6-K 1 r6k040607.txt NOTICE OF 104TH ORDINARY GENERAL MEETING OF SHAREHOLDERS 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 June, 2004 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/ Etsuo Kobayashi ------------------------------ Etsuo Kobayashi Executive Vice President General Manager of Personnel Division June 7, 2004 -------------------------------------------------------------------------------- (TRANSLATION) June 4, 2004 NOTICE OF 104th ORDINARY GENERAL MEETING OF SHAREHOLDERS Dear Shareholder, The Company would hereby like to inform you that the 104th ordinary general meeting of shareholders will be held as follows, and would be grateful if you could attend the meeting. Those who will not be able to attend the meeting on the day are kindly requested to consider appended "Reference Material for Exercising Voting Rights" and indicate on the voting form enclosed herewith your approval or disapproval of the matters to be resolved, and return the form bearing your registered seal or signature to us. Your voting right can also be exercised via the Internet (http://www.web54.net). Please submit your voting right no later than Thursday, June 24, 2004. Yours faithfully, Masamitsu Sakurai, President Ricoh Company, Ltd. 1-3-6 Nakamagome, Ohta-ku, Tokyo 1. DATE AND TIME: Friday, June 25, 2004, from 10:00 a.m. 2. VENUE: Ricoh's registered head office: 1-3-6 Nakamagome, Ohta-ku, Tokyo 3. MEETING AGENDA: ITEM TO BE REPORTED The Balance Sheets as of March 31, 2004, the Statements of Income and the Business Report for the fiscal year ended March 31, 2004 (April 1, 2003 to March 31, 2004). ITEMS TO BE RESOLVED Agenda 1: Approval of the proposed appropriation of retained earnings for the fiscal year Agenda 2: Partial amendment to the Articles of Incorporation Please see appended "Reference Material for Exercising Voting Rights" (page 26) Agenda 3: Election of fourteen (14) directors Agenda 4: Election of three (3) corporate auditors Agenda 5: Granting of retirement allowances to retiring directors -------------------------------------------------------------------------------- Shareholders are requested to fill out and submit the appended voting form at the reception desk on the above-mentioned date. * This English translation is an abridged version of the original notice in Japanese. In the event of any discrepancy, the Japanese version shall prevail. -1- Reference Documents Attached to Notice of 104/th/ Ordinary General Meeting of Shareholders BUSINESS REPORT (APRIL 1, 2003, TO MARCH 31, 2004) 1. OPERATING CONDITIONS (1) OPERATING PROGRESS AND RESULTS (a) Overview In the fiscal year ended March 31, 2004, the Japanese economy showed some positive signs of recovery, such as an improvement in corporate earnings and a steady increase in capital investment. In the U.S., economic recovery was seen in the latter half of the period, driven by the expansion of consumer spending and capital investment due to tax cuts and other factors, while the European economy was generally stagnant. Chinese economy maintained high growth rate driven by expanding domestic consumer spending and increased exports. Under such circumstances, the Ricoh Group proactively proceeds with business activities based on the "14/th/ Medium-term Management Plan", established for the period from April 2002 through March 2005. In the office equipment business, one of the Ricoh Group's core segment, the Company has been pursuing the "transition from mere manufacturing and marketing of such equipment as copiers and printers to the solution business to support the customers' business improvement and business innovation through the supply of equipment". We foresee that the customers' requirements to improve and innovate their business will further proliferate. Concurrently, with installation of digital networks further prevailing and customer needs for larger volumes of electronic and color processing of information ever increasing, it will become important issue for the customers to efficiently and effectively manage the input/output, storage and retrieval of TDV (total document volume), comprising of not only copying but also printing functions. Having recognized this trend, we have set the main strategy for the 14/th/ Medium-term Management Plan as "the expansion of our revenue base by meeting customer needs for TDV". The key elements of the strategy and respective aims are as follows. (i) B to C (Black and white to Color) Transition: To provide a full line of color products, which are comparable to monochrome models in machine price and are made of space-saving design, and which not only satisfy the customers' needs for replacing monochrome machines but also create new demand for color machines. (ii) Increasing sales of high-speed machines: To provide high-speed machines which are competitive in terms of unit price, maintenance cost and reliability, thereby satisfying the customer needs for effective output capability. (iii) Providing full printing solutions: To offer best combination of copiers and printers to satisfy the customer needs to further reduce their costs. -2- The results attained in the fiscal period under review based on these basic strategies are as follows. Responding to the B to C Transition, we launched new models of color multi-feature machines and color laser printers one after another to reinforce the product line-up. As a result, we could largely increase the market share in the U.S. and Europe. Also, we started the marketing of new color inkjet printer IPSiO G707/G505, incorporating GELJET technology exclusively developed by Ricoh, in an attempt to create a market for business-use ink-jet printers. As a result of our efforts to increase sales of high-speed machines, high-speed digital multi-function machines continued to do very well in both the domestic and overseas markets to establish our steady position in the market. In the printing solutions sector, we are steadily increasing the sales to major customers, who are doing business on a global scale, especially in the U.S. and European markets due to our proposition for minimizing total expenses through optimal combination of copiers and printers as well as our worldwide service and support networks. With respect to the technical strategy, we are striving for the reinforcement of technical capabilities aiming to become the "world's No.1 product-engineering company" capable of supplying competitive products and services. In particular, we are concentrating our efforts on such technical areas as: the development of next-generation high-speed color image processing equipment; development of system engineering to enable easy inter-connection and operation of various types of office equipment, and; the development of highly sustainable products. As one achievement of these efforts, we launched the imagio Neo 752/602 Series high-speed digital multi-function machines, which boast both high "operability" and low "energy consumption" and embody environment friendliness without sacrificing high productivity essential to high-speed machines. Meanwhile, as a part of our efforts to enhance corporate governance, we established Ricoh Group CSR (Corporate Social Responsibility) Charter and Ricoh Group Code of Conduct in order to renew our awareness for the importance of recognizing and observing the respective laws and regulations of each respective nation, international laws and the spirit thereof, so as to take socially sensible and responsible courses of action. With respect to the disclosure of corporate information, we enforced an internal rule regarding the process for gathering, producing, reporting and disclosing information. For the implementation of the rule, we established the Disclosure Committee to ensure the strict, timely and complete disclosure of corporate information. In the fiscal year under review, net sales increased to Yen 876.3 billion, up 2.5% from the previous fiscal year. Operating income fell to Yen 62.1 billion, down 13.5% from the previous fiscal year due to increased selling, general and administrative expenses (such as research and development costs) with ordinary income dropping to Yen 62.5 billion, down 9.3% from the previous fiscal year. Net income in the fiscal year rose to Yen 58.5 billion, up 36.6% from the previous fiscal year as we booked an extraordinary profit associated with the return of substitute portion of Employees' Pension Fund to the government, etc. -3- (b) Segment performance Sales by category
(Billions of yen) ---------------------------------------------------------------------------------------------------------- Category Sales Percentage of total Change (%) ---------------------------------------------------------------------------------------------------------- Imaging Solutions 470.9 53.7 -0.8 ---------------------------------------------------------------------------------------------------------- Network Input/Output Systems 259.4 29.6 9.2 ---------------------------------------------------------------------------------------------------------- Network System Solutions 91.6 10.5 2.2 ---------------------------------------------------------------------------------------------------------- Office Equipment Total 822.0 93.8 2.5 ---------------------------------------------------------------------------------------------------------- Other Businesses 54.3 6.2 3.1 ---------------------------------------------------------------------------------------------------------- Total 876.3 100.0 2.5 ---------------------------------------------------------------------------------------------------------- Domestic 486.1 55.5 0.4 ---------------------------------------------------------------------------------------------------------- Exports 390.1 44.5 5.2 ----------------------------------------------------------------------------------------------------------
(2) PLANT AND EQUIPMENT INVESTMENT In the fiscal year under review, we invested a total of Yen 24.3 billion in plant and equipment, mainly comprising of the following. (a) Major equipment and facility expansions completed during the fiscal year: Electronic components plant (Yashiro Plant) Related supplies plant (Numazu Plant) Logistics center facilities (Gotenba Plant and Numazu Plant) (b) Major equipment and facility expansions in progress in the fiscal year: Electronic components plant (Yashiro Plant) Related supplies plant (Numazu Plant) Logistics center facilities (Gotenba Plant and Numazu Plant) (3) FUNDING During the fiscal year under review, Ricoh did not seek increased capitalization or financing through any corporate bond or other issues. (4) TRANSITION OF OPERATING RESULT
