6-K 1 r6k060607.txt NOTICE OF 106TH 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 2006 Commission File Number 2 - 68279 RICOH COMPANY, LTD. ----------------------------------------------- (Translation of Registrant's name into English) 13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, 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 Corporate Senior Vice President General Manager of Personnel Division June 7, 2006 -------------------------------------------------------------------------------- (TRANSLATION) (Securities Code: 7752) June 7, 2006 NOTICE OF 106TH ORDINARY GENERAL MEETING OF SHAREHOLDERS Dear Shareholder, The Company would hereby like to inform you that the 106th 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 Tuesday, June 27, 2006. Yours faithfully, Masamitsu Sakurai, Chairman of the Board and Representative Director, President and Chief Executive Officer Ricoh Company, Ltd. 1-3-6 Nakamagome, Ohta-ku, Tokyo 1. DATE AND TIME: Wednesday, June 28, 2006, from 10:00 a.m. 2. VENUE: Ricoh's registered head office: 1-3-6 Nakamagome, Ohta-ku, Tokyo 3. MEETING AGENDA: ITEMS TO BE REPORTED: 1.The Business Report, Consolidated Balance Sheets and Consolidated Statements of Income as well as the results of auditing consolidated financial statements by account auditors and the Board of Corporate Auditors for the fiscal year ended March 31, 2006 (from April 1, 2005 to March 31, 2006). 2.The Non-Consolidated Balance Sheets and Non-Consolidated Statements of Income for the fiscal year ended March 31, 2006, and the acquisition of treasury shares by resolution of the Board of Directors in accordance with the authorization provided in the Company's Articles of Incorporation. 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" (pages 35 to 48). Agenda 3: Election of eleven (11) directors - 1 - Agenda 4: Election of one (1) corporate auditor Agenda 5: Election of one (1) substitute corporate auditor Agenda 6: Granting of retirement allowances to retiring directors and a corporate auditor ------------------------------------------------------------------------------- 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. - 2 - TO OUR SHAREHOLDERS I would like to take this opportunity to express our sincere appreciation for our shareholders' continuous support to us in delivering our business report for 106th business term. Under the 15th Medium-term Business Plan, started in the fiscal year ended March 31, 2006, the Ricoh Group strove to achieve a further growth and development by reinforcing its corporate competitiveness through "creation of new customer values" and "highly efficient business operations." By doing this, we aim to meet the expectations of our shareholders. Against the backdrop, consolidated net sales rose 5.6% year on year to 1,915.0 billion yen in the fiscal year ended March 31, 2006. The increase is attributable mainly to strong sales of color copiers, color multifunction printers (MFPs) and laser printers, at home and abroad. Net income increased sharply 16.7% to 97.0 billion yen, due chiefly to a rise in high-value added products and effects of continuous cost reductions. With regard to dividends, an interim dividend of 12 yen per share is already disbursed and a dividend of 12 yen per share, up 2 yen from a year earlier, at the end of the term will be proposed (total of 24.0 yen for the fiscal year) at the 106th Ordinary General Meeting of Shareholders. It is true that there are various uncertain factors such as economic trends and foreign exchange fluctuations, but the Ricoh Group is determined to do the utmost efforts to achieve consolidated net sales of 2.05 trillion yen and net income of 106 billion yen in the fiscal year ending March 31, 2007. We look forward to your continuous support and encouragement to the Company from now on. Sincerely, June 2006 Masamitsu Sakurai, Chairman of the Board and Representative Director, President and Chief Executive Officer - 3 - Reference Documents Attached to Notice of 106th Ordinary General Meeting of Shareholders BUSINESS REPORT FOR 106TH BUSINESS TERM (April 1, 2005 to March 31, 2006) (The following is an unofficial English translation of the Reports for the 106th Fiscal Year of the Company. The Company provides this translation for your reference and convenience only and without any warranty as to its accuracy or otherwise.) 1. OPERATING CONDITIONS (1) OPERATING PROGRESS AND RESULTS OF THE RICOH GROUP . Overview In the fiscal year under review, the Japanese economy continued to be steady in general, because of an increase in capital investment driven by improved corporate earnings and a recovery in consumer spending. In the U.S., the economy remained stable helped by strong personal consumption and capital expenditure, despite some unfavorable factors such as higher oil prices and interest rates. The European economy continued making a moderate recovery on the back of robust exports and an improvement in capital investment. In Asia, Chinese and Indian economies continued to expand. Under such circumstances, the Ricoh Group intends to be the company that gains most from the 21st century. Based on this group vision, we will continue to contribute both to productivity improvement and also to knowledge creation for individuals working anytime, anywhere. This approach will enable us to gain the utmost trust of our customers and continue to grow and develop our business. Accordingly, our proactive approach encompasses not only products and services for traditional office setups, but also customers working in a broadband environment. In terms of Office Solution business - our core competence - we in the Ricoh Group have made every possible effort since the inception of our 13th medium-term management plan to move beyond the manufacture and retail of equipment such as copiers and printers so that we may overhaul our operational structure, thus enabling us to support our customers in their efforts to improve or enhance productivity through our offering. In the 14th medium-term management plan, we defined our principal strategy as "the realization of TDV, thereby broadening our revenue and earning framework," as we recognize that efficient and effective Input/Output (I/O), storage, and searching of TDV (i.e., total document volume), which includes printed material in addition to photocopies, will become a pressing issue for our customers. While there are no changes to the direction of business structure reform and principal strategy of the Ricoh Group in the 15th medium-term management plan, we will aim to increase our corporate value by more than ever addressing issues from the customer's standpoint and continuing to provide values that meet customers' expectations. In Office Solution Business, in particular, we are confident that we can further solidify - 4 - our business foundation by taking utmost advantage of the abilities and strengths of the Ricoh Group, such as the comprehensive product line, customer rapport through sales and service, ability to provide solutions, global operations, image processing technology, and image processing and merging technology, to respond to the diverse needs of even greater range of customers. In Office Solution Business, we have identified "printing" as an area that presents an outstanding opportunity for growth. Consequently, we will shift a higher portion of our business resources to this area. Namely, we will continue to advance such printing solutions as BC (black-color) conversion and TCO (total cost of ownership) reduction solutions in the office, enter the high-end production printing market, boost low-end color laser printers and expand gel jet printers to expand the business domain and size. Furthermore, we will revamp our sales system solutions and solutions platform in order to promote document solution, which enables improved document workflow, and to capture a greater share of major customers, particularly major global accounts. On the other hand, we will allocate greater business resources to promising businesses in the Industry Business. In addition, we will seek for greater business shares of both Office Solutions and Industry Business in emerging markets. As technological differentiation is the key to realizing customer value in each business and increasing profitability, we will continue our aggressive R&D activities to boost our technical power. The following shows our achievements in the basic policies during this term. In Office Solution Business, we have continuously introduced new multifunctional color printers and color laser printers in order to provide more comprehensive product line. During this term, we have increased our market share by launching various products: "imagio Neo C600Pro (sold overseas as Aficio Color 5560)," which is a new generation of multifunctional color printer and high-speed copy or print at 55 ppm (pages per minute); "imagio MP C3000/2500 series," which enable to produce higher images with better quality by utilizing Color PxP toner with Ricoh's own polymerization method and features high security functions such as protection to prevent unauthorized copying, which is the fastest in the industry of color printers; "imagio MP C1500," which targets low-end business printer market employing the Gel Jet technology. Through these measures, the Ricoh Group obtained high market share in the major color copier markets in Japan, the Americas and Europe. In the high-end production printing market, we have released new 4 models including "IPSiO SP 9500Pro (sold overseas as EMP156)," which is a printer for main systems and actualizes high-speed printing at 156 ppm with high durability. This allowed us to have more comprehensive product line from center printers, which perform centralized printing of documents, to desktop printers, which perform distributed printing at each location. By combining those printers, we will provide efficient printing environment. In the low-end business printer market, we have "IPSiO G series (sold overseas as Aficio G series)," which is a printer with Gel Jet technology aimed to replace other companies' black and white laser printers or inkjet printers. Because of its high speed output, high quality image with plain paper and low running cost, it received great reviews as a business printer, and we - 5 - will continue to promote creating such products of high value-added in the future. As for the promoting our printing solution, we have developed business on a global scale by proposing TCO reduction solutions utilizing copiers and printers together and earning high reputation for our worldwide support and services. In addition, in developing document solution in order to improve workflow, we have provided software tools to link multifunctional printers with host systems, improved the support structure of technology centers to propose the optimum environment and support the introduction for those systems in Japan, the Americas and Europe, and strengthened the sales structures for solutions. On the other hand, we have promoted allocation of management resources on promising markets and businesses in the area of industry. The example for this is the establishment of a thermal paper production and sales company in China. Furthermore, we have continued priority investment during this term to achieve growth strategies and to improve revenue base. In sales and services, we have integrated the maintenance service department of domestic sales companies to Ricoh Technosystems Co., Ltd. in order to improve the system to enhance contacts with customers and to strengthen abilities to provide solutions. As for development, Ricoh Technology Center (Kanagawa Pref.) was established to consolidate all the functions of forefront color products from the development of elemental technology, to designing, to preparing the production and to evaluation of the products. This center allows us to enhance the cross-functional development structure and to further improve the development efficiency. In the fiscal year under review, consolidated net sales rose 5.6% year on year to 1,915.0 billion yen. Operating income also increased 12.2% to 152.0 billion yen primarily due to a increased sales of value-added high-margin product, and the effect of continuous cost-cutting activities. Income before income taxes was 156.1 billion yen, up 15.4%. As a result, net income increased 16.7% to 97.0 billion yen. . CONSOLIDATED SALES BY CATEGORY (CONSOLIDATED BASIS) Category Sales (billion yen) Percentage of total Change (%) -------- ------------------- ------------------- ---------- Imaging Solutions 1,446.6 75.5 8.6 Network System Solutions 190.5 10.0 -4.3 Office Solution Business 1,637.2 85.5 6.9 Industry Business 120.6 6.3 1.0 Other Businesses 157.2 8.2 -3.7 Total 1,915.0 100.0 5.6 Japan 972.0 50.8 -0.1 Overseas 943.0 49.2 12.1 The Americas 387.4 20.2 19.0 Europe 434.8 22.7 6.3 Others 120.8 6.3 13.3 OFFICE SOLUTIONS (up 6.9% year on year to Yen 1,637.2 billion) Sales of color copiers, multi-function printers (MFPs) and laser printers were strong. These products support the customers to efficiently and effectively manage the input/output, storage and retrieval of TDV (total document volume), comprising not only copying but also printing functions. Though sales of personal computers and servers - 6 - decreased, sales at overall office solution business were up 6.9% year on year to 1,637.2 billion yen. Imaging Solutions (up 8.6 % year on year to 1,446.6 billion yen) Trends in consolidated net sales (Unit: in billions of yen) [CHART APPEARS HERE] FY 2005............. 1,332.2 FY 2006............. 1,446.6 FY 2007 (E)......... 1,564.5 Imaging Solution: Digital copiers, color copiers, analog copiers, printers, facsimile machines, diazo copiers, scanners, multi-functional printers (MFP), printers, other equipment, and ancillary supplies and services, etc. While sales of digital copiers decreased as single-function printers are increasingly upgraded to multi-function printers domestically, sales continued to be firm overseas. On the other hand, sales of multi-function printers were favorable, since the Company continues to launch new products that can respond to customer requests, such as adding color function or network convertibility. Furthermore, sales of laser printers were strong domestically and overseas. As a result, sales from this category increased 8.6% from the preceding year to 1,446.6 billion yen. Network System Solutions (down 4.3% year on year to Yen 190.5 billion) Trends in consolidated net sales (Unit: in billions of yen) [CHART APPEARS HERE] FY 2005............. 199.1 FY 2006............. 190.5 FY 2007 (E)......... 202.1 Network System Solution: Personal computers, servers, networking equipment, network-related software, application software, services and support, etc. This business is responsible for providing customer services and support. As the Company's proposals to decrease total printing costs were highly regarded, sales continued to increase in Japan and overseas. However, sales of personal computers and servers in Japan were down. As a result, sales of this business decreased 4.3% to 190.5 billion yen. - 7 - INDUSTRY BUSINESS (up 1.0% year on year to Yen 120.6 billion) Trends in consolidated net sales (Unit: in billions of yen) [CHART APPEARS HERE] FY 2005............. 119.4 FY 2006............. 120.6 FY 2007 (E)......... 129.0 Industry Business: Thermal media, optical equipment, semiconductors, electric units, measuring equipment, etc. Sales at thermal business and electric device business increased, and demand recovered in the semiconductor business. Meanwhile, in the optical unit business, sales decreased owing to sluggish demand. As a result, sales in this business were 120.6 billion yen, up 1.0% from the previous year. OTHER BUSINESSES (down 3.7% year on year to Yen 157.2 billion) Trends in consolidated net sales (Unit: in billions of yen) [CHART APPEARS HERE] FY 2005............. 163.2 FY 2006............. 157.2 FY 2007 (E)......... 154.4 Other Business: Optical-disc products, digital cameras, etc. Though sales of digital cameras continued to be favorable, revenue of the optical disc business decreased especially overseas, as it scaled down in previous year key module operations, such as independently developed drives and components/units (excluding media). As a result, sales in this business decreased 3.7% year on year to 157.2 billion yen. (2) PLANT AND EQUIPMENT INVESTMENT AND FUNDING OF THE RICOH GROUP In the fiscal period under review, the Ricoh Group invested a total of 102.0 billion yen (including an investment of 44.6 billion yen by the Company) in plant and equipment, mainly comprising the following. Funds necessary for the plant and equipment investments above are procured by funds at own hands and borrowings. (a) Major equipment and facility expansions completed during the fiscal year: Electronic components plant (Yashiro Plant) Equipment-related supplies plant (Numazu Plant) Technology center (Ricoh Technology Center) (b) Major equipment and facility expansions in progress in the fiscal year: Equipment-related supplies plant (Numazu Plant) - 8 - (3) TRANSITION OF OPERATING RESULTS AND ASSETS OF THE RICOH GROUP AND THE COMPANY . Transition of operating results and assets of the Ricoh Group
