4 Percentage of net sales (%) 88.0 88.3 Domestic 194,698 196,026 -1,328 -0.7 -1,328 -0.7 Overseas 210,702 202,270 8,432 4.2 10,703 5.3 The Americas 88,937 96,137 -7,200 -7.5 1,863 1.9 Europe 98,309 84,908 13,401 15.8 5,842 6.9 Other 23,456 21,225 2,231 10.5 2,998 14.1 - ------------------------------------------------------------------------------------------------------------------------------- (Other Businesses) Other Businesses 55,398 52,626 2,772 5.3 2,620 5.0 Percentage of net sales (%) 12.0 11.7 Domestic 41,552 42,118 -566 -1.3 -566 -1.3 Overseas 13,846 10,508 3,338 31.8 3,186 30.3 The Americas 393 369 24 6.5 60 16.3 Europe 1,618 420 1,198 285.2 1,066 253.8 Other 11,835 9,719 2,116 21.8 2,060 21.2 - ------------------------------------------------------------------------------------------------------------------------------- Grand Total 460,798 450,922 9,876 2.2 11,995 2.7 Percentage of net sales (%) 100.0 100.0 Domestic 236,250 238,144 -1,894 -0.8 -1,894 -0.8 Percentage of net sales (%) 51.3 52.8 Overseas 224,548 212,778 11,770 5.5 13,889 6.5 Percentage of net sales (%) 48.7 47.2 The Americas 89,330 96,506 -7,176 -7.4 1,923 2.0 Percentage of net sales (%) 19.4 21.4 Europe 99,927 85,328 14,599 17.1 6,908 8.1 Percentage of net sales (%) 21.7 18.9 Other 35,291 30,944 4,347 14.0 5,058 16.3 Percentage of net sales (%) 7.6 6.9 - -------------------------------------------------------------------------------------------------------------------------------
Each category includes the following product line: Digital Imaging Systems Digital PPCs, color PPCs, digital duplicators and facsimile machines Other Imaging Systems Analog PPCs, diazo copiers, and thermal paper Printing Systems MFPs(multifunctional printers), laser printers and software Other Input/Output Systems Optical discs and system scanners Network System Solutions Personal computers, PC servers, network systems and network related software Other Businesses Optical equipments, measuring equipments and semiconductors Reference: Three months ended Three months ended Exchange rate March 31, 2003 March 31, 2002 Change US$ 1 (Yen) 119.04 (Yen) 132.50 (Yen) -13.46 EURO 1 (Yen) 127.63 (Yen) 116.21 (Yen) 11.42 A2
(Full year ended March 31, 2003 and 2002) (Millions of yen) - --------------------------------------------------------------------------------------------------------------------------------- Year ended Year ended Change % Change excluding % March 31, `03 March 31, `02 exchange impact - --------------------------------------------------------------------------------------------------------------------------------- [Office Equipment] Imaging Solutions: Digital Imaging Systems 626,967 654,425 -27,458 -4.2 -34,787 -5.3 Percentage of net sales (%) 36.1 39.1 Domestic 265,654 294,827 -29,173 -9.9 -29,173 -9.9 Overseas 361,313 359,598 1,715 0.5 -5,614 -1.6 Other Imaging Systems 232,746 279,755 -47,009 -16.8 -51,083 -18.3 Percentage of net sales (%) 13.4 16.7 Domestic 80,520 97,356 -16,836 -17.3 -16,836 -17.3 Overseas 152,226 182,399 -30,173 -16.5 -34,247 -18.8 Total Imaging Solutions 859,713 934,180 -74,467 -8.0 -85,870 -9.2 Percentage of net sales (%) 49.5 55.8 Domestic 346,174 392,183 -46,009 -11.7 -46,009 -11.7 Overseas 513,539 541,997 -28,458 -5.3 -39,861 -7.4 - -------------------------------------------------------------------------------------------------------------------------------- Networking input/output systems: Printing Systems 408,830 299,231 109,599 36.6 102,441 34.2 Percentage of net sales (%) 23.5 17.9 Domestic 177,510 141,273 36,237 25.7 36,237 25.7 Overseas 231,320 157,958 73,362 46.4 66,204 41.9 Other Input/Output Systems 54,549 45,016 9,533 21.2 9,077 20.2 Percentage of net sales (%) 3.2 2.7 Domestic 10,100 14,966 -4,866 -32.5 -4,866 -32.5 Overseas 44,449 30,050 14,399 47.9 13,943 46.4 Total Networking input/output systems 463,379 344,247 119,132 34.6 111,518 32.4 Percentage of net sales (%) 26.7 20.6 Domestic 187,610 156,239 31,371 20.1 31,371 20.1 