(Billions of yen; except for net income per share) ----------------------------------------------------------------------------------------------------------- Items Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended March 31, 2001 March 31, 2002 March 31, 2003 March 31, 2004 ----------------------------------------------------------------------------------------------------------- Net sales 855.4 860.1 855.0 876.3 ----------------------------------------------------------------------------------------------------------- Ordinary income 65.9 67.6 68.8 62.5 ----------------------------------------------------------------------------------------------------------- Net income 34.4 40.0 42.8 58.5 ----------------------------------------------------------------------------------------------------------- Net income per share (yen) 49.67 57.42 58.75 79.18 ----------------------------------------------------------------------------------------------------------- Total assets 824.1 908.0 933.3 937.3 ----------------------------------------------------------------------------------------------------------- Shareholders' equity 489.1 553.6 596.6 642.4 -----------------------------------------------------------------------------------------------------------
Notes: 1. Net income per share is based on the average number of shares of outstanding common stock during the fiscal year. 2. Since fiscal year ended March 2002, net income per share has been calculated after deducting the number of shares of treasury stock from the average number of shares of outstanding common stock. 3. Since fiscal year ended March 2003, the Company has been applying "Accounting Standards for Net Income per Share" (Corporate Accounting Standard No.2) and "Policies Applied to Accounting Standards Related to Net Income per Share" (Corporate Accounting Standard Application Policy No.4) in the calculation of net income per share. -4- 2. CORPORATE PROFILE (as of March 31, 2004) (1) PRINCIPAL SALES OFFICES AND PLANTS (a) Head office: 1-3-6, Nakamagome, Ohta-ku, Tokyo (b) Sales offices
-------------------------------------------------------------------------------- Name Location -------------------------------------------------------------------------------- Principal Executive Office Headquarters Minato-ku, Tokyo -------------------------------------------------------------------------------- Ginza Office Chuo-ku, Tokyo -------------------------------------------------------------------------------- Shinyokohama Office Yokohama, Kanagawa -------------------------------------------------------------------------------- Sapporo Branch Sapporo, Hokkaido -------------------------------------------------------------------------------- Sendai Branch Sendai, Miyagi -------------------------------------------------------------------------------- Kanto Branch Chuo-ku, Tokyo -------------------------------------------------------------------------------- Tokyo Branch Chuo-ku, Tokyo -------------------------------------------------------------------------------- Nagoya Branch Nagoya, Aichi -------------------------------------------------------------------------------- Osaka Branch Osaka, Osaka -------------------------------------------------------------------------------- Hiroshima Branch Hiroshima, Hiroshima -------------------------------------------------------------------------------- Fukuoka Branch Fukuoka, Fukuoka --------------------------------------------------------------------------------
(c) Laboratories and plants
-------------------------------------------------------------------------------- Name Location -------------------------------------------------------------------------------- Research and Development Center Yokohama, Kanagawa -------------------------------------------------------------------------------- Software Research Center Bunkyo-ku, Tokyo -------------------------------------------------------------------------------- Applied Electronics Institute Natori, Miyagi -------------------------------------------------------------------------------- Ohmori Office Ohta-ku, Tokyo -------------------------------------------------------------------------------- Ohmori Office 2 Ohta-ku, Tokyo -------------------------------------------------------------------------------- Atsugi Plant Atsugi, Kanagawa -------------------------------------------------------------------------------- Hatano Plant Hatano, Kanagawa -------------------------------------------------------------------------------- Gotemba Plant Gotemba, Shizuoka -------------------------------------------------------------------------------- Numazu Plant Numazu, Shizuoka -------------------------------------------------------------------------------- Fukui Plant Sakai-gun, Fukui -------------------------------------------------------------------------------- Ikeda Plant Ikeda, Osaka -------------------------------------------------------------------------------- Yashiro Plant Kato-gun, Hyogo --------------------------------------------------------------------------------
-5- (2) SHAREHOLDERS' EQUITY (a) Total number of shares Authorized: 993,000,000 Issued: 744,912,078 (b) Number of shareholders at year-end: 45,167 (c) Major shareholders
------------------------------------------------------------------------------------------------------------ Name The shareholders' stake in The Company's stake in the the Company shareholders ------------------------------------------------------------------------------------------------------------ Thousands of Percentage Thousands of Percentage shares of voting shares of voting rights rights ------------------------------------------------------------------------------------------------------------ Master Trust Bank of Japan, Ltd. (Trust 85,575 11.68 - - Account) ------------------------------------------------------------------------------------------------------------ Japan Trustee Services Bank, Ltd. (Trust 73,282 10.00 - - account) ------------------------------------------------------------------------------------------------------------ Nippon Life Insurance Company 31,709 4.33 - - ------------------------------------------------------------------------------------------------------------ The Chase Manhattan Bank N.A. London 26,952 3.68 - - ------------------------------------------------------------------------------------------------------------ UFJ Bank Ltd. 24,413 3.33 - - ------------------------------------------------------------------------------------------------------------ The Chase Manhattan Bank N.A. London S.L. 20,134 2.74 - - Omnibus Account ------------------------------------------------------------------------------------------------------------ State Street Bank and Trust Company 19,118 2.61 - - ------------------------------------------------------------------------------------------------------------ Nipponkoa Insurance Co., Ltd. 19,015 2.59 55 0.01 ------------------------------------------------------------------------------------------------------------ The Bank of Tokyo-Mitsubishi, Ltd. 16,028 2.18 - - ------------------------------------------------------------------------------------------------------------ The New Technology Development Foundation 15,636 2.13 - - ------------------------------------------------------------------------------------------------------------
Note: In addition to the above, stakes in the Company include 1,000,000 shares (0.13%) that Nipponkoa Insurance Co., Ltd. owns and has entrusted with Master Trust Bank of Japan, Ltd. These shares are registered in the name of Masters Trust Bank of Japan, Ltd. as the owner, but Nipponkoa Insurance Co., Ltd. reserves the right to instruct on exercising voting rights on these shares. (d) Acquisition, disposal and ownership of shares of treasury stock (i) Treasury stocks acquired: Number of shares of common stock 5,960,150 shares Total acquisition cost Yen 11,823 million (ii) Treasury stocks disposed of: Number of treasury shares of common stock 2,246,406 shares Total gain through the disposition Yen 4,277 million (iii) Number of treasury stocks at year-end: Number of treasury shares of common stock 6,017,187 shares (3) EMPLOYEES
------------------------------------------------------------------------------------------------------- Gender Number of Change from Average length of employees previous fiscal year Average age service ------------------------------------------------------------------------------------------------------- Male 9,971 -458 41.5 17.6 ------------------------------------------------------------------------------------------------------- Female 1,593 -63 34.1 12.6 ------------------------------------------------------------------------------------------------------- Total 11,564 -521 40.5 16.9 -------------------------------------------------------------------------------------------------------
-6- (4) DIRECTORS AND CORPORATE AUDITORS
------------------------------------------------------------------------------------------------------------ Position or principal duty Name ------------------------------------------------------------------------------------------------------------ Chairman and Hiroshi Hamada Representative Director ------------------------------------------------------------------------------------------------------------ President and Masamitsu Sakurai Representative Director ------------------------------------------------------------------------------------------------------------ Deputy President and Environment, Social Contribution, Public Relations Haruo Kamimoto Representative Director ------------------------------------------------------------------------------------------------------------ Deputy President and Accounting, Personnel Tatsuo Hirakawa Representative Director ------------------------------------------------------------------------------------------------------------ Executive Managing Corporate Planning, IR, Corporate Communications, Koichi Endo Director SCM Structural Reform, Information Technology and Solutions ------------------------------------------------------------------------------------------------------------ Executive Managing Domestic Marketing Masayuki Matsumoto Director ------------------------------------------------------------------------------------------------------------ Managing Director CS and Quality, Production, Materials Procurement; Makoto Hashimoto General Manager of Management Quality Control Division ------------------------------------------------------------------------------------------------------------ Managing