Fiscal year Fiscal year Fiscal year Fiscal year ended ended ended ended Items March 2003 March 2004 March 2005 March 2006 ----- ----------- ----------- ----------- ----------- Net sales (billions of yen)............. 1,738.3 1,780.2 1,814.1 1,915.0 Profits before tax (billions of yen).... 123.4 143.0 135.3 156.1 Net income (billions of yen)............ 72.5 91.7 83.1 97.0 Net income per share (yen).............. 99.79 123.63 112.64 132.33 Total assets (billions of yen).......... 1,884.9 1,852.7 1,953.6 2041.1 Net assets (billions of yen)............ 657.5 795.1 862.9 960.2
Notes: 1. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. 2. Net income per share is calculated based on the average number of shares outstanding during the fiscal year. . Transition of operating results and assets of the Company
Fiscal year Fiscal year Fiscal year Fiscal year ended ended ended ended Items March 2003 March 2004 March 2005 March 2006 ----- ----------- ----------- ----------- ----------- Net sales (billions of yen)............. 855.0 876.3 897.2 934.3 Ordinary income (billions of yen)....... 68.8 62.5 62.7 82.4 Net income (billions of yen)............ 42.8 58.5 41.9 55.0 Net income per share (yen).............. 58.75 79.18 56.64 74.81 Total assets (billions of yen).......... 933.3 937.3 949.5 982.5 Net assets (billions of yen)............ 596.6 642.4 659.9 694.7
Note: Net income per share is calculated based on the average number of shares outstanding during the fiscal year, from which the number of shares of treasury stock is deducted. (4) ISSUES THE RICOH GROUP FACES Now that customers' needs have increasingly diversified, it seems that they are not satisfied with only buying products or receiving specific services. The business climate is also uneasy as the competition in the field of colorization of documents and solutions is increasingly intensifying. In order for the Ricoh Group to achieve growth and development amid the drastically changing market environment, it is essential to boost our corporate competitiveness through "creation of new for values customer" and "highly efficient management structures." In creating customer values, it is important that we forecast customer needs and improve our products and services to meet these needs. To this end, we will increase the scope of "customer satisfaction (CS) operation," in which we aggressively cultivate new values by more than ever placing ourselves in the shoes of our customers. We will also continue to enhance our technical ability to materialize products and services that provide new values. Our effort will also continue on making management more efficient to raise our profitability. To raise profitability, we will streamline operational processes at each business - 9 - through structural reform. In addition, to improve managerial efficiency, we will concentrate resources on more carefully selected businesses. Furthermore, we will strive to reinforce the business structure by linking the results of prior investment, which has been made continuously for corporate growth, to profits. The Ricoh Group will proactively invest resultant profits in growth fields and the enhancement of technical power, aiming to increase sales and profits while further raising corporate value. 2. CORPORATE PROFILE (as of March 31, 2006) (1) MAIN BUSINESS OF THE RICOH GROUP Office Solution Business Imaging Solutions Digital copiers, color copiers, analog copiers, printers, facsimile machines, diazo copiers, scanners, multi-functional printers (MFP), printers, other equipment, and ancillary supplies and services, etc. Network System Solutions Personal computers, servers, networking equipment, network-related software, application software, services and support, etc. Industry Business Thermal media, optical equipment, semiconductors, electric units, measuring equipment, etc. Other businesses Optical-disc products, digital cameras, etc. (2) PRINCIPAL OFFICES AND PLANTS OF THE RICOH GROUP . Major domestic offices and plants The Company (location) Subsidiaries, etc. (location) -------------------------------------- -------------------------------------- Head Office (Tokyo) Ricoh Optical Industries Co., Ltd. (Iwate Pref.) Omori Office (Tokyo) Tohoku Ricoh Co., Ltd. (Miyagi Pref.) Software Research Center (Kanagawa Pref.) Ricoh Elemex Corporation (Aichi Pref.) Shin-Yokohama Office (Kanagawa Pref.) Ricoh Printing Systems, Ltd. (Tokyo) Ricoh Technology Center (Kanagawa Pref.) Ricoh Tohoku Co., Ltd. (Miyagi Pref.) Central Laboratory (Kanagawa Pref.) Ricoh Sales Co., Ltd. (Tokyo) Atsugi Plant (Kanagawa Pref.) Ricoh Chubu Co., Ltd. (Aichi Pref.) Hatano Plant (Kanagawa Pref.) Ricoh Kansai Co., Ltd. (Osaka Pref.) Gotemba Plant (Shizuoka Pref.) Ricoh Chugoku Co., Ltd. (Hiroshima Pref.) Numazu Plant (Shizuoka Pref.) Ricoh Kyushu Co., Ltd. (Fukuoka Pref.) Fukui Plant (Fukui Pref.) Ricoh Technosystems Co., Ltd. (Tokyo) Ikeda Plant (Osaka Pref.) Ricoh Leasing Co., Ltd. (Tokyo) Yashiro Plant (Hyogo Pref.) - 10 - . Major overseas offices SUBSIDIARIES, ETC. (LOCATION) SUBSIDIARIES, ETC. (LOCATION) ----------------------------- ------------------------------------------- RICOH CORPORATION (U.S.A) RICOH ELECTROICS, INC. (U.S.A) LANIER WORLDWIDE, INC. (U.S.A) RICOH UK PRODUCTS LTD. (U.K) RICOH EUROPE B.V. (Netherlands) RICOH INDUSTRIE FRANCE S.A.S. (France) NRG GROUP PLC (U.K) RICOH ASIA INDUSTRY (SHENZHEN) LTD. (China) RICOH CHINA CO., LTD. (China) SHANGHAI RICOH FACSIMILE CO., LTD. (China) RICOH ASIA PACIFIC PTE. LTD. (Singapore) (3) SHAREHOLDERS' EQUITY . Total number of shares Authorized: 1,500,000,000 Issued: 744,912,078 Total number of shares authorized increased 507 million shares following the resolution at the 105th Ordinary General Meeting of Shareholders held on June 28, 2005. . Number of shareholders at year-end: 45,276 . Major shareholders
The shareholders' stake in The Company's stake in the the Company shareholders -------------------------- -------------------------- Thousands Investment Thousands Investment Name of shares ratio (%) of shares ratio (%) ---- --------- ---------- --------- ---------- Master Trust Bank of Japan, Ltd. (Trust Account).. 66,722 8.96 -- -- Japan Trustee Services Bank, Ltd. (Trust Account). 44,460 5.97 -- -- The Bank of Tokyo-Mitsubishi UFJ, Ltd............. 36,203 4.86 -- -- Nippon Life Insurance Company..................... 31,306 4.20 -- -- Nipponkoa Insurance Co., Ltd...................... 18,193 2.44 55 0.01 The New Technology Development Foundation......... 15,839 2.13 -- -- State Street Bank and Trust Company 505103........ 15,009 2.01 -- State Street Bank and Trust Company............... 14,325 1.92 -- -- The Chase Manhattan Bank N.A. London.............. 14,006 1.88 -- -- The National Mutual Insurance Federation of Agricultural Cooperatives....................... 11,947 1.60 -- --
Notes: 1. The number of treasury stocks (14,579 thousands of shares) is not included in the chart above. 2. In addition to the above, stakes in the Company include 1,000 thousands of 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. . Breakdown of shareholders
Category Thousands of shares held Number of shareholders Investment ratio (%) -------- ------------------------ ---------------------- -------------------- Financial institutions............................ 334,688 227 44.93 Securities companies.............................. 12,836 47 1.72 Other domestic companies.......................... 32,871 745 4.41 Foreign companies................................. 291,237 652 39.10 Individual investors and others................... 58,699 43,604 7.88 Treasury stock.................................... 14,579 1 1.96 ------- ------ ------ Total.......................................... 744,912 45,276 100.00 ======= ====== ======
- 11 - (4) ACQUISITION, DISPOSAL AND OWNERSHIP OF SHARES OF TREASURY STOCK (i) Acquired shares: Common shares............................. 5,681,448 shares Total acquisition cost.................... 11,820 million yen Of the above, shares were purchased by resolution of the 105th Ordinary Meeting of Shareholders based on authorization of the Articles of Incorporation. The reason for the purchase: in order to realize a flexible capital strategy to comply with changes in the business environment as follows: Common shares............................. 4,678,000 shares Total amount of acquisition............... 9,993 million yen (ii)Disposed shares: Common shares............................. 1,218,160 shares Total disposal cost....................... 2,395 million yen (iii)Shareholdings at year-end: Common shares............................. 14,579,522 shares (5) EMPLOYEES OF THE RICOH GROUP AND THE COMPANY . Employees of the Ricoh Group
Common Office solution Industry businesses in the Classification business business Other businesses group Total -------------- --------------- -------- ---------------- ----------------- ------ Number of employees........... 68,685 3,045 3,401 1,019 76,150
. Employees of the Company Change from previous Number of employees fiscal year Average age Average length of service ------------------- -------------------- ----------- ------------------------- 11,340....... 48 (Decrease) 41.0 18.2 (6) STATUS OF CONSOLIDATION . Major consolidated subsidiaries
Investment Name Paid-in capital ratio Principle business ---- ------------------ ---------- ----------------------------------------- Tohoku Ricoh Co., Ltd........ 2,272 million JPY 100.0% Manufacture of office equipment Ricoh Printing Systems, Ltd.. 5,000 million JPY 100.0 Manufacture and sales of office equipment Ricoh Elemex Corporation..... 3,456 million JPY 55.9 Manufacture of office equipment Ricoh Sales Co., Ltd......... 622 million JPY 100.0 Sales of office equipment Ricoh Kansai Co., Ltd........ 700 million JPY 100.0 Maintenance service and sales of office equipment Ricoh Technosystems Co., Ltd. 2,128 million JPY 100.0 Sales of office equipment Ricoh Leasing Co., Ltd....... 7,896 million JPY 51.1 General leasing RICOH ELECTRONICS, INC....... 27 million USD 100.0 Manufacture of office equipment and consumable supplies RICOH CORPORATION............ 286 million USD 100.0 Sales of office equipment
- 12 - LANIER WORLDWIDE, INC. 256 million USD 100.0 Sales of office equipment RICOH EUROPE B.V. 17 million EUR 100.0 Sales of office equipment NRG GROUP PLC 49 million GBP 100.0 Sales of office equipment
Note: The respective percentage of total investment ratio for Ricoh Elemex Corporation, Ricoh Leasing Co., Ltd., Ricoh Electronics, Inc. and Lanier Worldwide, Inc. include voting rights of those shares held by subsidiaries. . Consolidations There were no changes that should be disclosed. . Result of consolidation As of the end of fiscal year under review, the Ricoh Group had 259 consolidated subsidiaries and 59 affiliates accounted for under the equity method. Results of consolidation were as stated in "1. Operating Conditions, (3) Transition of operating results and assets of the Ricoh Group and the Company, . Transition of operating results and assets of the Ricoh Group." (7) DIRECTORS AND CORPORATE AUDITORS
Position or principal duty Name ----------------------------------------------------------------------- ----------------- President and Representative CEO Masamitsu Sakurai Director: Director: Management reform, information and office business; Head of Business Koichi Endo Management Promotion Office Director: Domestic marketing; General Manager of Corporate Social Responsibility Masayuki Division Matsumoto Director: Overseas marketing; General Manager of Overseas Division; Head of Sales Katsumi Yoshida Control Center Director: Personnel, production, and legal affairs and intellectual property Takashi Nakamura Director: Image engine/solutions development; General Manager of MFP Division Shiro Kondoh and Head of Design Center Director: General Manger of Marketing Group Kazunori Azuma Director: Finance and IR; General Manager of Finance and Accounting Division Zenji Miura Director: Managing Partner of IGNITE GROUP Nobuo Mii Director: Co-director of Mitsui Life Financial Research Center, University of Takaaki Wakasugi Michigan Ross School of Business Director and General Manager, Japan Corporate Governance Research Institute, Inc. Professor, Faculty of Business Administration, Tokyo Keizai University Corporate Auditor: Full-time Hisaaki Koga Corporate Auditor: Full-time Koji Tomizawa Corporate Auditor: President of Matsuishi Law Office Kenji Matsuishi Corporate Auditor: President and Representative Director of Sanai-oil Co., Ltd. Takehiko Wada