Overseas 275,769 188,008 87,761 46.7 80,147 42.6 - --------------------------------------------------------------------------------------------------------------------------------- Network system solutions 197,482 206,962 -9,480 -4.6 -9,552 -4.6 Percentage of net sales (%) 11.3 12.4 Domestic 194,873 204,631 -9,758 -4.8 -9,758 -4.8 Overseas 2,609 2,331 278 11.9 206 8.8 - --------------------------------------------------------------------------------------------------------------------------------- Office Equipment Total 1,520,574 1,485,389 35,185 2.4 16,096 1.1 Percentage of net sales (%) 87.5 88.8 Domestic 728,657 753,053 -24,396 -3.2 -24,396 -3.2 Overseas 791,917 732,336 59,581 8.1 40,492 5.5 The Americas 342,568 340,260 2,308 0.7 10,873 3.2 Europe 349,577 308,450 41,127 13.3 14,450 4.7 Other 99,772 83,626 16,146 19.3 15,169 18.1 - --------------------------------------------------------------------------------------------------------------------------------- [Other Businesses] Other Businesses 217,784 186,951 30,833 16.5 29,508 15.8 Percentage of net sales (%) 12.5 11.2 Domestic 167,365 149,602 17,763 11.9 17,763 11.9 Overseas 50,419 37,349 13,070 35.0 11,745 31.4 The Americas 1,372 1,487 -115 -7.7 -81 -5.4 Europe 4,900 2,862 2,038 71.2 1,700 59.4 Other 44,147 33,000 11,147 33.8 10,126 30.7 - --------------------------------------------------------------------------------------------------------------------------------- Grand Total 1,738,358 1,672,340 66,018 3.9 45,604 2.7 Percentage of net sales (%) 100.0 100.0 Domestic 896,022 902,655 -6,633 -0.7 -6,633 -0.7 Percentage of net sales (%) 51.5 54.0 Overseas 842,336 769,685 72,651 9.4 52,237 6.8 Percentage of net sales (%) 48.5 46.0 The Americas 343,940 341,747 2,193 0.6 10,792 3.2 Percentage of net sales (%) 19.8 20.4 Europe 354,477 311,312 43,165 13.9 16,150 5.2 Percentage of net sales (%) 20.4 18.6 Other 143,919 116,626 27,293 23.4 25,295 21.7 Percentage of net sales (%) 8.3 7.0 - ---------------------------------------------------------------------------------------------------------------------------------
Each category includes the following product line: Digital Imaging Systems Digital PPCs, color PPCs, digital duplicators and facsimile machines Other Imaging Systems Analog PPCs, diazo copiers, and thermal paper Printing Systems MFPs(multifunctional printers), laser printers and software Other Input/Output Systems Optical discs and system scanners Network System Solutions Personal computers, PC servers, network systems and network related software Other Businesses Optical equipments, measuring equipments and semiconductors Reference: Year ended Year ended Change Exchange rate March 31, 2003 March 31, 2002 US$ 1 (Yen) 121.96 (Yen) 125.10 (Yen) -3.14 EURO 1 (Yen) 121.00 (Yen) 110.60 (Yen) 10.40 A3 3. FORECAST OF CONSOLIDATED SALES BY PRODUCT CATEGORY
(Billions of yen) - ------------------------------------------------------------------------------------------------------------------------------------ Year ended March 31,2004 Half year ended September 30,2003 ------------------------ --------------------------------- Year ended Change Change Change Change Mar.31,'03 Forecast % Forecast(*) % Forecast % Forecast(*) % - ------------------------------------------------------------------------------------------------------------------------------------ (Office Equipment) Imaging Solutions: Digital Imaging Systems 626.9 569.5 -9.2 573.5 -8.5 286.0 -7.6 287.0 -7.2 Percentage of net sales (%) Domestic 265.6 240.0 -9.7 240.0 -9.7 125.0 -8.0 125.0 -8.0 Overseas 361.3 329.5 -8.8 333.5 -7.7 161.0 -7.2 162.0 -6.6 Other Imaging Systems 232.7 191.0 -17.9 192.5 -17.3 99.5 -17.8 100.0 -17.3 Percentage of net sales (%) 0.0 0.0 0.0 0.0 Domestic 80.5 68.0 -15.5 68.0 -15.5 34.0 -17.0 34.0 -17.0 Overseas 152.2 123.0 -19.2 124.5 -18.2 65.5 -18.1 66.0 -17.5 Total Imaging Solutions 859.7 760.5 -11.5 766.0 -10.9 385.5 -10.4 387.0 -10.1 Percentage of net sales (%) 0.0 0.0 0.0 0.0 Domestic 346.1 308.0 -11.0 308.0 -11.0 159.0 -10.1 159.0 -10.1 Overseas 513.5 452.5 -11.9 458.0 -10.8 226.5 -10.7 228.0 -10.1 - ------------------------------------------------------------------------------------------------------------------------------------ Networking input/output systems: Printing Systems 408.8 555.0 35.8 559.0 36.7 261.0 37.8 261.6 38.1 Domestic 177.5 232.0 30.7 232.0 30.7 109.0 32.9 109.0 32.9 Overseas 231.3 323.0 39.6 327.0 41.4 152.0 41.5 152.6 42.1 Other Input/Output Systems 54.5 69.5 27.4 70.5 29.2 38.0 28.7 38.2 29.3 Domestic 10.1 12.0 18.8 12.0 18.8 7.0 17.5 7.0 17.5 Overseas 44.4 57.5 29.4 58.5 31.6 31.0 31.5 31.2 32.3 Total Networking input/output systems 463.3 624.5 34.8 629.5 35.8 299.0 36.6 299.8 36.9 Domestic 187.6 244.0 30.1 244.0 30.1 116.0 31.9 116.0 31.9 Overseas 275.7 380.5 38.0 385.5 39.8 183.0 39.7 183.8 40.3 - ------------------------------------------------------------------------------------------------------------------------------------ Network system solutions 197.4 195.0 -1.3 195.0 -1.3 98.5 -1.6 98.5 -1.6 Domestic 194.8 192.0 -1.5 192.0 -1.5 97.0 -1.8 97.0 -1.8 Overseas 2.6 3.0 15.0 3.0 15.0 1.5 15.6 1.5 15.6 - ------------------------------------------------------------------------------------------------------------------------------------ Office Equipment Total 1,520.5 1,580.0 3.9 1,590.5 4.6 783.0 4.5 785.3 4.8 Domestic 728.6 744.0 2.1 744.0 2.1 372.0 2.3 372.0 2.3 Overseas 791.9 836.0 5.6 846.5 6.9 411.0 6.5 413.3 7.1 The Americas 342.5 346.7 1.2 352.5 2.9 170.6 0.4 175.0 3.0 Europe 349.5 369.0 5.6 372.5 6.6 181.1 10.1 176.5 7.3 Other 99.7 120.3 20.6 121.5 21.8 59.3 15.3 61.8 20.1 - ------------------------------------------------------------------------------------------------------------------------------------ (Other Businesses) Other Businesses 217.7 225.0 3.3 226.0 3.8 112.0 4.2 112.1 4.3 Domestic 167.3 168.0 0.4 168.0 0.4 87.0 1.1 87.0 1.1 Overseas 50.4 57.0 13.1 58.0 15.0 25.0 16.6 25.1 17.0 The Americas 1.3 1.3 -5.2 1.5 9.3 0.4 -20.9 0.5 -1.2 Europe 4.9 8.0 63.3 7.5 53.1 2.9 66.9 2.9 66.9 Other 44.1 47.7 8.0 49.0 11.0 21.7 13.0 21.7 13.0 - ------------------------------------------------------------------------------------------------------------------------------------ Grand Total 1,738.3 1,805.0 3.8 1,816.5 4.5 895.0 4.5 897.4 4.7 Domestic 896.0 912.0 1.8 912.0 1.8 459.0 2.1 459.0 2.1 Overseas 842.3 893.0 6.0 904.5 7.4 436.0 7.1 438.4 7.6 The Americas 343.9 348.0 1.2 354.0 2.9 171.0 0.3 175.5 3.0 Europe 354.4 377.0 6.4 380.0 7.2 184.0 10.7 179.4 8.0 Other 143.9 168.0 16.7 170.5 18.5 81.0 14.7 83.5 18.2 - ------------------------------------------------------------------------------------------------------------------------------------
* Excluding foreign exchange impact Each category includes the following product line: Digital Imaging Systems Digital PPCs, color PPCs, digital duplicators and facsimile machines Other Imaging Systems Analog PPCs, diazo copiers, and thermal paper Printing Systems MFPs(multifunctional printers), laser printers and software Other Input/Output Systems Optical discs and system scanners Network System Solutions Personal computers, PC servers, network systems and network related software Other Businesses Optical equipments, measuring equipments and semiconductors
Reference: Year ended Mar. 31, `03 Year ended Mar. 31, `04 Half year ended Sept. 30, `03 Exchange rate (Forecast) (Forecast) US$ 1 (Yen) 121.96 (Yen) 120.00 (Yen) 120.00 EURO 1 (Yen) 121.00 (Yen) 120.00 (Yen) 120.00