Director Overseas Marketing; General Manager of International Katsumi Yoshida Marketing Group ------------------------------------------------------------------------------------------------------------ Managing Director Research And Development; General Manager of Kiyoshi Sakai Research and Development Division, Head of Group Technology Planning Office ------------------------------------------------------------------------------------------------------------ Managing Director Image System Business, Planning, Development and Engineering of Image Systems; General Manager of Shiro Kondoh Image System Group ------------------------------------------------------------------------------------------------------------ Managing Director Sales in Europe Kazuo Togashi ------------------------------------------------------------------------------------------------------------ Managing Director Domestic Marketing Planning; General Manager of Kazunori Azuma Marketing Group, Head of Solution Marketing Center ------------------------------------------------------------------------------------------------------------ Director Comprehensive Business Administration Josei Itoh Director Chairman and Representative Director of NIppon Life Insurance Company ------------------------------------------------------------------------------------------------------------ Director Information Communication Business and Technological Nobuo Mii Matters Managing Partner of Ignite Group ------------------------------------------------------------------------------------------------------------ Corporate Auditor (Full-time) Hisaaki Koga ------------------------------------------------------------------------------------------------------------ Corporate Auditor (Full-time) Hideyuki Takamatsu ------------------------------------------------------------------------------------------------------------ Corporate Auditor President of Matsuishi Law office Kenji Matsuishi ------------------------------------------------------------------------------------------------------------ Corporate Auditor President and Representative Director of Sanai-oil Takehiko Wada Co., Ltd. ------------------------------------------------------------------------------------------------------------
Notes: 1. Changes of directors took place in the fiscal year under review as follows: June 2003; Shiro Kondoh, Kazuo Togashi and Kazunori Azuma were appointed as managing directors. September 2003; Masami Takeiri retired from Executive Managing Director. March 2004; Naoto Shibata retired from Executive Managing Director. 2. Directors Josei Itoh and Nobuo Mii are outside directors appointed under Article 188-2-7-2 of the Commercial Code. 3. Corporate Auditors Kenji Matsuishi and Takehiko Wada are outside corporate auditors as stipulated in Clause 1, Article 18 of the Law for Special Exceptions to the Commercial Code concerning Audit, etc. of Kabushiki Kaisha. -7- (5) STATUS OF CONSOLIDATION (a) Major Consolidated Subsidiaries
----------------------------------------------------------------------------------------------------------- Percentage of Name Paid-in capital total voting rights Principal business ----------------------------------------------------------------------------------------------------------- Tohoku Ricoh Co., Ltd. 2,272 million JPY 100.00 Manufacture of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- Ricoh Elemex Corporation 3,456 million JPY 55.74 Manufacture of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- NBS Ricoh Co., Ltd. 50 million JPY 100.00 Marketing of office supplies ----------------------------------------------------------------------------------------------------------- Tokyo Ricoh Co., Ltd. 418 million JPY 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- Osaka Ricoh Co., Ltd. 210 million JPY 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- Marketing of IT equipment and Ricoh Technosystems Co., 1,000 million JPY 100.00 maintenance of copiers and IT Ltd. equipment ----------------------------------------------------------------------------------------------------------- Ricoh Chubu Co., Ltd. 400 million JPY 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- Ricoh Kansai Co., Ltd. 700 million JPY 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- Ricoh Leasing Co., Ltd. 7,896 million JPY 51.11 General leasing ----------------------------------------------------------------------------------------------------------- Manufacture of copiers and IT RICOH ASIA INDUSTRY 27 million USD 100.00 equipment; and manufacture of (SHENZHEN) LTD. office supplies ----------------------------------------------------------------------------------------------------------- RICOH ASIA INDUSTRY LTD. 180 million HKD 90.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- Manufacture of copiers and IT RICOH ELECTRONICS, INC. 27 million USD 100.00 equipment; and manufacture and marketing of office supplies ----------------------------------------------------------------------------------------------------------- RICOH CORPORATION 192 million USD 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- LANIER WORLDWIDE, INC. 256 million USD 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- RICOH EUROPE B.V. 13 million EUR 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- RICOH FRANCE S.A. 1 million EUR 100.00 Marketing of copiers and IT equipment ----------------------------------------------------------------------------------------------------------- NRG GROUP PLC 49 million GBP 100.00 Marketing of copiers and IT equipment -----------------------------------------------------------------------------------------------------------
Note: The respective percentages of total voting rights for Ricoh Elemex Corporation, Osaka Ricoh Co., Ltd., Ricoh Leasing Co., Ltd., Ricoh Asia Industry (Shenzhen) Ltd., Ricoh Electronics, Inc., and Lanier Worldwide, Inc., include voting rights of those shares held by subsidiaries. (b) Consolidations Tohoku Ricoh Co., Ltd. became a wholly owned subsidiary on April 1, 2003, through a stock for stock exchange. -8- (c) Results of consolidation In the fiscal year under review, Ricoh Group has 321 consolidated subsidiaries and 60 affiliates accounted for under the equity method. Results of consolidation were as follows.
(Billions of yen; except for net income per share) --------------------------------------------------------------------------------------------------------- Items Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended March 31, 2001 March 31, 2002 March 31, 2003 March 31, 2004 --------------------------------------------------------------------------------------------------------- Net sales 1,538.2 1,672.3 1,738.3 1,780.2 (Overseas) (607.8) (769.6) (842.3) (866.1) --------------------------------------------------------------------------------------------------------- Income before income 97.7 113.9 123.4 143.0 taxes --------------------------------------------------------------------------------------------------------- Net income 53.2 61.6 72.5 91.7 --------------------------------------------------------------------------------------------------------- Net income per share 76.85 88.27 99.79 123.63 (yen) --------------------------------------------------------------------------------------------------------- Total assets 1,704.7 1,832.9 1,884.9 1,852.7 --------------------------------------------------------------------------------------------------------- Total shareholders' 556.7 633.0 657.5 795.1 investment ---------------------------------------------------------------------------------------------------------
Notes: 1. The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). 2. Net income per share is based on the average number of shares of common stock during the period under review. 3. ISSUES TO BE RESOLVED While the economic fundamentals in Japan and the U.S. have been showing an upturn since the latter half of the previous year, the economic prospects are still unclear because of the concerns regarding the on-going appreciation of the yen and the sensitive global situation, such as the destabilization of Middle East. In addition, the business climate is also uneasy as the competition in the field of colorization of documents and digitization of networks is increasingly intensifying. It is of utmost importance to enhance our corporate competitiveness through the "creation of new value for the customers" and in "highly efficient corporate management" for Ricoh Group to achieve growth and expansion in such business environment. In order to realize our aim to be the "world's No.1 product-engineering company", it is essential to be a creator of new customer value by identifying new needs of the customers and providing superior value ahead of our peers. With such vision in mind, we shall strive harder than ever before to implement the CS (customer satisfaction) Operation by proactively creating new value and enhancing our technical capabilities by imbuing our products and services with such value. Furthermore, as the value we seek to provide to the customers, we intend to realize "Simplify Knowledge Creation", "Harmonize with the Environment" and "Think Solutions That Fit". In other words, we shall make further efforts: to support the knowledge creation activities of the customers and provide them with the technical environment for knowledge creation; to supply products and services which will enable the customers to contribute to protect the environment; and to improve user-friendliness for optimal utilization of our products and services. -9- Moreover, we continue to enhance the efficiency of the Ricoh Group through ongoing streamlining of processes in every business area, thereby increasing overall efficiency of corporate operations. We intend to further improve profitability through this increased operational efficiency and proactively allocate the created surplus to future growth. Acquisition of the shares of Hitachi Printing Solutions Co., Ltd., of which basic agreement was reached at the end of March 2004, will also be implemented with utmost effort in order to reinforce and expand our printer business. 4. SUBSEQUENT EVENTS There were no significant subsequent events. -10- BALANCE SHEETS (NON-CONSOLIDATED)