- 13 - Notes: 1. Changes of directors took place in the fiscal year under review as follows: June 2005: Takaaki Wakasugi was appointed as Director. June 2005: Makoto Hashimoto retired from Managing Director. June 2005: Kiyoshi Sakai retired from Managing Director. June 2005: Kazuo Togashi retired from Managing Director. June 2005: Yuji Inoue retired from Managing Director. June 2005: Hideyuki Takamatsu retired from Corporate Auditor. March 2006: Tatsuo Hirayama retired from Representative Director. 2. Directors Nobuo Mii and Takaaki Wakasugi are external directors appointed under Article 188 Paragraph 2 Item 7-2 of the Commercial Code. 3. Corporate Auditors Kenji Matsuishi and Takehiko Wada are external corporate auditors as stipulated in Article 18 Paragraph 1 of the Law for Special Exceptions to the Commercial Code concerning Audit, etc. of Corporation. (8) REMUNERATION, ETC. TO BE PAID TO ACCOUNTING AUDITORS Remuneration, etc. to be paid to the accounting auditor KPMG AZSA & Co. by the Company and its subsidiaries are as follows: (i) Total sum of remuneration, etc. to be paid to the accounting auditor by the Company and its subsidiaries, etc.: 213 million yen (ii) Of the amount of (i) above, total sum of remuneration, etc. to be paid for the audit certificate services provided in Article 2 Paragraph 1 of the Certified Public Accountants Law: 183 million yen (iii) Of the amount of (ii) above, total sum of remuneration, etc. to be paid by the Company to the accounting auditor: 76 million yen Note: In the audit contract signed between the Company and the accounting auditor, there is no classification between remuneration for audit services pursuant to the Law for Special Exceptions to the Commercial Code concerning Audit, etc. of Corporation and that in accordance with the Securities and Exchange Law. Accordingly, the amount of (iii) above represents the sum of these remunerations. 3. SUBSEQUENT EVENTS . Sales of some operations of a subsidiary At its Board of Directors' Meeting held on April 3, 2006, San-Ai Co., Ltd., a subsidiary of the Company, decided to sell the content distribution business currently under control of Giga Networks Company, a division of San-Ai, to Mobile Alliance Co., Ltd., a subsidiary of Faith, Inc. The decision to sell the content distribution business was made based on the Ricoh Group's judgment that it would be the best for San-Ai and the Ricoh Group as a whole if such business is able to grow and develop while meeting the expectation of customers and business partners by becoming a part of the Faith group's business and further improving the quality of services. Consummation of the 12.0-billion-yen sale is scheduled to occur on May 31, 2006. The gain on the sale is expected to be about 5.0 billion yen on the basis of net income. - 14 - CONSOLIDATED BALANCE SHEETS (as of March 31, 2006) Millions of yen -------------------- As of March 31, -------------------- 2006 2005 --------- --------- ASSETS Current Assets: Cash and cash equivalents....................... 187,055 186,857 Time deposits................................... 1,470 1,454 Marketable securities........................... 162 138 Trade receivables: Notes.......................................... 75,678 75,233 Accounts....................................... 391,972 396,150 Less-Allowance for doubtful receivables........ (16,031) (17,451) Total trade receivables...................... 451,619 453,932 Short-term lease receivables, etc.............. 178,882 166,636 Inventories: Finished goods................................. 104,218 109,224 Work in progress and raw materials............. 65,027 58,141 Total inventories............................ 169,245 167,365 Deferred tax, etc............................... 55,110 53,365 Total Current Assets......................... 1,043,543 1,029,747 Fixed Assets: Tangible fixed assets: Land........................................... 46,721 43,077 Buildings and structures....................... 217,302 203,537 Machinery, instruments and fixtures............ 622,038 643,386 Construction in progress....................... 11,541 18,720 Less-Accumulated depreciation.................. (629,359) (661,310) Total........................................ 268,243 247,410 Investment and other assets: Finance receivable............................. 415,435 391,947 Investment securities.......................... 36,419 31,154 Investment in and advances to affiliates....... 52,028 49,316 Goodwill....................................... 51,934 47,502 Other intangible assets........................ 79,175 69,414 Lease deposit investment and other............. 94,406 87,179 Total investment and other assets............ 729,397 676,512 Total Fixed Assets:........................ 997,640 923,922 --------- --------- Total Assets............................ 2,041,183 1,953,669 ========= ========= - 15 - CONSOLIDATED BALANCE SHEETS (as of March 31, 2006) Millions of yen -------------------- As of March 31, -------------------- 2006 2005 --------- --------- LIABILITIES Current Liabilities: Short-term borrowings............................... 82,520 38,710 Current maturities of Long-term indebtedness trade payables..................................... 103,131 144,808 Notes............................................. 25,591 29,686 Accounts.......................................... 313,561 306,813 Total purchase indebtedness...................... 339,152 336,499 Accused income tax................................. 40,936 24,074 Accrued expenses, etc.............................. 118,289 127,423 Total Current Liabilities...................... 684,028 671,514 Long-term Liabilities: Long-term indebtedness.............................. 195,626 226,567 Accused pension benefit obligation.................. 97,020 92,672 Long-term deferred tax.............................. 51,374 48,767 Total Long-term Liabilities:................... 344,020 368,006 Total Liabilities........................... 1,028,048 1,039,520 Minority Interests.................................... 52,890 51,151 Common stock.......................................... 135,364 135,364 Additional paid - in Capital.......................... 186,450 186,551 Retained earnings..................................... 665,394 584,515 Accumulated other comprehensive income (loss)......... 4,099 (21,963) Treasury stock........................................ (31,062) (21,469) Total shareholders' equity....................... 960,245 862,998 --------- --------- Total Liabilities, Minority Interests and Shareholders' Equity......................... 2,041,183 1,953,669 ========= ========= NOTES TO CONSOLIDATED BALANCE SHEETS 1. Allowance for doubtful accounts related to short-term lease receivables and lease receivables: 16,394 million yen 2. Other accumulated comprehensive income (loss) includes accumulated foreign currency translation adjustments, unrealized gain (loss) on securities, unrealized gain (loss) on derivatives, and pension liability adjustments. 3. Pledged assets: 3,167 million yen 4. Guarantee obligation: 1,193 million yen 5. The amounts below one million yen are rounded off. - 16 - CONSOLIDATED STATEMENTS OF INCOME (from April 1, 2005 to March 31, 2006)
Millions of yen --------------------------- For the year ended March 31, --------------------------- 2006 2005 --------- --------- Net sales................................................... 1,915,090 1,814,108 Cost of sales............................................... 1,115,479 1,059,531 Gross profit............................................. 799,611 754,577 Selling, general and administrative expenses................ 647,597 619,071 Operating income......................................... 152,014 135,506 Other (income) expenses..................................... 4,185 (123) Interest and dividend income............................. 2,896 2,240 Interest expenses........................................ (5,242) (4,684) Foreign exchange gain and loss, net...................... 3,748 1,547 Others, net.............................................. 2,783 774 Income before income taxes, minority interests and equity in earnings of affiliates....................... 156,199 135,383 Provision for income taxes: Current.................................................. 60,857 39,281 Deferred................................................. (3,294) 11,353 Total income taxes................................... 57,563 50,634 Minority interests.......................................... (4,185) (4,726) Equity in earnings of affiliates............................ 2,606 3,120 Net income............................................... 97,057 83,143 ========= =========
NOTES TO CONSOLIDATED STATEMENTS OF INCOME 1. Net income per share: 132.33 yen 2. The amounts below 1 million yen are rounded off. - 17 - ACCOUNTING POLICIES REGARDING THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS SCOPE OF CONSOLIDATION 1. ITEMS RELATED TO SCOPE OF CONSOLIDATION (1) NUMBER OF CONSOLIDATED SUBSIDIARIES: 259 COMPANIES The name of major consolidated subsidiaries can be found in 2. Corporate Profile, (6) Status of consolidation. (2) MAJOR NON-CONSOLIDATED SUBSIDIARIES Edisys Co., Ltd., others Non-consolidated subsidiaries are all small-scale entities with net sales, net income/loss and retained earnings insignificant for the Company. As such, their non-inclusion in scope of consolidation does not significantly affect the Company's consolidated financial statements. 2. APPLICATION OF THE EQUITY METHOD (1) NUMBER OF NON-CONSOLIDATED SUBSIDIARIES AND AFFILIATES TO WHICH THE EQUITY METHOD IS APPLIED: 59 COMPANIES Name of major non-consolidated subsidiaries and affiliates to which the equity method is applied: Coca-Cola West Japan Co., Ltd., others (2) There are no non-consolidated subsidiaries or affiliates to which the equity method is not applied. SIGNIFICANT ACCOUNTING POLICIES 1. BASIS FOR PREPARING CONSOLIDATED FINANCIAL STATEMENTS The consolidated statutory report including consolidated balance sheets and consolidated statements of income has been prepared on the basis of accounting principles generally accepted in the United States of America ("U.S.GAAP"), in compliance with Article 179, Section 1 of the Commercial Code Enforcement Regulations. However, in compliance with the article, certain disclosure that is required on the basis of U.S.GAAP is omitted. 2. ACCOUNTING POLICY FOR SECURITIES The Company's evaluation for securities is in conformity with Statement No.115, "Accounting for Certain Investments in Debt and Equity Securities," of the U.S. Financial Accounting Standards Board (FASB). Securities held by the Company and its consolidated subsidiaries are classified mainly as available-for-sale securities. Those available -for -sale securities are reported at fair value with unrealized gains and - 18 - losses, net of related taxes, excluded from earnings and reported in accumulated other comprehensive income (loss). 3. ACCOUNTING POLICY FOR INVENTORIES: Inventories are stated principally at the lower of cost or market using the gross average method. 4. DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT: Depreciated principally by using the declining-balance method. Meanwhile, most of overseas subsidiaries use the straight-line method. 5. GOODWILL AND OTHER INTANGIBLE FIXED ASSETS: Goodwill and intangible assets that have indefinite useful lives are not amortized but tested at least annually for impairment, in accordance with the FASB Statement No. 142, "Goodwill and Other Intangible Assets." Other intangible fixed assets that have definite useful lives are depreciated by using the straight-line method. 6. BASIS FOR PROVISION OF RESERVES (1) ALLOWANCE FOR DOUBTFUL ACCOUNTS: To prepare for losses incurred by bad debts, potential loss is calculated by taking historical loss ratio and recoverability of loans to and receivables from a certain customer. The estimated allowance for doubtful accounts is calculated based on the past loan losses in consideration of current economic conditions. For receivables in arrears, special estimated allowance for doubtful accounts is set aside. (2) RESERVE FOR RETIREMENT ALLOWANCES: The measurement of pension costs and liabilities is determined in accordance with SFAS No.87, "Employers' Accounting for Pensions." Under SFAS 87, changes in the amount of either the projected benefit obligation or plan assets resulting from actual results different from that assumed and from changes in assumptions can result in gains and losses not yet recognized in the consolidated financial statements. Amortization of an unrecognized net gain or loss is included as a component of the net periodic benefit plan cost for a year if, as of the beginning of the year, that unrecognized net gain or loss exceeds 10 percent of the greater of (1) the projected benefit obligation or (2) the fair value of that plan's assets. In such case, the amount of amortization recognized is the resulting excess divided by the average remaining service period of active employees expected to receive benefits under the plan. 7. The consumption tax and the local consumption tax are excluded from profits and losses. - 19 - Transcript of Account Auditor's Report on Consolidated Financial Statements (originally issued in Japanese) INDEPENDENT AUDITORS REPORT May 15, 2006 The Board of Directors Ricoh Company, Limited KPMG AZSA & Co. Tetsuzo Hamajima (seal), Designated and Engagement Partner Certified Public Accountant Mikihiro Himeno (seal), Designated and Engagement Partner Certified Public Accountant We have audited the consolidated statutory report, that is the consolidated balance sheet and the consolidated statements of income of Ricoh Company, Limited for the 106th business year (from April 1, 2005 to March 31, 2006) in accordance with Article 19-2(3) of the "Law for Special Exceptions to the Commercial Code Concerning Audits, etc., of Kabushiki Kaisha." The consolidated statutory report is the responsibility of the Company's management. Our responsibility is to express our independent opinion on the consolidated statutory report based on our audit as independent auditors. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those auditing standards require us to obtain reasonable assurance about whether the consolidated statutory report is free of material misstatement. An audit is conducted based on a test basis, and includes assessing accounting principles used, the method of their application and estimates made by management as well as evaluating the overall presentation of the consolidated statutory report. We believe that our audit provides reasonable bases for our opinion. Our audit procedures also include those considered necessary for the Company's majority-owned subsidiaries. As a result of the audit, in our opinion, the consolidated statutory report referred to above presents fairly the consolidated results of their operations in conformity with related laws and regulations and the Articles of Incorporation of the Company. No conflict of interest as defined by the Accounting Law exists between Ricoh Company, Ltd. 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. - 20 - Transcript of Corporate Auditor's Report on Consolidated Financial Statements (originally issued in Japanese) CORPORATE AUDITOR'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS The Board of Corporate Auditors discussed with each Corporate Auditor concerning the consolidated financial statements (the consolidated balance sheets and the consolidated statements of income) of Ricoh Company, Limited for the 106th business year (from April 1, 2005 to March 31, 2006). Upon discussion, the board prepared this audit report as follows. 