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- -APPENDIX B- [SCHEDULE 1] CONSOLIDATED PERFORMANCE - ---------------------------------------------------------------------------------------------------------------------- Fiscal year ended Fiscal year ended Fiscal year ended March, 1999 March, 2000 March, 2001 - ---------------------------------------------------------------------------------------------------------------------- Net sales (Billions of yen) 1,425.9 1,447.1 1,538.2 Net income (Billions of yen) 30.6 41.9 53.2 Return on equity (%) 6.4 8.1 9.7 Return on assets (%) 3.2 4.4 6.0 Net income per share (Yen) 44.33 60.61 76.85 - ---------------------------------------------------------------------------------------------------------------------- [SCHEDULE 2] CONSOLIDATED SALES BY PRODUCT LINE - ---------------------------------------------------------------------------------------------------------------------- Fiscal year ended Fiscal year ended Fiscal year ended March, 1999 March, 2000 March, 2001 - ---------------------------------------------------------------------------------------------------------------------- Imaging solutions (Billions of yen) 954.3 898.0 867.0 Networking I/O systems (Billions of yen) 128.3 173.1 261.8 Network system solutions (Billions of yen) 168.2 181.9 209.5 Other Businesses (Billions of yen) 175.0 194.0 199.8 - ---------------------------------------------------------------------------------------------------------------------- Imaging solutions (%) 66.9 62.0 56.4 Networking I/O systems (%) 9.0 12.0 17.0 Network system solutions (%) 11.8 12.6 13.6 Other Businesses (%) 12.3 13.4 13.0 Total 100.0 100.0 100.0 - ---------------------------------------------------------------------------------------------------------------------- [SCHEDULE 3] CONSOLIDATED SALES BY GEOGRAPHIC AREA - ---------------------------------------------------------------------------------------------------------------------- Fiscal year ended Fiscal year ended Fiscal year ended March, 1999 March, 2000 March, 2001 - ---------------------------------------------------------------------------------------------------------------------- Japan (Billions of yen) 820.9 873.1 930.4 The Americas (Billions of yen) 239.6 231.1 252.6 Europe (Billions of yen) 283.3 258.5 247.4 Others (Billions of yen) 82.0 84.3 107.6 - ---------------------------------------------------------------------------------------------------------------------- Japan (%) 57.5 60.3 60.5 The Americas (%) 16.8 16.0 16.4 Europe (%) 19.9 17.9 16.1 Others (%) 5.8 5.8 7.0 Total 100.0 100.0 100.0 - ---------------------------------------------------------------------------------------------------------------------- [SCHEDULE 4] GEOGRAPHIC SEGMENT INFORMATION - ---------------------------------------------------------------------------------------------------------------------- Japan Fiscal year ended Fiscal year ended Fiscal year ended March, 1999 March, 2000 March, 2001 - ---------------------------------------------------------------------------------------------------------------------- Net sales (Billions of yen) 1,071.0 1,145.7 1,233.9 Operating income (Billions of yen) 50.5 62.5 83.5 Operating income on net sales (%) 4.7 5.5 6.8 - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- The Americas Fiscal year ended Fiscal year ended Fiscal year ended March, 1999 March, 2000 March, 2001 - ---------------------------------------------------------------------------------------------------------------------- Net sales (Billions of yen) 245.4 236.4 256.4 Operating income (Billions of yen) 12.1 10.2 8.9 Operating income on net sales (%) 4.9% 4.3% 3.5% - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- Europe Fiscal year ended Fiscal year ended Fiscal year ended March, 1999 March, 2000 March, 2001 - ---------------------------------------------------------------------------------------------------------------------- Net sales (Billions of yen) 296.1 268.9 257.7 Operating income (Billions of yen) 12.3 13.2 11.2 Operating income on net sales (%) 4.2% 4.9% 4.4% - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- Others Fiscal year ended Fiscal year ended Fiscal year ended March, 1999 March, 2000 March, 2001 - ---------------------------------------------------------------------------------------------------------------------- Net sales (Billions of yen) 106.9 101.0 117.1 Operating income (Billions of yen) 3.2 5.2 6.1 Operating income on