Millions of yen --------------------------------- As of March 31, --------------------------------- 2004 2003 -------------- --------------- ASSETS Current Assets: Cash on hand and in banks 14,687 8,951 Notes receivable -- trade 7,345 6,287 Accounts receivable -- trade 209,588 170,349 Marketable securities 211,045 132,096 Finished goods 24,043 20,711 Raw materials 2,934 3,397 Work-in-process 6,286 5,572 Supplies 6,448 5,680 Short-term loans receivable 27,213 3,323 Deferred tax assets 17,415 19,417 Accounts receivable -- other 14,551 119,481 Other current assets 4,393 3,934 Allowance for doubtful accounts -1,965 -1,049 Total current assets 543,987 498,155 Fixed Assets: Tangible fixed assets: Buildings 41,503 41,408 Structures 1,752 1,797 Machinery and equipment 18,619 18,914 Vehicles 15 17 Tools 19,044 17,898 Land 26,023 24,478 Construction in process 3,570 2,669 Total tangible fixed assets 110,528 107,183 Intangible assets Leasehold right and others 9,296 9,438 Software 17,597 11,907 Total intangible fixed assets 26,893 21,346 Investments and Other Assets: Investment securities 26,083 76,143 Affiliates' securities 131,715 126,622 Investment in affiliates 19,014 18,158 Long-term loans receivable 61,669 55,482 Deferred tax assets 10,913 23,721 Lease deposit 5,930 5,709 Other investments 3,399 3,595 Allowance for doubtful accounts -2,824 -2,777 Total investments and other assets 255,901 306,655 Total fixed assets 393,323 435,186 -------------- --------------- TOTAL ASSETS 937,310 933,341 ============== ===============
-11-
Millions of yen ---------------------------------- As of March 31, ---------------------------------- 2004 2003 --------------- ---------------- LIABITITIES Current Liabilities: Notes payable -- trade 4,156 6,822 Accounts payable -- trade 99,181 100,348 Accounts payable -- other 13,674 7,791 Accrued expenses 43,805 44,789 Accrued corporate tax and others 6,146 19,375 Accrued bonuses 13,873 15,838 Warranty reserve 330 202 Other current liabilities 5,958 6,090 Total current liabilities 187,125 201,259 Fixed Liabilities: Bonds 100,000 100,000 Long-term accounts payable -- other 6,445 - Retirement benefit obligation 341 34,507 Reserve for directors' retirement allowances 982 879 Total long-term liabilities 107,769 135,387 --------------- ---------------- Total Liabilities 294,895 336,646 --------------- ---------------- SHAREHOLDERS' EQUITY Common Stock 135,364 135,364 Capital Surplus: Additional paid-in capital 179,522 176,131 Other capital surplus 0 - Total capital surplus 179,522 176,131 Retained Earnings: Legal reserve 14,955 14,955 Reserve for deferral of capital gain on property 600 613 Reserve for special depreciation 499 486 Reserve for warranty on computer programs 304 255 Reserve for social promotion 110 119 General reserve 260,350 241,350 Unappropriated retained earnings 58,478 30,248 Total retained earnings 335,298 288,027 Unrealized holding gains on securities 4,161 1,556 Treasury stock -11,932 -4,386 Total Shareholders' Equity 642,415 596,694 --------------- ---------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 937,310 933,341 =============== ================
-12- STATEMENTS OF INCOME (NON-CONSOLIDATED)
Millions of yen ----------------------------------- For the year ended March 31, ----------------------------------- 2004 2003 -------------- ------------- Ordinary Income and Loss Operating income and expenses Operating income: Net sales 876,366 855,024 Operating expenses: Cost of sales 600,991 584,539 Selling, general and administrative expenses 213,213 198,628 Total operating expenses 814,204 783,167 Operating income 62,161 71,856 Non-operating income and expenses Non-operating income: Interest and dividends income 6,131 7,251 Other income 3,633 4,110 Total non-operating income 9,765 11,361 Non-operating expenses: Interest expenses 1,475 1,527 Other expenses 7,938 12,792 Total non-operating expenses 9,414 14,319 Ordinary income 62,513 68,898 Extraordinary Income and Loss Extraordinary income: Gain on exemption from the obligation for benefits related to substitutional portion of Employees' Pension Fund 26,949 - Gain on transfer of securities to an employee retirement benefit trust 2,691 - Gains on sales of shares of a subsidiary 572 - Gains on settlement of qualified pension plan 6 - Total extraordinary income 30,219 - Income before income taxes 92,732 68,898 Provision for income taxes 21,100 33,880 Corporate and other tax adjustments 13,037 -7,862 Net income 58,595 42,880 Retained earnings at beginning of year 5,736 5,703 Reversal of reserve for social contribution 89 81 Retirement of treasury stocks - 13,328 Interim cash dividends 5,943 5,088 -------------- ------------- UNAPPROPRIATED RETAINED EARNINGS AT END OF YEAR 58,478 30,248 ============== =============
-13- I. SIGNIFICANT ACCOUNTING POLICIES 1. VALUATION METHOD FOR SECURITIES (1) Stocks of subsidiaries and affiliates Securities of subsidiaries and affiliates are stated at moving average cost. (2) Other securities Marketable securities: Marketable securities are marked to market based on the market price at the end of the term and other factors (accounting for all valuation differences with the full capital injection method; the cost of securities sold is valued at moving average cost). Non-marketable securities: Non-marketable securities are stated at cost based on the moving average method. 2. VALUATION METHOD FOR INVENTORIES Inventories are stated at the lower of average cost or market. 3. VALUATION STANDARDS AND METHODS FOR DERIVATIVES Derivatives are stated at market value. 4. DEPRECIATION AND AMORTIZATION (1) Tangible fixed assets: Depreciation of tangible fixed assets is computed principally by using the declining-balance method. Buildings (excluding fixtures) acquired after April 1, 1998, are depreciated using the straight-line method. The depreciation periods are basically as follows: Buildings: 5-50 years Machinery and equipment: 2-12 years (2) Intangible assets: Amortization of intangible assets is computed by using the straight-line method. With software for sale in the market, however, the Company records the larger of a amortization based on projected sales profits or a uniform amortization based on a projected effective sales period for the balance. The initially projected effective sales term is three years. With software for internal use, the Company uses straight-line method based on a usable period of five years. 5. BASIS FOR PROVISION OF RESERVES (1) Allowance for doubtful accounts: The allowance for doubtful accounts is provided to cover possible losses from bad debts and represents possible individual doubtful accounts based on historical default rate and the potential for irrecoverability. -14- (2) Reserve for accrued bonuses: The reserve for accrued bonuses is provided by estimating the amount of bonuses payable to employees for the current fiscal year under our corporate rules for calculating such bonus payment. (3) Warranty reserve: To cover product after-sales service expenses, the Company calculates the product warranty reserve based on projected service costs during warrantee terms. (4) Accrued pension and severance costs: To cover projected employee benefits, the Company records the estimated obligations at the end of the current fiscal year based on projected year-end benefit obligations and plan assets. Amortization of actuarial gains or losses is computed by the straight-line method over the averaged remaining employment term (15 years). Amortization of prior service cost is computed by the straight-line method over the averaged remaining employment term (15 years). (Additional Information) On January 1, 2004, the Company obtained an approval from the Minister of Health, Welfare and Labor for the return of the past substitute portion of Employees' Pension Fund in accordance with the enforcement of Defined-benefit Corporate Pension Law, and made the reimbursement of the minimum responsible reserve to the government. The amount of profit/loss in the fiscal year being affected by this operation is Yen 26,949 million, which is booked as an extraordinary profit. In accordance with the Defined-benefit Corporate Pension Law coming into force, the Company made transitions of the lump-sum retirement payment plan and the qualified retirement pension system to the defined contribution plan and the retirement benefit prepayment system, respectively, and adopted "Accounting Process Regarding Transition of Retirement Benefit System" (Corporate Accounting Standard Application Policy No.1). The effects of this operation were Yen 6 million booked as an extraordinary profit. (5) Reserve for directors' retirement allowances: Ricoh calculates the necessary amounts of directors retirement allowances based on internal rules at year-end, in compliance with the provisions in Article 43 of the Commercial Code Enforcement Regulation. 6. CONSUMPTION TAXES Consumption taxes are excluded from revenues and expenses. 7. LEASING Finance leases for which ownership does not transfer to leasees are accounted for as operating leases. 8. HEDGE ACCOUNTING (1) Hedge accounting methods: Ricoh accounts for hedges at market value. With currency swaps, however, the Company hedges by assigning transactions that meet assignment requirements. -15- (2) Hedge instruments and targets: There is no hedging instrument or hedging target at the end of current fiscal year. (3) Hedging policies: In keeping with its internal Market Risk Management Rules, Ricoh uses derivatives to manage the exposure of its assets and liabilities to market fluctuations. (4) Hedge effectiveness: Ricoh assesses the effectiveness of hedges by analyzing the ratios of the total market fluctuations of hedged targets and instruments. 9. From the fiscal year under review, the financial statements are prepared in accordance with the Revised Commercial Code Enforcement Regulation as specified by "Ministerial Ordinance for the Revised Commercial Code Enforcement Regulation" (Ministry of Justice Ordinance No.68 of September 22, 2003). II. NOTES TO BALANCE SHEETS (Millions of yen) 1. Short-term receivable due from subsidiaries Yen 215,199 Long-term receivable due from subsidiaries Yen 62,007 2. Short-term payable due to subsidiaries Yen 46,657 3. Accumulated depreciation on tangible fixed assets Yen 327,967 4. Guarantee obligation Yen 512 5. Trade notes receivable discounted with banks Yen 27 6. Shares of common stock issued and outstanding at year-end 744,912,078 shares Shares of treasury stock held at year-end 6,017,187 shares 7. In addition to the fixed assets stated in the balance sheet, the Company uses computer and electronic component manufacturing facilities under lease agreements. 8. Increase in net assets by applying current value to the net assets pursuant to Article 124-3 of the Commercial Code Enforcement Regulation. Yen 4,161 9. The amounts less than one million yen have been omitted.