1. OUTLINE OF CORPORATE AUDITORS' AUDIT METHODS In accordance with an audit policy prescribed by the Board of Corporate Auditors, each corporate Auditor received reports on the consolidated financial statements from the Directors, internal audit division, other administrative divisions and Account Auditors, and audited the operational and financial conditions of consolidated and non-consolidated subsidiaries as well when necessary. 2. AUDIT RESULTS We regard that the audit methods and results by KPMG AZSA & Co. are appropriate. May 15, 2006 The Board of Corporate Auditors, Ricoh Company Limited Full-time corporate auditors: Hisaaki Koga (seal), Koji Tomizawa (seal) Corporate auditors: Kenji Matsuishi (seal), Takehiko Wada (seal) Note: Corporate auditors Kenji Matsuishi and Takehiko Wada are external auditors in accordance with Article 18 Item 1 of the Law for Special Exceptions to the Commercial Code Concerning Audits, etc., of Corporation. - 21 - NON-CONSOLIDATED BALANCE SHEETS (as of March 31, 2006) Millions of yen ---------------- As of March 31, ---------------- 2006 2005 ------- ------- ASSETS Current Assets: Cash on hand and in bank.................................. 8,689 10,148 Notes receivable - trade.................................. 7,540 7,983 Accounts receivable - trade............................... 235,393 213,503 Marketable securities..................................... 50,985 128,186 Finished goods............................................ 26,352 29,336 Raw materials............................................. 3,405 3,665 Work in progress.......................................... 6,806 6,348 Supplies.................................................. 7,820 6,924 Short-term loans receivable............................... 102,411 33,753 Deferred tax assets....................................... 12,703 11,706 Accounts receivable - other............................... 14,510 29,510 Other current assets...................................... 6,019 5,493 Allowance for doubtful accounts........................... (1,582) (1,492) Total Current Assets........................... 481,056 485,067 Fixed Assets: Tangible fixed assets: Buildings............................................. 48,532 40,423 Structures............................................ 1,894 1,783 Machinery and equipment............................... 19,391 18,422 Vehicles.............................................. 19 12 Tools................................................. 21,997 17,521 Land.................................................. 29,261 25,980 Construction in progress.............................. 9,277 4,806 Total tangible fixed assets........................ 130,374 108,949 Intangible fixed assets: Leasehold right and others............................ 9,169 9,203 Software.............................................. 22,190 21,741 Total Intangible fixed assets...................... 31,359 30,945 Investments and Other Assets: Investment securities................................. 33,217 28,058 Investment securities in subsidiaries and affiliates.......................................... 191,797 184,437 Investment in affiliates.............................. 25,974 28,440 Long-term loans receivable............................ 80,814 70,170 Deferred tax assets................................... 1,620 7,073 Lease deposit......................................... 7,009 6,515 Other investments..................................... 2,289 2,582 Allowance for doubtful accounts....................... (2,962) (2,693) Total investments and other assets................. 339,761 324,584 Total Fixed Assets............................. 501,494 464,480 ------- ------- Total Assets................................. 982,551 949,547 ======= ======= - 22 - NON-CONSOLIDATED BALANCE SHEETS (as of March 31, 2006) Millions of yen ---------------- As of March 31, ---------------- 2006 2005 ------- ------- LIABILITIES Current Liabilities: Notes payable - trade..................................... 4,641 6,033 Accounts payable - trade.................................. 133,036 109,598 Bonds due within one year................................. 35,000 40,000 Accounts payable - other.................................. 17,112 13,650 Accrued expenses.......................................... 33,153 34,872 Income tax payable, etc................................... 21,308 3,061 Reserve for bonuses....................................... 11,872 11,855 Warranty reserve.......................................... 418 389 Other current liabilities................................. 5,329 6,427 Total Current Liabilities............................. 261,871 225,887 Long-term Liabilities: Bonds..................................................... 25,000 60,000 Long-term accounts payable - other........................ -- 2,810 Reserve for retirement allowances......................... 417 352 Reserve for directors' retirement bonuses................. 510 519 Total Long-term Liabilities........................... 25,927 63,683 Total Liabilities.................................. 287,799 289,571 (Shareholders' Equity) Common Stock................................................. 135,364 135,364 Capital Surplus: Additional paid-in capital................................ 180,804 179,522 Total Capital Surplus................................. 180,804 179,522 Retained Earnings Legal reserve............................................. 14,955 14,955 Reserve for deferral of capital gain on property................................................ 550 574 Reserve for special depreciation.......................... 1,272 802 Reserve for warranty on computer programs................. 167 218 Reserve for social promotion.............................. 117 112 General reserve........................................... 326,350 301,350 Unappropriated retained earnings.......................... 55,740 42,392 Total Retained Earnings............................... 399,153 360,404 Unrealized gain on valuation of stocks, etc.................. 8,769 4,598 Treasury stock............................................... (29,339) (19,914) Total Shareholders' Equity......................... 694,752 659,975 ------- ------- Total Liabilities and Shareholders' Equity....................................... 982,551 949,547 ======= ======= NOTES TO NON-CONSOLIDATED BALANCE SHEETS 1. Short-term receivable due from affiliates: Yen 319,437 million Long-term receivable due from affiliates: Yen 81,192 million 2. Short-term payable due to affiliates: Yen 79,679 million 3. Accumulated depreciation on tangible fixed assets: Yen 347,019 million 4. Guarantee obligation: Yen 117 million 5. Trade notes receivable discounted with banks: Yen 48 million 6. In addition to the fixed assets stated in Balance Sheets, the Company uses computers and electronic component manufacturing facilities under lease agreements. 7. Net assets pursuant to Article 124-3 of the Enforcement Regulation of the Commercial Code: Yen 8,769 million 8. The amounts less than one million yen are omitted. - 23 - NON-CONSOLIDATED STATEMENTS OF INCOME (from April 1, 2005 to March 31, 2006) Millions of yen ----------------- For the year ended March 31, ----------------- 2006 2005 ------- ------- Ordinary Income and Loss Operating income and expenses Operating income:............................................ 934,354 897,217 Net sales................................................. 934,354 897,217 Operating expenses:.......................................... 864,641 840,355 Cost of sales............................................. 645,496 619,968 Selling, general and administrative expenses.............. 219,144 220,387 Total operating income................................ 69,712 56,861 Non-operating income and expenses Non-operating income: Interest and dividend income.............................. 7,995 6,625 Other revenue............................................. 7,732 5,199 Total non-operating revenue........................ 15,728 11,824 Non-operating expenses: Interest expenses......................................... 709 1,474 Other expenses............................................ 2,290 4,477 Total non-operating expenses.......................... 3,000 5,952 Ordinary income.............................................. 82,441 62,733 Extraordinary Income and Loss Extraordinary income: Gains on sales of fixed assets............................ 1,662 -- Total extraordinary income......................... 1,662 -- Net income before taxes................................... 84,103 62,733 Corporate, inhabitant and enterprise taxes................ 27,400 11,500 Corporate and other tax adjustments....................... 1,616 9,250 Net income................................................ 55,087 41,983 Profit carried over....................................... 9,404 9,630 Reversal of reserve for social contribution............... 83 88 Disposal of treasury stocks............................... 4 1,922 Interim cash dividends.................................... 8,830 7,387 Unappropriated retained earnings for the year............. 55,740 42,392 ======= ======= NOTES TO NON-CONSOLIDATED STATEMENTS OF INCOME 1. Sales to affiliates: Yen 832,571 million 2. Purchase from affiliates: Yen 342,565 million 3. Non-operating transactions with affiliates: Yen 25,738 million 4. Net income per share: Yen 74.81 5. The amounts less than one million yen are omitted. - 24 - SIGNIFICANT ACCOUNTING POLICIES 1. ACCOUNTING POLICY FOR SECURITIES (1) SECURITIES OF SUBSIDIARIES AND AFFILIATES Securities of subsidiaries and affiliates are stated at cost based on the moving average method. (2) OTHER SECURITIES Marketable securities: 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: Stated at cost based on the moving average method. 2. ACCOUNTING POLICY FOR DERIVATIVES Derivatives are stated at market value. 3. ACCOUNTING POLICY FOR INVENTORIES Inventories are stated principally at the lower of cost or market using the gross average method. 4. DEPRECIATION AND AMORTIZATION (1) TANGIBLE FIXED ASSETS: Depreciated by using the declining-balance method. Buildings (excluding fixtures) acquired after April 1, 1998 are depreciated using the straight-line method. Major useful life: Buildings: 5-50 years Machinery and equipment: 2-12 years (2) INTANGIBLE FIXED ASSETS: Depreciated by using the straight-line method. With software for sale in the market, however, the Company records the larger of an 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 the straight-line method based on a usable period of five years. 5. BASIS FOR PROVISION OF RESERVES (1) ALLOWANCE FOR DOUBTFUL ACCOUNTS: To prepare for losses incurred by accounts receivables and loans, potential loss is calculated by taking historical loss ratio in case of non-classified loans/receivables. Potential loss for - 25 - classified loans/receivables is individually assessed. (2) RESERVE FOR BONUSES: Reserve for bonuses is provided by estimating the amount of bonuses payable to employees for the fiscal year under review based on corporate rules for calculating 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) RESERVE FOR RETIREMENT ALLOWANCES: To prepare for projected retirement allowances, the Company records the estimated obligations at the end of the fiscal year under review based on projected year-end benefit obligations and plan assets. Actuarial gain or loss is amortized using the straight-line method over periods (15 years) which are less than the average remaining years of service of the employees, and the amortization will be stated in the year following the year in which the gain or loss is recognized. Underfunded pension obligations are amortized using the straight-line method over periods (15 years) which are less than the average remaining years of service of the employees. (5) RESERVE FOR DIRECTORS' RETIREMENT BONUSES: The Company calculates the necessary amount of directors' retirement bonuses at the end of the fiscal year based on internal rules, in compliance with the provision in Article 43 of the Enforcement Regulation of the Commercial Code. 6. CONSUMPTION TAXES The consumption tax and the local consumption tax are excluded from profits and losses. 7. LEASING Finance leases where ownership does not transfer to the lessees are accounted for in the same manner as operating leases. 8. HEDGE ACCOUNTING (1) HEDGE ACCOUNTING METHODS: The Company uses the allocation methods for currency swaps that meet the requirements for the method. (2) HEDGE INSTRUMENTS AND TARGETS: There is no hedging instrument or hedged item at the end of the fiscal year under review. (3) HEDGING POLICIES: In accordance with its internal Market Risk Management Rules, the Company uses derivatives to manage the exposure of its assets and liabilities to market fluctuations, within the range of the hedged assets and liabilities. - 26 - (4) HEDGE EFFECTIVENESS: Effectiveness is assessed by rate analysis of the sum total of price fluctuation involving hedged transactions and the sum total of price fluctuation involving hedge methods. However, evaluation of hedge effectiveness is omitted for currency swaps conducted through assigning transactions. [CHANGE IN ACCOUNTING POLICY] . Accounting standards for impairment of fixed assets The Company adopted "Accounting Standards for Impairment of Fixed Assets ("Opinion Concerning Establishment of Accounting Standards for Impairment of Fixed Assets" issued by the Business Accounting Deliberation Council on August 9, 2002) and "Implementation Guidance for Accounting Standards for Impairment of Fixed Assets (Financial Accounting Standard Implementation Guidance No. 6 issued by the Accounting Standards Board of Japan on October 31, 2003) in the fiscal year under review. The above adoption has little effect on profits and losses. - 27 - PROPOSAL FOR APPROPRIATION OF RETAINED EARNINGS Yen ------------------------------ For the year ended March 31, ------------------------------ 2006 2005 -------------- -------------- Unappropriated retained earnings at year-end.. 55,740,342,101 42,392,066,985 Reversal of reserve for deferral of capital gain on fixed assets........................ 22,732,462 24,290,071 Reversal of reserve for special depreciation.. 393,585,677 186,560,715 Reversal of reserve for warranty on computer program..................................... 28,886,758 50,684,928 Total.................................. 56,185,546,998 42,653,602,699 To be appropriated as follows: Cash dividends................................ 8,763,990,672 7,347,958,440 (Per share)................................... (12.00) (10.00) Directors' bonuses............................ 135,700,000 155,700,000 Reserve for special depreciation.............. 736,870,895 657,002,782 Reserve for social contribution............... 83,000,000 88,000,000 General reserve............................... 