net sales (%) 3.0% 5.2% 5.3% - ---------------------------------------------------------------------------------------------------------------------- [SCHEDULE 1] CONSOLIDATED PERFORMANCE - ------------------------------------------------------------------------------------------------ Fiscal year ended Fiscal year ended March, 2002 March, 2003 - ------------------------------------------------------------------------------------------------ Net sales (Billions of yen) 1,672.3 1,738.3 Net income (Billions of yen) 61.6 72.5 Return on equity (%) 10.4 11.2 Return on assets (%) 6.4 6.6 Net income per share (Yen) 88.27 99.79 - ------------------------------------------------------------------------------------------------ [SCHEDULE 2] CONSOLIDATED SALES BY PRODUCT LINE - ------------------------------------------------------------------------------------------------ Fiscal year ended Fiscal year ended March, 2002 March, 2003 - ------------------------------------------------------------------------------------------------ Imaging solutions (Billions of yen) 934.1 859.7 Networking I/O systems (Billions of yen) 344.2 463.3 Network system solutions (Billions of yen) 206.9 197.4 Other Businesses (Billions of yen) 186.9 217.7 - ------------------------------------------------------------------------------------------------ Imaging solutions (%) 55.8 49.5 Networking I/O systems (%) 20.6 26.7 Network system solutions (%) 12.4 11.3 Other Businesses (%) 11.2 12.5 Total 100.0 100.0 - ------------------------------------------------------------------------------------------------ [SCHEDULE 3] CONSOLIDATED SALES BY GEOGRAPHIC AREA - ------------------------------------------------------------------------------------------------ Fiscal year ended Fiscal year ended March, 2002 March, 2003 - ------------------------------------------------------------------------------------------------ Japan (Billions of yen) 902.6 896.0 The Americas (Billions of yen) 341.7 343.9 Europe (Billions of yen) 311.3 354.4 Others (Billions of yen) 116.6 143.9 - ------------------------------------------------------------------------------------------------ Japan (%) 54.0 51.5 The Americas (%) 20.4 19.8 Europe (%) 18.6 20.4 Others (%) 7.0 8.3 Total 100.0 100.0 - ------------------------------------------------------------------------------------------------ [SCHEDULE 4] GEOGRAPHIC SEGMENT INFORMATION - ------------------------------------------------------------------------------------------------ Japan Fiscal year ended Fiscal year ended March, 2002 March, 2003 - ------------------------------------------------------------------------------------------------ Net sales (Billions of yen) 1,248.6 1,274.9 Operating income (Billions of yen) 106.1 86.1 Operating income on net sales (%) 8.5 6.8 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ The Americas Fiscal year ended Fiscal year ended March, 2002 March, 2003 - ------------------------------------------------------------------------------------------------ Net sales (Billions of yen) 346.9 339.5 Operating income (Billions of yen) 11.4 14.3 Operating income on net sales (%) 3.3% 4.2% - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Europe Fiscal year ended Fiscal year ended March, 2002 March, 2003 - ------------------------------------------------------------------------------------------------ Net sales (Billions of yen) 313.3 355.9 Operating income (Billions of yen) 12.1 18.2 Operating income on net sales (%) 3.9% 5.1% - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Others Fiscal year ended Fiscal year ended March, 2002 March, 2003 - ------------------------------------------------------------------------------------------------ Net sales (Billions of yen) 146.9 169.8 Operating income (Billions of yen) 7.0 9.9 Operating income on net sales (%) 4.8% 5.9% - ------------------------------------------------------------------------------------------------
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