III. NOTES TO STATEMENTS OF INCOME (Millions of yen; except for net income per share) 1. Sales to subsidiaries Yen 740,976 2. Purchases from subsidiaries Yen 281,669 3. Non-operating transactions with subsidiaries: Yen 305,030 Transfer of assets Yen 146,453 Transfer of liabilities Yen 147,788 Others Yen 10,789 4. Net income per share (yen) Yen 79.18 5. The amounts less than one million yen have been omitted.
-16- PROPOSAL FOR APPROPRIATION OF UNAPPROPRIATED RETAINED EARNINGS
Yen ------------------------------------------------ For the year ended March 31, ------------------------------------------------ 2004 2003 ---------------------- ---------------------- Unappropriated retained earnings at end of year 58,478,829,574 30,248,567,126 Reversal of reserve for deferral of capital gain on property 25,773,094 27,478,909 Reversal of reserve for special depreciation 198,199,491 104,573,744 Reversal of reserve for warranty on computer programs 85,900,776 91,806,833 Total 58,788,702,935 30,472,426,612 To be appropriated as follows: Cash dividends 7,388,948,910 5,198,260,445 [per share] [10.00] [7.00] Director bonuses 178,800,000 183,400,000 Reserve for deferral of capital gain on property - 14,137,521 Reserve for special depreciation 500,529,515 118,240,207 Reserve for warranty on computer programs - 141,070,970 Reserve for social contribution 89,800,000 81,000,000 General reserve 41,000,000,000 19,000,000,000 ---------------------- ---------------------- Retained earnings brought forward to the next fiscal year 9,630,624,510 5,736,317,469 ====================== ======================
Notes: On December 1, 2003, the Company paid interim cash dividends of Yen 8.00 per share, totaling Yen 5,943,250,104. -17- English Translation of the Auditors' Report Originally Issued in Japanese Language INDEPENDENT AUDITORS' REPORT April 26, 2004 The Board of Directors Ricoh Company, Limited KPMG AZSA & Co. Teruo Suzuki (seal), Representative Partner Certified Public Accountant Tetsuzo Hamajima (seal), Representative and Engagement Partner Certified Public Accountant Mikihiro Himeno (seal), Engagement Partner Certified Public Accountant
We have audited the statutory report, that is the balance sheets, the statements of income, the business report (limited to accounting matters), and the proposal for appropriation of unappropriated retained earnings, and its supporting schedules (limited to accounting matters) of Ricoh Company Limited for the 104/th/ business year from April 1, 2003 to March 31, 2004 in accordance with Article 2 of the "Law for Special Exceptions to the Commercial Code Concerning Audits, etc. of Kabushiki Kaisha". With respect to the aforementioned business report and supporting schedules, our audit was limited to those matters derived from the accounting books and records of the Company and its subsidiaries. The statutory report and supporting schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the statutory report and supporting schedules based on our audit as independent auditors. We conducted our audit in accordance with generally accepted auditing standards in Japan. Those auditing standards require us to obtain reasonable assurance about whether the statutory report and supporting schedules are free of material misstatement. An audit is performed on a test basis, and includes assessing the accounting principles used, the method of their application and estimates made by management, as well as evaluating the overall presentation of the statutory report and supporting schedules. We believe that our audit provides a reasonable basis for our opinion. Our audit procedures also include those considered necessary for the Company's subsidiary. As a result of the audit, our opinion is as follows: (1) The balance sheet and the statement of income present fairly the financial position and the results of operations of the Company in conformity with related laws and regulations and the Articles of Incorporation of the Company. (2) The business report (limited to accounting matters) presents fairly the status of the Company in conformity with related laws and regulations and the Articles of Incorporation of the Company. (3) The proposal for appropriation of unappropriated retained earnings has been prepared in conformity with related laws and regulations and the Articles of Incorporation of the Company. (4) With respect to the supporting schedules (limited to accounting matters) there are no items to be noted that are not in conformity with the provisions of the Commercial Code. Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certified Public Accountants Law of Japan. -18- English translation of the corporate auditor's report originally issued in Japanese CORPORATE AUDITOR'S REPORT April 27, 2004 The Board of Corporate Auditors received each corporate auditor's report on audit methods and results concerning the execution of duties of each director for the business year from April 1, 2003 to March 31, 2004. Upon discussion, the board prepared this audit report as follows. 1. OUTLINE OF CORPORATE AUDITORS' AUDIT METHODS Each of the corporate auditors, in accordance with the policy and work shares prescribed by the Board of Corporate Auditors, attended the meetings of the Board of Directors and other important meetings of the Company, received reports on business operations from the Directors, etc., inspected important written approvals, etc., inquired into the activities and assets of the head office and principal places of business and had the subsidiaries of the Company submit reports on their business operations whenever necessary. The board also received reports and briefings from the independent auditors, and examined the accounting documents and schedules of the Company. With respect to any transactions by the Directors, transaction between the Directors and the Company involving conflict of interests, the gratuitous provision of profits by the Company and any other transactions not customary in nature between the Company and its subsidiaries or shareholders, and acquisition and disposal of treasury stock, we, in addition to the above mentioned auditing, asked the Directors, etc. to submit reports, whenever necessary, and examined these transactions in detail. 2. AUDIT RESULTS (1) We hereby state that the audit method and results of KPMG AZSA & Co., independent auditors, are appropriate. (2) We hereby state that the business report fairly presents the Company's situation in accordance with the law and the Articles of Incorporation. (3) There is no matter that should be specially indicated for the proposal for appropriation of unappropriated retained earnings, considering the state of Company's asset and other circumstances. (4) Supporting schedules fairly present matters to be disclosed, and there is no item that should be indicated. (5) There is no important fact that represents an unfair act, or violates the law or the Articles of Incorporation, with respect to the execution of directors' duties including those for the subsidiary. Also, we found no violations of duties by directors with respect to the covenant not to compete for directors, conflicts of interest between directors and the Company, offering of the Company's profits for free, unordinary transactions with the Company's subsidiary or shareholders, acquisition and disposal of treasury stock, etc. The Board of Corporate Auditors, Ricoh Company Limited Full-time corporate auditors: Hisaaki Koga (seal), Hideyuki Takamatsu (seal) Corporate auditors: Kenji Matsuishi (seal), Takehiko Wada (seal) Note: Corporate auditors Kenji Matsuyoshi, Takehiko Wada are outside corporate auditors in accordance with Paragraph 1, Article 18 of the Law for Special Exceptions to the Commercial Code Concerning Audits, etc., of Kabushiki Kaisha. -19- (FOR REFERENCE) CONSOLIDATED BUSINESS REPORT CONSOLIDATED OPERATING RESULTS ACHIEVING CONTINUOUS INCREASE IN CONSOLIDATED SALES FOR 10 YEARS AND CONSOLIDATED INCOME FOR 12 YEARS IN A ROW The amount of consolidated net sales in the fiscal year was Yen 1,780.2 billion (up 2.4% from previous fiscal year) driven by increased sales of printing systems, especially color MFPs (multi-function printers), in both the domestic and overseas markets, thereby marking continuous increase of sales for 10 consecutive years. Consolidated operating income in the fiscal year was Yen 150.0 billion (up 12.2% from the previous fiscal year) owing to the expanded sale of high value-added products, especially color MFPs and the increase of income by continually implementing cost reductions, which exceeded the increase of strategic expenditures, such as research & development cost and costs of core IT system development as well as pension