36,000,000,000 25,000,000,000 Retained earnings brought forward to the next fiscal year................................. 10,465,985,431 9,404,941,477 ============== ============== Note: On December 1, 2005, the Company paid interim cash dividends of 12.0 yen per share, totaling 8,830,471,500 yen. - 28 - Transcript of the Account Auditors' Report (originally issued in Japanese) INDEPENDENT AUDITORS' REPORT May 15, 2006 The Board of Directors Ricoh Company, Limited KPMG AZSA & Co. Tetsuzo Hamajima (seal), Designated and Engagement Partner Certified Public Accountant Mikihiro Himeno (seal), Designated and Engagement Partner Certified Public Accountant We have audited the statutory report, that is the balance sheet, the statement of income, the business report (limited to accounting matters), and the proposal for appropriation of retained earnings, and its supporting schedules (limited to accounting matters) of Ricoh Company, Ltd. for the 106th business year from April 1, 2005 to March 31, 2006 in accordance with Article 2(1) 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 auditing standards generally accepted 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 fairly present 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) fairly presents 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 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 Accounts Law of Japan. - 29 - Transcript of the Corporate Auditor's Report (originally issued in Japanese) CORPORATE AUDITOR'S REPORT 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 106th business year from April 1, 2005 to March 31, 2006. 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., examined the status of activities and assets (including laws, etc. governing corporate structure as well as the internal corporate management system for risk management, etc.) 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 statutory reports and supporting schedules of the Company. With respect to any transactions by the Directors, transactions between the Directors and the Company involving conflict of interests, gratuitous provision of profits by the Company and any other transactions not customary in nature between the Company and its subsidiaries or shareholders, or related to 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 retained earnings, considering the state of the 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 any transactions by the Directors, no transaction between the Directors and the Company involving conflict of interests, no gratuitous provision of profits by the Company nor any other transactions not customary in nature between the Company and its subsidiaries or shareholders, or related to acquisition and disposal of treasury stock. May 15, 2006 The Board of Corporate Auditors, Ricoh Company, Limited Full-time corporate auditors: Hisaaki Koga (seal), Koji Tomizawa Corporate auditors: Kenji Matsuishi (seal), Takehiko Wada (seal) Note: Corporate auditors Kenji Matsuishi and Takehiko Wada are external auditors in accordance with Article 18 Item 1 of the Law for Special Exceptions to the Commercial Code Concerning Audits, etc., of Kabushiki Kaisha. - 30 - CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Millions of yen ----------------- For the year ended March 31, ----------------- 2006 2005 -------- ------- 1. Cash flows from operating activities Net income....................................................................... 97,057 83,143 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization................................................ 84,460 78,201 Decrease in trade receivables (increase).................................. 13,429 (26,429) Decrease in inventories (increase)........................................ 3,726 (12,885) Increase in trade payables (decrease)..................................... (4,495) 27,276 Other, net................................................................... (17,308) (16,526) Net cash provided by operating activities............................. 176,869 132,780 2. Cash flows from investing activities Expenditures for property, plant and equipment, net.............................. (98,708) (83,355) Process from sales of available-for-sale securities, net......................... 3,013 38,689 Other, net....................................................................... (24,370) (51,532) Net cash used in investing activities................................. (120,065) (96,198) 3. Cash flows from financing activities Decrease of borrowings, indebtedness and debt securities, net.................... (32,383) (30,459) Dividend payments................................................................ (16,178) (14,793) Payment for purchase of treasury stock........................................... (10,653) (10,624) Other, net....................................................................... (775) (563) Net cash used in financing activities................................. (59,989) (56,439) 4. Effect of exchange rate changes on cash and cash equivalents..................... 3,383 1,200 5. Net increase (decrease) in cash and cash equivalents............................. 198 (18,657) 6. Cash and cash equivalents at beginning of year................................... 186,857 203,039 7. Adjustment for change of fiscal period on consolidated subsidiaries.............. -- 2,475 8. Cash and cash equivalents at year-end............................................ 187,055 186,857
- 31 - REFERENCE: RESOLUTIONS REGARDING BASIC POLICY ON INTERNAL CONTROL SYSTEMS The Company made the following resolutions at the Board of Directors' Meeting held on May 17, 2006 regarding basic policy on construction of internal control systems. 1. SYSTEM TO ENSURE THE EFFICIENT IMPLEMENTATION OF DIRECTORS' DUTIES AND COMPLIANCE WITH LAWS AND ARTICLES OF INCORPORATION The Company promotes a sense of alertness in execution of management and execution of business, and in addition uses the following management structures in order to further improve its quality and speediness. (1) Management transparency and fairness of decision-making are strengthened by the presence of outside directors. (2) As part of the strengthening of management oversight functions by the Board of Directors, the "Nomination and Compensation Committee," a permanent organization composed of outside directors and designated internal directors, makes propositions and resolutions concerning the regulation of the nomination, dismissal and compensation of directors and executive officers, etc. (3) The executive officer system, its division of duties clarified, is speeding up the decision-making process through the attribution of authority to each business division. (4) The "Group Management Committee" (GMC) is a decision-making organization delegated by the Board of Directors, and composed of executive officers who meet certain qualifications. The GMC operates so as to accelerate consideration and decision-making from the perspective of the optimum management of the entire Group, concerning proposals on the most appropriate strategies for direction of each business division and the entire Group, within the limits granted to it. (5) The "Disclosure Committee" is an independent organization that assures the accuracy, timeliness and comprehensiveness of disclosure of corporate information, and it performs checks on the process for the production of disclosed information. 2. SYSTEMS RELATED TO THE RETENTION AND MANAGEMENT OF INFORMATION RELATED TO THE IMPLEMENTATION OF DIRECTORS' DUTIES Records and proposals related to decisions by directors in the course of their duties are collated retained and managed in compliance with applicable laws, regulations and internal rules. Documents are kept so that they can be retrieved and produced in response to a request from directors and corporate auditors. 3. REGULATIONS AND OTHER STRUCTURES REGARDING RISK MANAGEMENT FOR LOSSES (1) The occurrence of losses shall be proactively prevented based on regulations for risk management. (2) Should losses nevertheless arise, efforts shall be made to minimize damage (loss) based on standards for initial reaction. (3) In order to manage losses as a Group, comprehensively and in a unified fashion, a - 32 - division responsible for integrated management will be created that will thoroughly cover all aspects globally. 4. SYSTEMS TO ENSURE APPROPRIATE COMPLIANCE WITH LAWS, AND ARTICLES OF INCORPORATION CONCERNING THE PERFORMANCE OF EMPLOYEE'S DUTIES (1) In order to thoroughly implement the "Ricoh Group CSR Charter " which sets forth the principles of corporate behavior with regard to CSR including compliance, and the "Ricoh Group Code of Conduct" which shows the general rules of conduct for Ricoh Group employees, the CSR Committee is in the process of setting up a "Hot Line" for reporting incidents and seeking advice, worldwide, and provides training. Every effort is being made to enhance compliance domestically and overseas. (2) Strengthening and enhancing internal controls Efforts are being made to improve business processes and construct a framework for standardized internal control throughout the entire Ricoh Group, with the goal of "complying with laws, norms and internal rules," "improvement of business effectiveness and efficiency" and "maintaining high reliability of financial reporting," including compliance to the section 404 of the Sarbanes-Oxley Act of 2002, and other relevant laws and regulations. (3) Internal auditing An internal auditing department shall perform fair and objective examination and evaluation of how each division is executing its business based on legal compliance and rational criteria, and provide advice or recommendation for improvement. . 5. SYSTEMS TO ENSURE CORRECT BUSINESS STANDARDS IN THE RICOH GROUP COMPOSED OF THE COMPANY AND ITS AFFILIATES Ricoh and each affiliate in the Ricoh Group shall devise a system that will ensure the adherence to correct business standards to improve business performance and enhance the prosperity of each Group company, while keeping mutual respect for their independence, as follows: (1) The Company's Board of Directors and the "Group Management Committee" (GMC) make decisions and perform management oversight for the Ricoh Group as a whole. To ensure the efficacy of such efforts, they establish management regulations concerning affiliate companies, and set up relevant administrative organizations in order to manage the Group. (2) The "Ricoh Group Standard" (RGS) represents a set of common rules to be followed by the entire Group. 6. MATTERS REGARDING EMPLOYEES WHOM AUDITORS REQUEST TO ASSIST THEM IN THE PERFORMANCE OF THEIR DUTIES A system shall be established to assist work duties through directives from auditors, and to select employees who shall assist the auditors in their work. 7. MATTERS RELATED TO THE INDEPENDENCE OF AUDITORS' STAFF FROM DIRECTORS DESCRIBED IN NO. - 33 - 6 ABOVE When an employee (as in No. 6 above) assists auditors in their work, he or she shall not be subject to orders given by directors. In addition, decisions concerning personnel assessments or personnel changes regarding said employees shall be made only after hearing the opinions of the auditors. 8. SYSTEMS TO ENABLE DIRECTORS OR EMPLOYEES TO REPORT TO AUDITORS, AND OTHER SYSTEMS RELATED TO REPORTING TO AUDITORS Directors or employees shall report to auditors matters concerning laws and regulations, as well as "important matters decided by directors which affect the entire company," "the results of internal audits," "the status of reporting via the internal reporting system," and "matters which auditors have sought reports about." 9. SYSTEMS ESTABLISHED TO ENSURE THE EFFICACIOUS PERFORMANCE OF AUDITING RESPONSIBILITIES BY AUDITORS Auditors shall perform audits thoroughly by attending the board of directors meetings and management meetings, receiving reports on exercise of function from the directors and executive officers, reviewing important resolution documents, and investigating the status of operations of divisions and group companies. - 34 - REFERENCE MATERIAL FOR EXERCISING VOTING RIGHTS 1. NUMBER OF VOTING RIGHTS OF ALL SHAREHOLDERS: 723,955 2. AGENDA AND INFORMATION: AGENDA 1: APPROVAL OF THE PROPOSED APPROPRIATION OF RETAINED EARNINGS FOR THE FISCAL YEAR (April 1, 2005 to March 31, 2006) The proposal for appropriation of retained earnings is described in the attached 106th Report (see page 28). Year-end cash dividends to shareholders for the current term will be paid at the rate of Yen 12.00 per share, up 2 yen from a year earlier, in consideration of our business results for the 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 24.00 per share in cash dividends. With regard to directors' bonuses for the period under review, we would like to pay bonuses amounting to a total of Yen 135.7 million to the eleven (11) directors as of the year-end, considering the Company's business performance and other factors. AGENDA 2: PARTIAL AMENDMENT TO THE ARTICLES OF INCORPORATION (1) REASONS FOR CHANGE The "Corporation Law" (2005 Law No. 86) and the "Law Concerning the Development of Laws Related to the Enforcement of the Corporation Law" (Law No. 87, 2005) will come into force on May 1, 2006, and accordingly we shall make the following amendments with respect to the matters that will be allowed under the provisions of the Articles of Incorporation. (1) Article 10 of the Proposed Amendments (Rights Concerning Less-Than-One-Unit Shares): This Article sets forth the rights which the shareholders may exercise with respect to shares of less than one unit. (2) Article 18 of the Proposed Amendments (Disclosure and Deemed Provision of Reference Materials for General Meeting of Shareholders via the Internet): This Article enables the Company, in calling the general meeting of shareholders, to disclose the reference materials for the general meeting of shareholders and other documents by using the Internet, to make it more convenient for our shareholders to obtain information. (3) Article 28 of the Proposed Amendments (Omission of Resolution of Board of Directors): This Article enables so-called written resolution of the Board of Directors provided for in Article 370 of the "Corporation Law" to increase the responsiveness and efficiency of the management of the Board of Directors. (4) Articles 30 (Exemption of Liability of Outside Directors) and 39 (Exemption of Liability of Outside Corporate Auditors) of the Proposed Amendments: These Articles are enable the Company to enter into an agreement regarding limitation of - 35 - liability with outside directors and outside corporate auditors so that the Company can continue to invite highly independent and skilled people who are suitable for the position of an outside director and outside corporate auditor. All members of the Board of Auditors have already approved the proposed amendment in Article 30. (5) Articles 4 (Organizations) and 7 (Issue of Share Certificates) of the Proposed Amendments are newly established with respect to the matters for which new provisions must be made in the Articles of Incorporation pursuant to the provision of the Corporation Law. (6) Necessary amendments are made to use the clauses quoted from the Corporation Law and the terms amended under the Corporation Law, in addition to partial amendments of expression, correction of phrases and adjusting article numbers with addition and subtraction of articles. - 36 - (2) DETAILS OF AMENDMENTS TO THE ARTICLES OF INCORPORATION: The details of amendments are as follows: (Underlined portions indicate the changes.)