reserves. Consolidated income before income taxes was Yen 143.0 billion (up 15.9% from the previous fiscal year), as the interest paid was decreased due to the reduction of interest bearing debts and the non-operating income increased due to gains from the additional transfer of a portion of the securities held to the retirement benefit trust account in accordance with the reform of pension plans, etc. Furthermore, in accordance with the said additional transfer of securities to the retirement benefit trust, an accounting transaction was made to reflect the accumulated gains from the establishment of the trust fund made in the past to the income of the year under review. As a result of the above, consolidated net income of the fiscal year was Yen 91.7 billion, a 26.6% increase from the previous year, and we achieved a continuous increase of consolidated income for 12 years in a row as well as a continuous renewal of the record-high consolidated income for 10 years. REINFORCING OUR FINANCIAL STRENGTH THROUGH THE REFORM OF THE PENSION PLAN Due to the increase of consolidated net profit of the fiscal year and other favorable conditions, the free cash flow, which is the aggregated cash flow generated by operating and financing activities, increased by Yen 3.9 billion from the previous fiscal year to mark Yen 91.5 billion. Furthermore, as the result of reduced interest bearing debts through the efficient use of funds in Ricoh Group, the amount of interest bearing debts decreased by Yen 51.8 billion, compared with the previous year. In the fiscal year, we returned substitute portion of Employees' Pension Fund to the government and implemented the reform of the pension plan themselves, which resulted in the reduction of the retirement benefit obligations by Yen 125.5 billion. Concurrently, the loss of the adjustment account for pensions to be disbursed (listed under the assets) was decreased by Yen 74.2 billion. As the result, the return on equity increased by 8.0 percentage points from the previous fiscal year to 42.9%, thus further enhancing the financial strength of the Ricoh Group. -20- OPERATING RESULTS/FINANCIAL CONDITIONS (CONSOLIDATED BASIS)
(Billions of yen; except for net income per share) ------------------------------------------------------------------------------------------------------------ Items Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended March 2001 March 2002 March 2003 March 2004 ------------------------------------------------------------------------------------------------------------ Net sales 1,538.2 1,672.3 1,738.3 1,780.2 (Overseas) 607.8 769.6 842.3 866.1 ------------------------------------------------------------------------------------------------------------ Income before 97.7 113.9 123.4 143.0 income taxes Net income 53.2 61.6 72.5 91.7 Net income per share 76.85 88.27 99.79 123.63 (yen) ------------------------------------------------------------------------------------------------------------ Total assets 1,704.7 1,832.9 188.49 1,852.7 Total shareholders' 556.7 633.0 657.5 795.1 equity Return on equity (%) 32.7 34.5 34.9 42.9 ------------------------------------------------------------------------------------------------------------
Notes: 1. The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). 2. Net income per share is based on the average number of shares of outstanding common stock during the fiscal year. -21- CONSOLIDATE FINANCIAL STATEMENTS (1) CONSOLIDATED BALANCE SHEETS
As of March 31, (Millions of yen) -------------------------- Year-on-year 2004 2003 change --------- --------- ----------------- ASSETS Current Assets: Cash and time deposits 204,001 200,330 3,671 Trade receivables 422,244 417,942 4,302 Marketable securities 45,124 107 45,017 Inventories 145,369 146,051 -682 Other current assets 55,079 58,083 -3,004 Total current assets 871,817 822,513 49,304 Fixed Assets: Tangible fixed assets 238,712 248,752 -10,040 Finance receivable 514,047 476,293 37,754 Other investment 228,217 337,364 -109,147 Total fixed assets 980,976 1,062,409 -81,433 --------- --------- -------- TOTAL ASSETS 1,852,793 1,884,922 -32,129 ========= ========= ========
Notes: - The breakdown of cash and time deposits:
(Millions of yen) CURRENT FISCAL YEAR Previous fiscal year ------------------- -------------------- Cash and cash equivalents 203,039 189,243 Time deposits 962 11,087 - Exchange rate at the end of the fiscal periods: CURRENT FISCAL YEAR Previous fiscal year ------------------- -------------------- US$1= Yen 105.69 Yen 120.20 EURO 1= Yen 128.88 Yen 129.83
-22- CONSOLIDATED BALANCE SHEETS
As of March 31, (Millions of yen) ------------------------- Year-on-year 2004 2003 change --------- --------- ----------------- LIABILITIES Current Liabilities: Trade payables 297,672 280,798 16,874 Short-term borrowings 151,162 138,713 12,449 Other current liabilities 158,594 169,072 -10,478 Total current liabilities 607,428 588,583 18,845 Long-term Liabilities: Long-term indebtedness 281,570 345,902 -64,332 Retirement benefit obligation 83,492 209,011 -125,519 Other liabilities 36,295 30,653 5,642 Total fixed liabilities 401,357 585,566 -184,209 --------- --------- -------- TOTAL LIABILITIES 1,008,785 1,174,149 -165,364 --------- --------- -------- MINORITY INTERESTS 48,877 53,259 -4,382 SHAREHOLDERS' EQUITY Common stock 135,364 135,364 - Additional paid-in capital 186,599 186,521 78 Retained earnings 515,372 434,748 80,624 Accumulated other comprehensive income (loss) -30,272 -94,733 64,461 Treasury stock -11,932 -4,386 -7,546 Total shareholders' equity 795,131 657,514 137,617 --------- --------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,852,793 1,884,922 -32,129 ========= ========= ========
Note: - Other comprehensive income
(Millions of yen) CURRENT FISCAL Previous Year-on-year YEAR fiscal year change -------------- ----------- ----------------- Net unrealized holding gains on available-for-sale securities 4,026 8,582 -4,556 Pension liability adjustments -14,863 -89,119 74,256 Net unrealized gains (losses) on derivative instruments -24 -178 154 Cumulative translation adjustments -19,411 -14,018 -5,393
-23- CONSOLIDATED FINANCIAL STATEMENTS (2) CONSOLIDATED STATEMENTS OF INCOME
For the year ended March (Millions of yen) -------------------------- Year-on-year 2004 2003 change (%) --------- ---------- ----------------- Net sales 1,780,245 1,738,358 2.4 Cost of sales 1,014,619 993,009 2.2 Gross profit 765,626 745,349 2.7 Selling, general and administrative expenses 615,620 611,695 0.6 Operating income 150,006 133,654 12.2 Interest and dividend income 1,925 3,772 -49.0 Interest expenses 5,290 6,853 -22.8 Other, net 3,578 7,103 -49.6 Income before income taxes, minority interests, equity in earnings of affiliates and cumulative effect of accounting change 143,063 123,470 15.9 Provision for income taxes 56,641 51,984 9.0 Minority interests 4,094 1,376 197.5 Equity in earnings of affiliates 2,065 2,403 -14.1 Income before cumulative effect of accounting changes 84,393 72,513 16.4 Cumulative effect of accounting change, net of tax 7,373 - - --------- --------- -------------- Net income 91,766 72,513 26.6 ========= ========= ============== FOR REFERENCE: (Billions of yen) Research and development expenditures 92.5 83.5 10.8% (Percentage of net sales amount) 5.2% 4.8% -
EFFECT OF EXCHANGE RATE FLUCTUATION ON THE SALES AMOUNT: The sales in the year under review continued at a brisk pace driven by sales of color copiers and printing systems in both the domestic and overseas markets, outperforming the results recorded in the previous fiscal year. Foreign exchange adjustments reduced the sales amount in the U.S. with the appreciation of the yen against the U.S. dollar but the sales value expanded dramatically in Europe due in part to the depreciation of the yen against the Euro. Even after the adjustment for the effect of foreign exchange fluctuations, the overseas sales amount increased by 1.5%.
(DOMESTIC AND OVERSEAS SALES) (Billions of yen; %) -------------------------------------------------------------------------------------------------------- Current fiscal year Previous fiscal year Year-on-year change Growth rate * -------------------------------------------------------------------------------------------------------- Domestic 914.0 896.0 2.0% 2.0% Overseas 866.1 842.3 2.8% 1.5% -------------------------------------------------------------------------------------------------------- Total 1,780.2 1,738.3 2.4% 1.8% --------------------------------------------------------------------------------------------------------
Note: * After foreign exchange adjustments. The growth rate is based on the assumption that the current foreign exchange rate is equivalent to the previous year's rate.
Foreign exchange rates (average rates during the period under review): ----------------------------------------------------------------- Current fiscal year Previous fiscal year ----------------------------------------------------------------- US$1 Yen 113.09 Yen 121.96 EURO 1 Yen 132.65 Yen 121.00 -----------------------------------------------------------------
-24- CONSOLIDATED STATEMENTS OF CASH FLOW
(Millions of yen) For the year ended March 31, ---------------------------------- 2004 2003 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income 91,766 72,513 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 76,968 76,551 Decrease (increase) in trade receivable -11,367 22,176 Decrease (increase) in inventories -4,317 14,983 Increase in trade payables 21,316 5,632 Other, net -19,455 -6,113 Net cash provided by operating activities 154,911 185,742 CASH FLOWS FROM INVESTING ACTIVITIES: Sales (purchases) of tangible fixed assets, net -75,242 -71,739 Sales (purchases) of available-for-sale securities, net 9,946 -27,706 Other, net 1,913 1,246 Net cash used in investing activities -63,383 -98,199 CASH FLOWS FROM FINANCING ACTIVITIES: Decrease of borrowings, indebtedness and debt securities, net -51,798 -39,055 Cash dividends paid -11,136 -10,176 Purchase of treasury stocks -11,411 -17,281 Other, net -490 -631 Net cash used in financing activities -74,835 -67,143 Effect of exchange rate changes on cash and cash -2,897 -1,329 equivalents Net increase in cash and cash equivalents 13,796 19,071 Cash and cash equivalents at beginning of year 189,243 170,172 ----------- ----------- Cash and cash equivalents at end of period 203,039 189,243 =========== ===========
STATUS OF RICOH GROUP COMPANIES The Ricoh Group consists of the Company itself, its 360 subsidiaries (321 consolidated subsidiaries and 39 subsidiaries accounted for under the equity method) and 21 affiliates (all accounted for under the equity method). -25- REFERENCE MATERIAL FOR EXERCISING VOTING RIGHTS 1. NUMBER OF VOTING RIGHTS OF ALL SHAREHOLDERS: 732,169 2. AGENDA AND INFORMATION: AGENDA 1: APPROVAL OF THE PROPOSED APPROPRIATION OF RETAINED EARNINGS FOR THE FISCAL YEAR (April 1, 2003, to March 31, 2004) The proposal for appropriation of retained earnings is described in the attached 104th Business Report (See page 17). Year-end cash dividends to shareholders for the current term will be paid at the rate of Yen 10.00 per share, in consideration of our business results for the current term, the strengthening of our corporate structure and the expansion of business in the future. Including interim cash dividends for the current term, shareholders will earn a total of Yen 18.00 per share in cash dividends. AGENDA 2: PARTIAL AMENDMENT TO THE ARTICLES OF INCORPORATION (1) Reasons for change: On September 25, 2003, the "Law Regarding Partial Revision of the Commercial Code and the Law for Special Exceptions to the Commercial Code concerning Audit, etc. of Kabushiki Kaisha" (Law No.132, 2003) came into effect, enabling the purchase of treasury stocks if so resolved by the Board of Directors based on the provisions of Articles of Incorporation. Accordingly, the Company proposes to newly stipulate the provisions for the purchase of treasury stocks as Article 6 of the Articles of Incorporation. Accordingly, current Article 6 and subsequent articles are to be renumbered as Article 7 and up. (2) Details of proposed amendment: The details of proposed amendment are as stated below.
(Underlined portions indicate the changes) ----------------------------------------------------------------------------------------------------- Current Articles of Incorporation Proposed provisions after amendment ----------------------------------------------------------------------------------------------------- Chapter 2 Shares Chapter 2 Shares (Purchase of Treasury Stocks) ----------------------------- (Newly established) Article 6 The Company may purchase the shares of its ---------------------------------------------------- own stocks by a resolution of the Board of Directors ---------------------------------------------------- pursuant to Paragraph 1, Item 2 of Article 211-3 of ---------------------------------------------------- the Commercial Code. -------------------- Article 6 through 33 Article 7 through 34 - -- - -- Provisions omitted. (Unchanged) -----------------------------------------------------------------------------------------------------
-26- AGENDA 3: ELECTION OF FOURTEEN (14) DIRECTORS As the tenure of office of fourteen (14) directors will expire at the end of this General Meeting of Shareholders, the Company proposes the appointment of fourteen (14) directors at this meeting.
The candidates for directors are as follows. -------------------------------------------------------------------------------------------------------------------------------- No. Name Brief personal profile Number of the (Date of birth) (the other company's name and position thereof when the candidate is a Company's representative director of other company; with an asterisk) shares held -------------------------------------------------------------------------------------------------------------------------------- Apr. 1966 Joined the Company May 1984 President, Ricoh UK Products Ltd. Apr. 1990 General Manager, Materials Procurement Division 1 Masamitsu Sakurai Jun. 1992 Director of the Company (January 8, 1942) Apr. 1993 President, Ricoh Europe B. V. 7,000 Jun. 1994 Managing Director of the Company Mar. 1995 General Manager, Research & Development Group Apr. 1996 President, Chief Executive Officer and Chief Operating Officer of the Company (to date) -------------------------------------------------------------------------------------------------------------------------------- Apr. 1960 Joined the Company Jun. 1983 Director of the Company Jun. 1990 Managing Director of the Company Jun. 1994 Executive Managing Director of the Company Sep. 1995 General Manager, Finance & Accounting Division 2 Tatsuo Hirakawa Jan. 1996 In charge of Corporate Planning 16,379 (November 17, 1937) Apr. 1997 In charge of Personnel and General Affairs Apr. 1999 In charge of Semiconductor Business Jun. 2000 Executive Vice President of the Company (to date) Oct. 2001 Deputy President of the Company (to date) Jun. 2003 In charge of Finance & Accounting and Personnel (to date) -------------------------------------------------------------------------------------------------------------------------------- Apr. 1966 Joined the Company Apr. 1987 President, Ricoh Electronics, Inc. Jun. 1992 Director of the Company Apr. 1993 General Manager, Information System Division Jun. 1997 Managing Director of the Company Apr. 1998 General Manager, Production Business Group 3 Koichi Endo Apr. 1999 In charge of DMS Business 12,747 (February 16, 1944) Jun. 2000 Executive Managing Director of the Company (to date) Executive Vice President of the Company (to date) Apr. 2004 In charge of Management Planning, IR & Corporate Communication, SCM Structure Reformation, Information Technology & Solution and Legal Affairs & Intellectual Properties (to date) -------------------------------------------------------------------------------------------------------------------------------- Apr. 1970 Joined the Company Jul. 1993 Manager, Tokyo Branch, Imaging Equipment Marketing Division, Marketing Group Masayuki Jun. 1994 Director of the Company 4 Matsumoto Jan. 1996 Deputy General Manager, Marketing Division (December 10, 1944) Oct. 1998 Managing Director of the Company 4,000 General Manager, Marketing Group Jun. 2000 Executive Vice President of the Company (to date) Jun. 2002 Executive Managing Director of the Company (to date) Apr. 2004 In charge of Domestic Sales and CSR (to date) --------------------------------------------------------------------------------------------------------------------------------
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----------------------------------------------------------------------------------------------------------------------------- Brief personal profile Number of the No. Name (the other company's name and position thereof when the candidate is a Company's (Date of birth) representative director of other company; with an asterisk) shares held ----------------------------------------------------------------------------------------------------------------------------- Apr. 1967 Joined the Company Oct. 1990 President, Ricoh Electronics, Inc. Feb. 1996 Vice Chairman, Ricoh Corporation Chairman, Ricoh Electronics, Inc. Apr. 2000 President, Ricoh Corporation Apr. 2001 Executive Vice President of the Company (to date) 5 Katsumi Yoshida Jun. 2002 Managing Director of the Company (to date) 5,100 (August 20, 1994) Jan. 2003 * Chairman, Ricoh Corporation (to date) Oct. 2003 General Manager, International Marketing Group of the Company * Chairman, Ricoh China Co., Ltd. (to date) In charge of Overseas Marketing of the Company and Sales in the U.S. (to date) Apr. 2004 General Manager, Overseas Business Group (to date) ----------------------------------------------------------------------------------------------------------------------------- Nov. 1972 Joined the Company Oct. 1990 General Manager, RP 2/nd/ Division, Imaging Business Group Jun. 1994 Director of the Company Mar. 1995 Deputy General Manager, Imaging System Business Group Apr. 1998 Director in charge of Imaging System Business and General Manager, Imaging System Business Group 6 Makoto Hashimoto Jun. 1998 Managing Director of the Company (to date) 10,000 (August 26, 1945) Jun. 2000 Executive Vice President of the Company (to date) Oct. 2000 President, Personal Multimedia Products Jun. 2003 Company In charge of CS & Quality Control, Production, and Materials Purchasing (to date) General Manager, Management Quality Control Division (to date) ----------------------------------------------------------------------------------------------------------------------------- Apr. 1970 Joined the Company Jun. 1994 General Manager, IPS Business Division, Imaging System Business Group Jan. 1996 Head of Management Planning Office Jun. 1996 Director of the Company 7 Kiyoshi Sakai Apr. 1999 General Manager, Research & Development Group (to date) 4,000 (December 25, 1945) Jun. 2000 Senior Vice President of the Company In charge of Research & Development (to date) Jun. 2002 Managing Director of the Development (to date) Executive Vice President of the Company (to date) ----------------------------------------------------------------------------------------------------------------------------- Apr. 1972 Joined the Company Apr. 1990 President, Ricoh UK Products Ltd. Jan. 1995 President, Ricoh Europe B.V. 8 Takashi Nakamura Jun. 1998 Director of the Company 5,693 (September 2, 1946) Jan. 1999 Head of Management Planning Office Jun. 2000 Senior Vice President of the Company Apr. 2002 Group Executive Officer of the Company (to date) Jun. 2002 * President Ricoh Elemex Corporation (to date) -----------------------------------------------------------------------------------------------------------------------------