================================= Current Articles of Incorporation =================================== Proposed provisions after amendment ================================= =================================== CHAPTER I. GENERAL PROVISIONS CHAPTER I. GENERAL PROVISIONS (Trade Name) (Trade Name) Article 1. The name of the Article 1. The name of the Company Company is Kabushiki Kaisha Ricoh is Kabushiki Kaisha Ricoh and is and is written RICOH COMPANY, LTD. expressed RICOH COMPANY, LTD. in ------- --------- in English. English. (Location of Head Office) (Unchanged) ------------------------- Article 2. The head office of the Company is to be located in Ohta-ku, Tokyo. (Objectives) (Unchanged) ------------ Article 3. The objectives of the Company are to engage in the following businesses: 1. - 9. (Omitted) (Newly established) (Organizations) --------------- Article 4. In addition to the ----------------------------- general meeting of shareholders ------------------------------- and directors, the Company shall -------------------------------- establish the following ----------------------- organizations: -------------- i) Board of Directors; ---------------------- ii) Corporate Auditors; ----------------------- iii) Board of Corporate ----------------------- Auditors; and ------------- iv) Accounting Auditors. ------------------------ (Public Notices) (Method of Public Notices) ---------- Article 4. Public notices of the Article 5. Public notices of the -- -- Company shall appear in the Nihon Company shall appear in the Nihon Keizai Shimbun published in Tokyo. Keizai Shimbun. ------------------ CHAPTER II. SHARES CHAPTER II. SHARES (Total Number of Shares to be (Total Number of Issuable shares) ------------ --------------- Issued and Types of Share ------------------------- Certificates) ------------- Article 5. The total number of Article 6. The total number of - - shares to be issued by the Company issuable shares by the Company is ------------------- --------------- is one billion and five hundred one billion and five hundred million million (1,500,000,000) shares. If (1,500,000,000) shares. (Deleted) -- any shares are cancelled, the ----------------------------- number of shares so cancelled shall ----------------------------------- be deducted from the total number --------------------------------- of shares to be issued. -----------------------
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================================= =================================== Current Articles of Incorporation Proposed provisions after amendment ================================= =================================== 2. The types of share (Deleted) --------------------- certificates to be issued by the -------------------------------- Company shall be subject to the ------------------------------- Share Handling Regulations -------------------------- established by the Board of --------------------------- Directors. ---------- (Newly established) (Issuance of Share Certificates) -------------------------------- Article 7. The Company shall issue ---------------------------------- share certificates for the shares. ---------------------------------- (Purchase of Treasury Stocks) (Purchase of Treasury Stocks) Article 6. The Company may Article 8. The Company may acquire - - ------- purchase the shares of its own stocks the shares of its own stocks by a -------- resolution of the Board of Directors by a resolution of the Board of pursuant to Paragraph 2, Article 165 Directors pursuant to Paragraph 1, ------------------------ ------------ of the Corporation Law. Item 2 of Article 211-3 of the ----------------------- ------------------------------ Commercial Code. ---------------- (Number of Shares Constituting One (Number of Shares Constituting One Unit and Non-Issuance of Certificates Unit and Non-Issuance of Certificates for Less-Than-One-Unit Shares) for Less-Than-One-Unit Shares) Article 7. The number of shares Article 9. - - constituting one unit of shares of the 1. The number of shares Company shall be one thousand -- (1,000) shares. constituting one unit of shares of the Company shall be one thousand (1,000) shares. (Small change in Japanese) 2. The Company shall not issue any 2. Notwithstanding the provisions certificates for shares constituting ------------------------------ ------------------- of Article 7, the Company shall not less than one unit of shares ------------- ---------------------------- issue any certificates for (hereinafter referred to as less-than-one-unit shares, unless --------------------------- -------------------------- "less-than-one-unit shares"), unless otherwise provided for in the Share ----------------------------- Handling Regulations. otherwise provided for in the Share Handling Regulations. (Newly established) (Rights Concerning Less-Than-One-Unit ------------------------------------- Shares) ------- Article 10. A shareholder ------------------------- (including the beneficial shareholder; -------------------------------------- the same applies hereinafter) of the ------------------------------------ Company shall not exercise any rights ------------------------------------- other than those described below with ------------------------------------- respect to the less-than-one-unit --------------------------------- shares held by it. ------------------ i) Right described in each Item ------------------------------- of Paragraph 2, Article 189 ---------------------------- of the Corporation Law. ----------------------- ii) Right to make a request under --------------------------------- the provision of Paragraph 1, ----------------------------- Article 166 of the Corporation ------------------------------ Law. ---- iii) Right to receive allocation --------------------------- of offered shares and --------------------- allocation of offered stock --------------------------- purchase warrants in -------------------- accordance with the number of ----------------------------- shares held by the ------------------ shareholder. ------------ iv) Right to make a request --------------------------- provided for in the following ----------------------------- Article. --------
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================================= =================================== Current Articles of Incorporation Proposed provisions after amendment ================================= =================================== (Sale of Shares Constituting (Sale of Shares Constituting Less-Than-One-Unit Shares to Less-Than-One-Unit Shares to Constitute One Unit) Constitute One Unit) Article 8. A shareholder Article 11. A shareholder of the - -- (including the beneficial Company may request that the Company ------------------------- sell such number of shares as may, shareholder; the same applies together with the number of ----------------------------- --- hereinafter) who holds less-than-one-unit shares held by ---------------------- ------- less-than-one-unit shares of the the shareholder, constitute one unit ------------------------- --------------- Company, may request that the Company of shares, in accordance with the sell such number of shares as may, Share Handling Regulations. together with such number of ---- less-than-one-unit shares, constitute one unit of shares, in accordance with the Share Handling Regulations. (Transfer Agent) (Custodian of Register of Shareholders) ---------------- -------------------------------------- Article 9. The Company shall have Article 12. - -- a transfer agent for its shares. 1. The Company shall have a -------------------------------- - - custodian of the register of ---------------------------- shareholders. ------------- 2. The transfer agent and its 2. The custodian of the register ------------------ ----------------------------- business office shall be determined by of shareholders and its business resolution of the Board of Directors --------------- and public notice shall be given office shall be determined by thereof. resolution of the Board of Directors and public notice shall be given thereof. 3. The register of shareholders 3. The register of shareholders (including the register of beneficial (including the register of beneficial shareholders; the same applies shareholders; the same hereinafter) and the register of the applies hereinafter), the register lost share certificates ------------ of the Company shall be of stock purchase warrants and the kept at the business office of the -------------------------- ---------------------------------- register of the lost share transfer agent. All business certificates of the Company shall be ---------------------------- prepared and kept, and all other pertaining to the shares of the -------------------------------- ------------------------------- business pertaining to the register Company, such as the registration of ----------------------------------- ------------------------------------ of shareholders, the register of a transfer of shares and the -------------------------------- ---------------------------- stock purchase warrants and the purchase and sale of ------------------------------- -------------------- register of the lost share less-than-one-unit shares, shall be -------------------------- ----------------------------------- certificates shall be handled by the handled by the transfer agent and ------------------------------------ ----------------------------- custodian of the register of not by the Company. ---------------------------- shareholders and not by the Company. ------------ (Share Handling Regulations) (Share Handling Regulations) Article 10. The registration of a Article 13. The business and the -- ---------------------- -- -------------------- transfer of shares, the registration service changes pertaining to the ------------------------------------ --------------- of the lost share certificates, the shares of the Company shall be ----------------------------------- subject to laws, ordinances or these purchase and sale of ------------------------- -------------------- Articles of Incorporation and the less-than-one-unit shares by the ----------------------------- -------------------------------- Share Handling Regulations established Company, and other business by the Board of Directors. --------------------------- pertaining to the shares of the Company shall be subject to the Share Handling Regulations established by the Board of Directors.
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================================= =================================== Current Articles of Incorporation Proposed provisions after amendment ================================= =================================== (Record Date) (Deleted) ------------- Article 11. The Company shall deem the -------------------------------------- shareholders (including the beneficial -------------------------------------- shareholders; the same applies ------------------------------ hereinafter) appearing or recorded in ------------------------------------- the final register of shareholders as ------------------------------------- of the accounts closing date for each ------------------------------------- business year to be the shareholders ------------------------------------ entitled to exercise the shareholders' ------------------------------------- rights at the ordinary general meeting -------------------------------------- of shareholders concerning such ------------------------------- business year. -------------- 2. In addition to the preceding ------------------------------- paragraph, whenever necessary, upon ----------------------------------- giving prior public notice in ----------------------------- accordance with the resolution of the ------------------------------------- Board of Directors, the Company may ----------------------------------- deem the shareholders or registered ----------------------------------- pledgees appearing or recorded in the ------------------------------------- register of shareholders as of a -------------------------------- certain fixed date to be the ---------------------------- shareholders or registered pledgees ----------------------------------- entitled to exercise their rights. ---------------------------------- CHAPTER III. GENERAL MEETING OF CHAPTER III. GENERAL MEETING OF SHAREHOLDERS SHAREHOLDERS (Calling of Meeting) (Calling of Meeting) Article 12. The ordinary general Article 14. -- -- meeting of shareholders shall be (Unchanged) called in June each year and an extraordinary general meeting of shareholders shall be called as the necessity arises. 2. A general meeting of shareholders (Deleted) ------------------------------------ shall be called by a Representative ----------------------------------- Director previously appointed by the ------------------------------------ resolution of the Board of Directors. ------------------------------------- 3. In the event that the (Deleted) ------------------------ Representative Director as appointed ------------------------------------ above is unable to act, one of the ---------------------------------- other directors shall call such ------------------------------- meeting in the order determined in ---------------------------------- advance by resolution of the Board of ------------------------------------- Directors. ---------- (Newly established) (Record Date of General Meeting of ---------------------------------- Shareholders) ------------- Article 15. The record date of ------------------------------ voting rights for the Company's ------------------------------- general meeting of shareholders ------------------------------- shall be March 31 every year. -----------------------------
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===================================== =================================== Current Articles of Incorporation Proposed provisions after amendment ===================================== =================================== (Exercise of Voting Rights by Proxy) (Exercise of Voting Rights by Proxy) Article 13. A shareholder may Article 16. -- -- exercise his voting rights by proxy 1. A shareholder may exercise his who shall be another shareholder of voting rights by proxy who shall be the Company entitled to vote. another shareholder of the Company ----------------- that has voting rights. ----------------------- 2. Such shareholder or proxy shall 2. Such shareholder or proxy shall submit a power of attorney to the submit a document certifying the Company. ----------------------- power of attorney to the Company for --- each general meeting of shareholders. ------------------------------------- (Chairman) (Person with the Right to Call the ---------------------------------- Meeting and Chairman) ----------- Article 14. A Representative Article 17. ---------------------------- ----------- Director previously appointed by 1. A meeting of the shareholders -------------------------------- -------------------------------- resolution of the Board of Directors shall be called and presided over by ------------------------------------ ------------------------------------ shall preside over a general meeting a Representative Director previously ------------------------------------ ------------------------------------ of shareholders. In the event that appointed by the Board of Directors. ---------------------------------- ------------------------------------ the Representative Director is unable 2. In case the Representative ------------------------------------- ----------------------------- to act, one of the other directors Director is unable to act, one of the ---------------------------------- ------------------------------------- shall act in his place in the order other directors shall call and ----------------------------------- ------------------------------ determined in advance by resolution preside over the meeting of the ----------------------------------- ------------------------------- of the Board of Directors. shareholders in accordance with the -------------------------- ----------------------------------- order determined in advance by ------------------------------ resolution of the Board of Directors. ------------------------------------- (Newly established) (Disclosure and Deemed Provision of ----------------------------------- Reference Materials for General ------------------------------- Meeting of Shareholders via the ------------------------------- Internet) --------- Article 18. In calling the general ---------------------------------- meeting of shareholders, the Company ------------------------------------ may deem that the information ----------------------------- regarding the matters which should be ------------------------------------- described or shown in the reference ----------------------------------- materials for the general meeting of ------------------------------------ shareholders, business reports, ------------------------------- financial documents and consolidated ------------------------------------ financial documents have been ----------------------------- provided to the shareholders by ------------------------------- disclosing them via the Internet in ----------------------------------- accordance with the Ministerial ------------------------------- Ordinance of the Ministry of Justice. ------------------------------------- (Method of Adopting Resolutions) (Method of Adopting Resolutions) Article 15. Except as otherwise Article 19. -- -- provided for in laws, ordinances or 1. Except as otherwise provided these Articles of Incorporation, -- resolutions at a general meeting of for in laws, ordinances or these shareholders shall be adopted by a Articles of Incorporation, majority of the votes of the resolutions at a general meeting of shareholders present thereat. shareholders shall be adopted by a majority of the votes of the shareholders present thereat who --- are entitled to vote. --------------------- 2. Special resolutions provided 2. Resolutions provided for in ------- Paragraph 2, Article 309 of the for in Article 343 of the Commercial ------------------------------- ----------------------------- Corporation Law shall be adopted by Code shall be adopted by the vote of --------------- ---- the vote of the shareholders not less the shareholders not less than than two-thirds (2/3) of those two-thirds (2/3) of those present at present at the meeting whereby not the meeting whereby one-third --- (1/3) of voting rights of all the less than one-third (1/3) of voting --- --------- shareholders shall constitute a rights of the shareholders entitled quorum. -------- to exercise voting rights shall ------------------------- constitute a quorum.
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======================-=========== =================================== Current Articles of Incorporation Proposed provisions after amendment ======================-=========== =======================-=========== (Minutes) (Minutes) Article 16. The proceedings in Article 20. The proceedings in -- -- outline and the resultant actions outline, the resultant actions taken taken at a general meeting of and other matters subject to shareholders shall be entered in the ---------------------------- minutes, which shall bear the names laws and ordinances at a general and seals of the chairman of the ------------------- meeting and the directors present and meeting of shareholders shall be shall be kept by the Company. entered in the minutes, which shall bear the names and seals of the chairman of the meeting and the directors present and shall be kept by the Company. CHAPTER IV. DIRECTORS AND BOARD OF CHAPTER IV. DIRECTORS AND BOARD OF DIRECTORS DIRECTORS (Number) (Number) Article 17. The Company shall have Article 21. The Company shall have -- -- not more than fifteen (15) directors. not more than fifteen (15) directors. (Small change in Japanese) (Election) (Election) Article 18. Directors shall be Article 22. -- -- elected at a general meeting of 1. (Unchanged) shareholders. -- 2. Resolutions for the election under 2. Resolutions for the election ----- of directors shall be adopted by a the preceding paragraph shall be ------------ ----------------------- majority of the votes of the adopted by a majority of the votes of shareholders present who hold not less the shareholders present who hold not than one-third (1/3) of the voting less than one-third (1/3) of the rights of the shareholders entitled voting rights of all the -------- --- to exercise voting rights. shareholders. ------------------------- 3. Cumulative voting shall not be used 3. (Unchanged) for the adoption of resolutions for the election of directors. (Term of Office) (Term of Office) Article 19. The term of office of Article 23. -- -- directors shall be until the close of 1. The term of office of directors the ordinary general meeting of -- shareholders relating to the last shall be until the close of the accounts closing date occurring within ordinary general meeting of ------------------------------- shareholders relating to the last two (2) years after their assumption fiscal year ending within two (2) ---------- years after their election. of office; provided, however, that the 2. The term of office of a -------------------------------------- -------------------------- term of office of a director elected director elected to fill a vacancy ------------------------------------ ---------------------------------- to fill a vacancy or by reason of of a director who has resigned --------------------------------- ------------------------------ an increase in the number of directors before the completion of his/her -------------------------------------- -------------------------------- shall be for the remaining balance of term, or elected to increase the ------------------------------------- -------------------------------- the term of office of the other number of directors, shall be for ------------------------------- --------------------------------- directors currently in office. the remaining balance of the term ------------------------------ --------------------------------- of office of the other directors -------------------------------- currently in office. --------------------
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================================= =================================== Current Articles of Incorporation Proposed provisions after amendment ================================= =================================== (Filling of Vacancy) (Deleted) -------------------- Article 20. In the event of any ------------------------------- vacancy occurring in the office of ---------------------------------- directors, no election to fill such ----------------------------------- vacancy may be held, if the number of ------------------------------------- the remaining directors is not short ------------------------------------ of the statutory number. ------------------------ (Representative Directors) (Representative Directors) Article 21. One (1) or more Article 24. Representative -- --------------- -- representative directors shall be Directors shall be elected by appointed by resolution of the Board ------- --------- resolution of the Board of Directors. of Directors. (Calling of Meetings of Board of (Person with the Right to Call the -------------------------------- ---------------------------------- Directors; Chairman; Resolutions) Meeting of Board of Directors and --------------------------------- --------------------------------- Article 22. The Board of Directors Chairman) -- ---------------------- --------- shall decide important matters Article 25. ------------------------------ -- concerning the execution of business (Deleted) ------------------------------------ 1. A meeting of the Board of and affairs of the Company as well as ---------------------------- ------------------------------------- Directors shall be called and presided such matters as are provided for in -------------------------------------- ----------------------------------- over by a Director previously laws and ordinances. ----------------------------- -------------------- appointed by the Board of Directors. ------------------------------------ 2. A meeting of the Board of 2. In case the Director is unable ------------------------- to act, one of the other directors Directors shall be called and presided shall call and preside over the -------------------------------------- ------------------------- over by a Director previously meeting of the Board of Directors in ----------------------------- ------------------------------------ appointed by the Board of Directors. accordance with the order determined ------------------------------------ --------------- In case the Director is unable to act, in advance by resolution of the Board one of the other directors shall act of Directors. in his place in the order determined ------------ in advance by resolution of the Board of Directors. 3. Notice of a meeting of the (Deleted) ----------------------------- Board of Directors shall be dispatched -------------------------------------- to each director and each corporate ----------------------------------- auditor three (3) days before the date -------------------------------------- of the meeting; provided, however, ---------------------------------- that such meeting may be held without ------------------------------------- going through the procedure for ------------------------------- calling if so agreed by all the ------------------------------- directors and the corporate auditors. ------------------------------------- 4. Resolutions at a meeting of the (Deleted) ---------------------------------- Board of Directors shall be adopted by -------------------------------------- a majority of the directors present ----------------------------------- who shall constitute a majority of the -------------------------------------- total number of directors. -------------------------- (Newly established) (Calling Meetings of Board of ----------------------------- Directors) ---------- Article 26. ----------- 1. Notice of a meeting of the ----------------------------- Board of Directors shall be dispatched -------------------------------------- to each director and each corporate ----------------------------------- auditor three (3) days before the date -------------------------------------- of the meeting; provided, however, ---------------------------------- that such period may be shortened in ------------------------------------ case of emergency. ------------------ 2. A meeting of the Board of ---------------------------- Directors may be held without going ----------------------------------- through the procedure for calling, if ------------------------------------- so agreed by all the directors and the -------------------------------------- corporate auditors. -------------------
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============================================ ========================================== Current Articles of Incorporation Proposed provisions after amendment ============================================ ========================================== (Newly established) (Resolutions of Meetings of Board of ------------------------------------ Directors) ---------- Article 27. ----------- 1. The Board of Directors shall ------------------------------- decide important matters concerning ----------------------------------- the execution of business and affairs ------------------------------------- of the Company as well as such matters -------------------------------------- as are provided for in laws and ------------------------------- ordinances. ----------- 2. Resolutions at a meeting of the ---------------------------------- Board of Directors shall be adopted by -------------------------------------- a majority of the directors present ----------------------------------- who shall constitute a majority of the -------------------------------------- total number of directors. -------------------------- (Newly established) (Omission of Resolution of Board of ----------------------------------- Directors) ---------- Article 28. The Company shall deem ---------------------------------- that the resolution of the Board of ----------------------------------- Directors has been adopted if the --------------------------------- requirements under Article 370 of the ------------------------------------- Corporation Law are satisfied. ------------------------------ (Remuneration) (Remuneration and other interests) -------------------- Article 23. Remuneration of directors Article 29. Remuneration and bonus -- --------- -- ---------- shall be determined by resolution at a of directors and other property general meeting of shareholders. ------------------------------- interests received by the directors ----------------------------------- from the Company in consideration of ------------------------------------ the performance of their duties ------------------------------- (hereinafter referred to as the ------------------------------- "Remuneration") shall be determined by --------------- resolution at a general meeting of shareholders. (Newly established) (Exemption of Liability of Outside ---------------------------------- Directors) ---------- Article 30. The Company may enter --------------------------------- into an agreement with outside ------------------------------ directors under which their liability ------------------------------------- for damages due to the failure in --------------------------------- performing their duties shall ----------------------------- be limited in accordance with the --------------------------------- provisions of Paragraph 1, Article 427 -------------------------------------- of the Corporation Law; provided, --------------------------------- however, that the limit of liability ------------------------------------ under such agreement shall be the --------------------------------- higher of the predetermined amount of ------------------------------------- not less than ten million (10,000,000) -------------------------------------- yen, or the amount provided for under ------------------------------------- the laws and ordinances. ------------------------ CHAPTER V. CORPORATE AUDITORS CHAPTER V. CORPORATE AUDITORS AND BOARD OF CORPORATE AUDITORS AND BOARD OF CORPORATE AUDITORS (Number) (Number) Article 24. The Company shall have Article 31. The Company shall have -- -- not more than five (5) corporate not more than five (5) corporate auditors. auditors. (Small change in Japanese)
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============================================ ============================================ Current Articles of Incorporation Proposed provisions after amendment ============================================ ============================================ (Election) (Election) Article 25. Corporate auditors Article 32. -- -- shall be elected at a general meeting 1. (Unchanged) of shareholders. -- 2. Resolutions for the election 2. Resolutions for the election under the preceding paragraph shall be of corporate auditors shall be adopted ----------------------------- ------------------- adopted by a majority of the votes of by a majority of the votes of the the shareholders present who hold not shareholders present who hold not less less than one-third (1/3) of the than one-third (1/3) of the voting voting rights of all the shareholders. rights of the shareholders entitled --- -------- to exercise voting rights. -------------------------- (Term of Office) (Term of Office) Article 26. The term of office of Article 33. -- -- corporate auditors shall beuntil 1. The term of office of corporate the close of the ordinary general -- meeting of shareholders relating to auditors shall be until the close of the last accounts closing date the ordinary general meeting of --------------------- shareholders relating to the last occurring within four (4) years after fiscal year ending within four (4) --------- ------------------ their assumption of office; provided, years after their assumption of office. --------- 2. The term of office of a however, that the term of office of a -------------------------- ------------------------------------- corporate auditor elected to fill a corporate auditor elected to fill a ----------------------------------- ----------------------------------- vacancy of an auditor resigned vacancy shall be for the remaining ------------------------------ ---------------------------------- before the completion of the term balance of the term of office of the --------------------------------- ------------------------------------ shall be for the remaining balance of retired corporate auditor. ------------------------------------- -------------------------- the term of office of the retired --------------------------------- corporate auditor. ------------------ (Filling of Vacancy) (Deleted) -------------------- Article 27. In the event of any ------------------------------- vacancy occurring in the office of ---------------------------------- corporate auditors, no election to ---------------------------------- fill such vacancy may be held, if the ------------------------------------- number of the remaining corporate --------------------------------- auditors is not short of the statutory -------------------------------------- number. -------
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================================= =================================== Current Articles of Incorporation Proposed provisions after amendment ================================= =================================== (Calling of Meetings of Board of (Person with the Right to Call the ------------------- ----------------------------------- Corporate Auditors; Resolutions) Meeting of Board of Corporate Auditors) ----------- ------- Article 28. The Board of Corporate Article 34. -- ---------------------- -- Auditors shall decide matters (Deleted) ----------------------------- concerning the audit policy, the -------------------------------- methods for investigating the state of -------------------------------------- the business and property and the --------------------------------- execution of other duties of corporate -------------------------------------- auditors as well as such matters as ----------------------------------- are provided for in laws and ---------------------------- ordinances. ----------- 2. A meeting of the Board of A meeting of the Board of Corporate - Auditors shall be called by each Corporate Auditors shall be called by corporate auditor. each corporate auditor. 3. Notice of a meeting of the Board (Deleted) ----------------------------------- of Corporate Auditors shall be ------------------------------ dispatched to each corporate auditor ------------------------------------ three (3) days before the date of the ------------------------------------- meeting; provided, however, that such ------------------------------------- meeting may be held without going --------------------------------- through the procedure for calling if ------------------------------------ so agreed by all the corporate ------------------------------ auditors. --------- 4. Except as otherwise provided for (Deleted) ----------------------------------- in laws or ordinances, resolutions at ------------------------------------- a meeting of the Board of Corporate ----------------------------------- Auditors shall be adopted by a ------------------------------ majority of the corporate auditors. ----------------------------------- (Newly established) (Calling Meetings of Board of ---------------------------- Corporate Auditors) ------------------ Article 35. ----------- 1. Notice of a meeting of the Board ----------------------------------- of Corporate Auditors shall be ------------------------------ dispatched to each corporate auditor ------------------------------------ three (3) days before the date of the ------------------------------------- meeting; provided, however, that such ------------------------------------- period may be shortened in case of ---------------------------------- emergency. ---------- 2. A meeting of the Board of ---------------------------- Corporate Auditors may be held without -------------------------------------- going through the procedure for ------------------------------- calling, if so agreed by all the -------------------------------- corporate auditors. ------------------- (Resolutions of Meetings of Board of (Newly established) ----------------------------------- Corporate Auditors) ------------------ Article 36. ----------- 1. The Board of Corporate Auditors ---------------------------------- shall decide matters concerning the ----------------------------------- audit policy, the methods for ----------------------------- investigating the state of the ------------------------------ business and property and the ----------------------------- execution of other duties of corporate -------------------------------------- auditors as well as such matters as ----------------------------------- are provided for in laws and ---------------------------- ordinances. ----------- 2. Except as otherwise provided for -------------------------------------- in laws or ordinances, resolutions at ------------------------------------- a meeting of the Board of Corporate ----------------------------------- Auditors shall be adopted by a ------------------------------ majority of the corporate auditors. -----------------------------------
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================================= =================================== Current Articles of Incorporation Proposed provisions after amendment ================================= =================================== (Full-Time Corporate Auditor) (Full-Time Corporate Auditor) Article 29. The corporate auditors Article 37. A full-time corporate ---------------------------------- --------------------------------- shall appoint a full-time corporate auditor or auditors shall be elected ----------------------------------- ------------------------------------ auditor or auditors from among their by resolution of the Board of ------------------------------------ ----------------------------- number. Corporate Auditors. ------- ------------------- (Remuneration) (Remuneration and other interests) Article 30. Remuneration of corporate Article 38. Remuneration and other -- -- ----- auditors shall be determined by interests of corporate auditors shall resolution at a general meeting of --------- shareholders. be determined by resolution at a general meeting of shareholders. (Newly established) (Exemption of Liability of Outside ---------------------------------- Corporate Auditors) ------------------- Article 39. The Company may enter --------------------------------- into an agreement with outside ------------------------------ corporate auditors under which their ------------------------------------ liability for damages due to the -------------------------------- failure in performing their duties ---------------------------------- shall be limited in accordance with ----------------------------------- the provisions of Paragraph 1, Article -------------------------------------- 427 of the Corporation Law; provided, ------------------------------------- however, that the limit of liability ------------------------------------ under such agreement shall be the --------------------------------- higher of the predetermined amount not -------------------------------------- less than five million (5,000,000) ---------------------------------- yen, or the amount provided for under ------------------------------------- the laws or regulations. ------------------------ CHAPTER VI. ACCOUNTS CHAPTER VI. ACCOUNTS (Business Year; Accounts Closing Date) (Fiscal Year) ------------------------------------ ----------- Article 31. The business year of Article 40. The fiscal year of the -- -------- -- ------ the Company shall be from April 1 of Company shall be one year from April 1 each year to March 31 of the following -------- year and the last day of each business of each year to March 31 of the --------------------------------- following year. year shall be the accounts closing ---------------------------------- date. ----- (Dividends) (Record Date for Dividends at Fiscal ----------- ------------------------------------ Year End) --------- Article 32. Dividends shall be Article 41. The record date for the -- ------------------ -- ----------------------- paid to the shareholders and dividends to be paid by the Company at ---------------------------- -------------------------------------- registered pledgees appearing or the end of fiscal year shall be March -------------------------------- ------------------------------- recorded in the final register of 31 of each year. --------------------------------- shareholders as of March 31 of each ------------------ year. (Interim Dividends) (Interim Dividends) Article 33. The Company may, by Article 42. The Company may, by -- -- resolution of the Board of Directors, resolution of the Board of Directors, make cash distribution as provided for pay interim dividends by regarding -------------------------------------- ---------------------------------- in Article 293-5 of the Commercial September 30 of each year as the ---------------------------------- ------ Code of Japan ("interim dividends") to record date. -------------------------------------- ----------- the shareholders or registered ------------------------------ pledgees appearing or recorded in the ------------------------------------- final register of shareholders as of ------------------------------------ September 30 of each year.