-28-
----------------------------------------------------------------------------------------------------------------------------- Brief personal profile Number of the No. Name (the other company's name and position thereof when the candidate is a Company's (Date of birth) representative director of other company; with an asterisk) shares held ----------------------------------------------------------------------------------------------------------------------------- Apr. 1973 Joined the Company Apr. 1998 General Manager, Printer & System Business Division, Imaging System Business Group Jul. 1999 Deputy General Manager, Imaging System Business Group 9 Shiro Kondoh Jun. 2000 Senior Vice President of the Company 4,000 (October 7, 1949) Oct. 2000 General Manager, Imaging System Business Group (to date) Jun. 2002 Executive Vice President of the Company (to date) Jun. 2003 Managing Director of the Company (to date) Apr. 2004 In charge of Imaging System Business, Planning, Development and Engineering of Imaging System, and GJ Business (to date) ----------------------------------------------------------------------------------------------------------------------------- Apr. 1972 Joined the Company Apr. 1998 President, Ricoh Europe B.V. Jun. 2000 Group Executive Officer of the Company Apr. 2002 * Chairman, Ricoh Europe B.V. (to date) 10 Kazuo Togashi * Chairman, NRG Group PLC (to date) 3,000 (November 28, 1949) Jun. 2002 Executive Vice President of the Company (to date) Jun. 2003 Managing Director of the Company (to date) In charge of Sales in Europe (to date) ----------------------------------------------------------------------------------------------------------------------------- Apr. 1971 Joined the Company Apr. 1998 Deputy General Manager, System Solution Division, Marketing Group Jun. 2000 Senior Vice President of the Company Oct. 2000 Group Executive Officer of the Company President, Ricoh Technosystems Co., Ltd. Jun. 2003 Managing Director of the Company (to date) 11 Kazunori Azuma Executive Vice President of the Company (to date) 4,000 (February 11, 1949) Oct. 2003 In charge of Domestic Sales Planning (to date) * Chairman, Ricoh Technosystems Co., Ltd. (to date) Deputy General Manager, Marketing Group of the Company Nov. 2003 General Manager, Marketing Group (to date) ----------------------------------------------------------------------------------------------------------------------------- Apr. 1971 Joined the Company Apr. 1993 General Manager, Finance Department, Finance and Accounting Division Jan. 1997 Deputy General Manager, Finance 12 Yuji Inoue and Accounting Division 10,000 (April 4, 1948) Apr. 1998 General Manager, Finance and Accounting Oct. 1998 Division General Manager, Marketing Division of Ricoh Leasing Co., Ltd. (to date) Apr. 2000 * President, Ricoh Leasing Co., Ltd. (to date) Jun. 2000 Group Executive Officer of the Company (to date) -----------------------------------------------------------------------------------------------------------------------------
-29-
----------------------------------------------------------------------------------------------------------------------------- Brief personal profile Number of the No. Name (the other company's name and position thereof when the candidate is a Company's (Date of birth) representative director of other company; with an asterisk) shares held ----------------------------------------------------------------------------------------------------------------------------- Apr. 1976 Joined the Company Jan. 1993 President, Ricoh France S.A. Jan. 1998 General Manager, Accounting 13 Zenji Miura Department, Finance & Accounting Division of the Company 2,000 (January 5, 1950) Apr. 1998 Deputy General Manager, Finance & Accounting Division Oct. 2000 Senior Vice President of the Company General Manager, Accounting Division (to date) Jun. 2003 Executive Vice President of the Company (to date) ----------------------------------------------------------------------------------------------------------------------------- April 1955 Joined NHK 14 Nobuo Mii Jan. 1969 Joined IBM Japan Ltd. (July 4, 1931) Jan. 1969 Joined IBM Corporation Oct. 1973 General Manager, Fujisawa Research Laboratory, IBM Japan Ltd. 0 March 1977 Director of IBM Japan Ltd. April 1990 Vice President of IBM Japan Ltd. June 1990 Vice President of IBM Corporation Oct. 1997 * Managing Partner of Ignite Group (to date) June 2000 Director of the Company (to date) -----------------------------------------------------------------------------------------------------------------------------
Notes: 1. There is no conflict of interests between the candidate and the Company. 2. Mr. Nobuo Mii meets the requirements regarding the outside directors prescribed in Article 188, Paragraph 2-7-2 of the Commercial Code. -30- AGENDA 4: ELECTION OF THREE (3) CORPORATE AUDITORS As the tenure of office of corporate auditors Hisaaki Koga and Takehiko Wada will expire at the end of this General Meeting of Shareholders, the Company proposes the appointment of three (3) corporate auditors at this meeting. The board of corporate auditors has given its consent to these nominations. The candidates for corporate auditors are as follows.
--------------------------------------------------------------------------------------------------------------------- Brief personal profile Number of the No. Name (the other company's name and position thereof when the candidate Company's (Date of birth) is a representative director of other company; with an asterisk) shares held --------------------------------------------------------------------------------------------------------------------- April 1967 Joined the Company Oct. 1991 Deputy General Manager, Personnel Division 1 Hisaaki Koga April 1995 General Manager, Sendai Office, Marketing Group (April 5, 1943) April 1998 Head of General Manager's Office, Marketing 5,253 Group June 1998 Standing Corporate Auditor of the Company (to date) --------------------------------------------------------------------------------------------------------------------- April 1971 Joined the Company July 1988 President, Ricoh Finance Ltd. May 1991 Head of Administration Office, System Development Division 2 Koji Tomizawa June 1993 General Manager, Marketing Administration (May 25, 1946) Department, International Division 1,000 June 1997 Managing Director of Ricoh Logistics Co., Ltd. July 2001 Director of Tokyo Ricoh Co., Ltd. (to date) June 2004 Scheduled to retire from director of Tokyo Ricoh Co., Ltd. --------------------------------------------------------------------------------------------------------------------- April 1958 Joined Sanai-oil Co., Ltd. June 1985 Director of Sanai-oil Co., Ltd. 3 Takehiko Wada June 1990 Managing Director of Sanai-oil Co., Ltd. 0 (October 24, 1935) July 1994 Executive Managing Director of Sanai-oil Co., Ltd. June 1999 * President of Sanai-oil Co., Ltd. (to date) June 2001 Corporate Auditor of the Company (to date) ---------------------------------------------------------------------------------------------------------------------
Notes: 1. There is no conflict of interests between the candidates and the Company. 2. Mr. Takehiko Wada meets the requirements regarding the outside corporate auditors prescribed in Article 18, Paragraph 1 of the Law for Special Exceptions to the Commercial Code concerning Audit, etc. of Kabushiki Kaisha. -31- AGENDA 5: GRANTING OF RETIREMENT ALLOWANCES TO RETIRING DIRECTORS The Company proposes to pay retirement allowances in appropriate amounts with the set limits, according to the standards prescribed by the Company and the past practice, to Mr. Masami Takeiri, who resigned as a director as of September 30, 2003, Mr. Naoto Shibata, who resigned as a director as of March 31, 2004, and Messrs. Hiroshi Hamada, Haruo Kamimoto and Josei Itoh, who will retire as directors at the end of this meeting, in order to reward their services. The Company requests that the details such as the amount, timing and manner of payment shall be left to the decisions of the Board of Directors. Brief personal profile of the retiring directors are as follows.
------------------------------------------------------------------------------------------------------------------------- Name Brief personal profile ------------------------------------------------------------------------------------------------------------------------- June 1994 Director of the Company June 1998 Managing Director of the Company Masami Takeiri June 2002 Executive Managing Director of the Company Sep. 2003 Resigned as Executive Managing Director of the Company ------------------------------------------------------------------------------------------------------------------------- June 1992 Director oft he Company June 1996 Managing Director of the Company Naoto Shibata June 2000 Executive Managing Director of the Company March 2004 Resigned as Executive Managing Director of the Company ------------------------------------------------------------------------------------------------------------------------- May 1975 Director of the Company June 1980 Managing Director of the Company Hiroshi Hamada April 1981 Executive Managing Director and Representative Director of the Company April 1983 President and Representative Director of the Company April 1996 Chairman and Representative Director of the Company (to date) ------------------------------------------------------------------------------------------------------------------------- June 1980 Director of the Company Haruo Kamimoto June 1990 Managing Director of the Company June 1994 Executive Managing Director of the Company October 2001 Deputy President and Representative Director of the Company (to date) ------------------------------------------------------------------------------------------------------------------------- Josei Itoh June 2000 Director of the Company (to date) -------------------------------------------------------------------------------------------------------------------------
-32-