- 47 - ========================================= ======================================== Current Articles of Incorporation Proposed provisions after amendment ========================================= ======================================== (Period of Limitations) (Period of Limitations for Dividends) Article 34. The Company shall be Article 43. The Company shall be -- -- relieved from the obligation to pay relieved from the obligation to pay any dividend or interim dividend if any property available for ---------------------------- ---------------------- such any dividend or interim dividend distribution if such property -------------------------------- ------------ -------- remains unreceived after the lapse of available for distribution is cash and three (3) full years from the date on -------------------------------------- which the same became due and payable. still remains unreceived after the ----- lapse of three (3) full years from the date on which the same became due and payable.
- 48 - AGENDA 3: ELECTION OF ELEVEN (11) DIRECTORS As the tenure of office of ten (10) directors will expire at the end of this General Meeting of Shareholders, the Company proposes the appointment of eleven (11) directors at this meeting. The candidates for directors are as follows: Brief personal profile (the other company's name and position thereof when the candidate is a representative Number of the Name director ofother company, with Company's No. (Date of birth) an asterisk) shares held --- ------------------- --------------------------------------- ------------- 1 Masamitsu Sakurai Apr. 1966 Joined the Company 9,000 (January 8, 1942) May 1984 President, Ricoh UK Products Ltd. Jun. 1992 Director of the Company Apr. 1993 President, Ricoh Europe B.V. Jun. 1994 Managing Director of the Company Apr. 1996 President and Representative Director of the Company Mar. 2005 * Chairman, Coca-Cola West Japan Co., Ltd. (to date) Jun. 2005 Representative Director of the Company (to date) President of the Company (to date) Chairman of the Board of the Company (to date) CEO (Chief Executive Officer) (to date) ------------------------------------------------------------------------------ 2 Koichi Endo Apr. 1966 Joined the Company 13,747 (February 16, 1944) Apr. 1987 President, Ricoh Electronics, Inc. Jun. 1992 Director of the Company Jun. 1997 Managing Director of the Company Jun. 2000 Executive Managing Director of the Company Executive Vice President of the Company Apr. 2004 General Manager, Fact Base Management Innovation Office (to date) Jun. 2005 Director of the Company (to date) Corporate Executive Vice President of the Company (to date) CINO (Chief Innovation Officer) (to date) Apr. 2006 CSO (Chief Strategy Officer) (to date) ------------------------------------------------------------------------------ 3 Masayuki Matsumoto Apr. 1970 Joined the Company 4,000 (December 10, 1944) Jul. 1993 Manager, Tokyo Branch, Imaging Equipment Marketing Division, Marketing Group Jun. 1994 Director of the Company Jan. 1996 Deputy General Manager, Marketing Division Oct. 1998 Managing Director of the Company General Manager, Marketing Group Jun. 2000 Executive Vice President of the Company Jun. 2002 Executive Managing Director of the Company Apr. 2005 General Manager, Corporate Social Responsibility Division (to date) Jun. 2005 Director of the Company (to date) Corporate Executive Vice President of the Company (to date) CMO (Chief Marketing Officer) (Japan) (to date) ------------------------------------------------------------------------------ - 49 - Brief personal profile (the other company's name and position thereof when the candidate is a representative Number of the Name director ofother company, with Company's No. (Date of birth) an asterisk) shares held --- ------------------- ---------------------------------------- ------------- 4 Katsumi Yoshida Apr. 1967 Joined the Company (August 20, 1944) Oct. 1990 President, Ricoh Electronics, Inc. Feb. 1996 Vice Chairman, Ricoh Corporation Apr. 2000 President, Ricoh Corporation 5,100 Apr. 2001 Executive Vice President of the Company Jun. 2002 Managing Director of the Company Oct. 2003 General Manager, International Marketing Group * Chairman, Ricoh China Co., Ltd. (to date) Jun. 2005 Director of the Company (to date) Corporate Executive Vice President of the Company (to date) CMO (Chief Marketing Officer) (overseas) (to date) Apr. 2006 In charge of Office Business Strategic Planning (to date) ------------------------------------------------------------------------------ 5 Takashi Nakamura Apr. 1972 Joined the Company (September 2, 1946) Apr. 1990 President, Ricoh UK Products Ltd. Jan. 1995 President, Ricoh Europe B.V. Jun. 1998 Director of the Company Jun. 2000 Senior Vice President of the Company Jun. 2002 President, Ricoh Elemex 6,693 Corporation Jun. 2004 Managing Director of the Company Jun. 2005 Director of the Company (to date) In charge of Legal Affairs and Intellectual Property (to date) Jan. 2006 Corporate Executive Vice President of the Company (to date) CHO (Chief Human Resource Officer) (to date) CPO (Chief Production Officer) (to date) ------------------------------------------------------------------------------ 6 Shiro Kondoh Apr. 1973 Joined the Company (October 7, 1949) Jul. 1999 Deputy General Manager, Imaging System Business Group Jun. 2000 Senior Vice President of the Company Oct. 2000 General Manager, Imaging System Business Group Jun. 2002 Executive Vice President of 5,000 the Company Jun. 2003 Managing Director of the Company Oct. 2004 In charge of Imaging Engine Solution Development (to date) General Manager, MFP Business Group (to date) Jun. 2005 Director of the Company (to date) Corporate Executive Vice President of the Company (to date) ------------------------------------------------------------------------------ - 50 - Brief personal profile (the other company's name and position thereof when the candidate is a representative Number of the Name director ofother company, with Company's No. (Date of birth) an asterisk) shares held --- ------------------- ---------------------------------------- ------------- 7 Kazunori Azuma Apr. 1971 Joined the Company 6,000 (February 11, 1949) Oct. 2000 President, Ricoh Technosystems Co., Ltd. Jun. 2003 Managing Director of the Company Executive Vice President of the Company In charge of Domestic Sales Planning Oct. 2003 Chairman, Ricoh Technosystems Co., Ltd. Nov. 2003 General Manager, Marketing Group (to date) Jun. 2005 Director of the Company (to date) Corporate Executive Vice President of the Company (to date) ------------------------------------------------------------------------------ 8 Zenji Miura Apr. 1976 Joined the Company 6,000 (January 5, 1950) Jan. 1993 President, Ricoh France S.A. Oct. 2000 Senior Vice President of the Company General Manager, Finance and Accounting Division Jun. 2003 Executive Vice President of the Company Jun. 2004 Managing Director of the Company Jun. 2005 Director of the Company (to date) Corporate Executive Vice President of the Company (to date) CFO (Chief Financial Officer) (to date) In charge of IR (to date) Apr. 2006 CIO (Chief Information Officer) (to date) In charge of Corporate Communication and Management of Group Companies (to date) General Manager, Corporate Planning Division (to date) ------------------------------------------------------------------------------ 9 Kiyoshi Sakai Apr. 1970 Joined the Company 5,000 (December 25, 1945) Apr. 1994 General Manager, IPS Business Division, Imaging System Business Group Jan. 1996 General Manager, Corporate Planning Division Jun. 1996 Director of the Company Apr. 1999 General Manager, Research & Development Group Jun. 2000 Senior Vice President of the Company Jun. 2002 Managing Director of the Company Executive Vice President of the Company Jun. 2005 Corporate Senior Vice President of the Company (to date) Apr. 2006 In charge of Research & Development and Corporate Environment (to date) ------------------------------------------------------------------------------ - 51 - Brief personal profile (the other company's name and position thereof when the candidate is a representative Number of the Name director ofother company, with an Company's No. (Date of birth) asterisk) shares held --- ----------------- ------------------------------------------- ------------- 10 Takaaki Wakasugi Mar. 1968 Graduated from Graduate School 3,000 (March 11, 1943) of Economics, the University of Tokyo Jun. 1985 Professor, Faculty of Economics, the University of Tokyo Sep. 1990 Co-director, Mitsui Life Financial Research Center, University of Michigan Ross School of Business (to date) Apr. 2003 * Director and General Manager, Japan Corporate Governance Research Institute, Inc. (to date) Apr. 2004 Professor, Faculty of Business Administration, Tokyo Keizai University (to date) Jun. 2004 Professor Emeritus, the University of Tokyo Jun. 2005 Director of the Company (to date) ------------------------------------------------------------------------------- 11 Takuya Goto Apr. 1964 Joined Kao Soap Company (renamed 0 (August 19, 1940) Kao Corporation in 1985) May 1987 General Manager, Tochigi Plant, Kao Corporation May 1990 General Manager, Chemical Business Division, Kao Corporation Jun. 1990 Director of Kao Corporation Jul. 1991 Managing Director of Kao Corporation Jun. 1996 Executive Managing Director of Kao Corporation Jun. 1997 President, Kao Corporation Jun. 2004 Chairman, Kao Corporation (to date) ------------------------------------------------------------------------------- Notes: 1. There is no conflict of interests between the candidates and the Company. 2. Messrs. Takaaki Wakasugi and Takuya Goto are the candidates for outside directors. - 52 - AGENDA 4: ELECTION OF ONE (1) CORPORATE AUDITOR As the tenure of office of a corporate auditor Mr. Hisaaki Koga will expire at the end of this General Meeting of Shareholders, the Company proposes the appointment of one (1) corporate auditor at this meeting. The Board of Corporate Auditors has given its consent to this nomination. The candidate for the corporate auditor is as follows: Brief personal profile (the other company's name and position thereof when the candidate is a Number of the Name representative director of Company's (Date of birth) othercompany; with an asterisk) shares held --------------- ------------------------------------------------ ------------- Shigekazu Iijima Apr. 1972 Joined the Company 1,000 (July 7, 1948) Oct. 1990 General Manager, Accounting Department, Finance and Accounting Division Apr. 1993 General Manager, Administration Department, Electronic Device Division Jun. 1996 Leader, Corporate Planning Group, Corporate Planning Division Jun. 1999 Director, Ricoh Elemex Corporation Apr. 2004 General Manager, Business Planning Department, International Business Group Jul. 2005 General Manager, Business Strategy & Planning Center, International Business Group (to date) ------------------------------------------------------------------------------- Note: There is no conflict of interests between the candidate and the Company. - 53 - AGENDA 5: ELECTION OF ONE (1) SUBSTITUTE CORPORATE AUDITOR The Corporation Law stipulates that a company may elect a substitute corporate auditor. Hence, the Company proposes to appoint Mr. Satoshi Ito as a substitute outside corporate auditor for outside corporate auditors Mr. Kenji Matsuishi and Mr. Takehiko Wada so that audit operations can be carried out continuously even in a case where the number of corporate auditors falls below the number required by law. The above appointment may be nullified only before the candidate assumes as outside corporate auditors, by resolution of the Board of Directors and with approval of the Board of Corporate Auditors. The Board of Corporate Auditors has given its consent to this nomination. The candidate for the substitute outside corporate auditor is as follows: Brief personal profile (the other company's name and position thereof when the candidate is a Number of the Name representative director of Company's (Date of birth) othercompany; with an asterisk) shares held --------------- ----------------------------------------------- ------------- Satoshi Itoh Jan. 1967 Joined Japan Office, Arthur Anderson 0 (July 25, 1942) Mar. 1967 Finished Master's Course, Graduate School of Commerce, Chuo University Dec. 1970 Registered as Certified Public Accountant Aug. 1975 Served at London Office, Arthur Anderson Sep. 1978 Partner, Arthur Anderson Sep. 1993 Representative Partner of Asahi & Co. Aug. 2001 Retired from Arthur Anderson and Asahi & Co. Apr. 2002 Professor, Graduate School of International Accounting, Specialty Graduate School (presently Professional Graduate School), Chuo University (to date) ------------------------------------------------------------------------------- Note: There is no conflict of interests between the candidate and the Company. - 54 - AGENDA 6: GRANTING OF RETIREMENT ALLOWANCES TO RETIRING DIRECTORS AND A CORPORATE AUDITOR The Company proposes to pay retirement allowances in appropriate amounts with the set limits, according to the standards prescribed by the Company, to Messrs. Tatsuo Hirakawa, who retired as director on March 31, 2006, and Nobuo Mii, who will retire as director at the end of this meeting, and Hisaaki Koga, who will retire as corporate auditor 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 decision of the Board of Directors regarding the directors and to the Board of Corporate Auditors regarding the corporate auditor. Brief personal profiles of the retired and retiring directors and a corporate auditor are as follows: Name Brief personal profile --------------- --------------------------------------------------------------- Tatsuo Hirakawa Jun. 1983 Director of the Company Jun. 1990 Managing Director of the Company Jun. 1994 Executive Managing Director of the Company Oct. 2001 Deputy President and Representative Director of the Company Jun. 2005 Representative Director of the Company Deputy President of the Company Mar. 2006 Retired as Representative Director Retired as Deputy President ------------------------------------------------------------------------------- Nobuo Mii Jun. 2000 Director of the Company (to date) ------------------------------------------------------------------------------- Hisaaki Koga Jun. 1998 Corporate Auditor of the Company (full-time) (to date) ------------------------------------------------------------------------------- - 55 -