6-K 1 r6k071025.txt INTERIM REPORT 9-30-2007 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 October 2007 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/ Zenji Miura ------------------------------ Zenji Miura Director, Chief Financial Officer Corporate Executive Vice President October 25, 2007 -------------------------------------------------------------------------------- RICOH October 25, 2007 INTERIM REPORT Half year ended September 30, 2007 (Results for the Period from April 1, 2007 to September 30, 2007) Three months ended September 30, 2007 (Results for the Period from July 1, 2007 to September 30, 2007) PERFORMANCE OUTLINE (CONSOLIDATED) (1) Half year ended September 30, 2006, 2007 and Year ending March 31, 2008 (Forecast)
(Billions of yen) --------------------------------------------------------------------------------------------------- --------------------- Half year ended Half year ended Year ending September 30, 2006 September 30, 2007 March 31, 2008 (Results) (Results) Change (Forecast) Change --------------------------------------------------------------------------------------------------- --------------------- Domestic sales 492.4 504.4 2.4% 1,040.0 3.8% Overseas sales 494.4 583.9 18.1% 1,210.0 13.4% Net sales 986.9 1,088.3 10.3% 2,250.0 8.8% Gross profit 407.9 451.2 10.6% 940.0 9.0% Operating income 73.1 84.5 15.6% 195.0 11.8% Income from continuing operations before income taxes 74.2 85.0 14.5% 192.0 10.0% Net income 52.0 53.1 2.1% 117.0 4.7% --------------------------------------------------------------------------------------------------- --------------------- Exchange rate (Yen/US$) 115.40 119.37 3.97 117.19 0.17 Exchange rate (Yen/EURO) 145.98 162.36 16.38 158.68 8.60 --------------------------------------------------------------------------------------------------- --------------------- Net income per share-basic (yen) 71.35 72.83 1.48 160.30 7.20 Net income per share-diluted (yen) 71.35 70.90 -0.45 156.04 4.15 --------------------------------------------------------------------------------------------------- --------------------- Total assets 2,090.9 2,299.8 208.8 -- -- Shareholders' investment 1,001.9 1,114.5 112.6 -- -- Interest-bearing debt 393.7 420.4 26.7 -- -- --------------------------------------------------------------------------------------------------- --------------------- Equity ratio (%) 47.9 48.5 0.6 -- -- --------------------------------------------------------------------------------------------------- --------------------- Shareholders' investment per share (yen) 1,373.28 1,527.18 153.90 -- -- --------------------------------------------------------------------------------------------------- --------------------- Cash flows from operating activities 51.6 78.8 27.2 -- -- Cash flows from investing activities -39.2 -137.1 -97.8 -- -- Cash flows from financing activities 1.1 -7.2 -8.3 -- -- Cash and cash equivalents at end of period 203.8 190.1 -13.7 -- -- --------------------------------------------------------------------------------------------------- --------------------- Capital expenditures 39.1 39.6 0.5 90.0 4.2 Depreciation for tangible fixed assets 33.7 35.6 1.9 76.0 3.5 R&D expenditures 56.5 61.5 5.0 128.0 13.0 --------------------------------------------------------------------------------------------------- ---------------------
(2) Three months ended September 30, 2006 and 2007
(Billions of yen) ----------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change ----------------------------------------------------------------------------------- Domestic sales 252.0 259.7 3.0% Overseas sales 250.2 298.5 19.3% Net sales 502.3 558.2 11.1% Gross profit 205.3 222.4 8.3% Operating income 32.5 37.9 16.7% Income before income taxes 35.5 31.7 -10.6% Net income 22.9 19.3 -15.8% ----------------------------------------------------------------------------------- Exchange rate (Yen/US$) 116.26 117.98 1.72 Exchange rate (Yen/EURO) 148.16 162.00 13.84 ----------------------------------------------------------------------------------- Net income per share-basic (yen) 31.43 26.45 -4.98 Net income per share-diluted (yen) 31.43 25.75 -5.68 ----------------------------------------------------------------------------------- Capital expenditures 23.2 22.5 -0.6 Depreciation for tangible fixed assets 17.7 18.8 1.0 R&D expenditures 31.1 34.3 3.1 -----------------------------------------------------------------------------------
RICOH COMPANY, LTD. * Ricoh bases the forecast estimates for March 31, 2008 above upon information currently available to management, which involves risks and uncertainties that could cause actual results to differ materially from those projected. 1 RICOH COMPANY, LTD. AND CONSOLIDATED SUBSIDIARIES INTERIM REPORT (CONSOLIDATED. HALF YEAR ENDED SEPTEMBER 30, 2007) 1. RESULTS FOR THE PERIOD FROM APRIL 1, 2007 TO SEPTEMBER 30, 2007 (1) Operating Results
(Millions of yen) -------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 March 31, 2007 -------------------------------------------------------------------------------------------------------------- Net sales 986,922 1,088,373 2,068,925 (% change from the previous corresponding periods) 7.3 10.3 8.4 Operating income 73,163 84,568 174,380 (% change from the previous corresponding periods) 12.5 15.6 17.4 Income from continuing operations before income taxes 74,268 85,042 174,519 (% change from the previous corresponding periods) 10.0 14.5 14.2 Net income 52,045 53,160 111,724 (% change from the previous corresponding periods) 21.4 2.1 15.1 Net income per share-basic (yen) 71.35 72.83 153.10 Net income per share-diluted (yen) 71.35 70.90 151.89 -------------------------------------------------------------------------------------------------------------- Notes:
Equity in income of affiliates: Yen 955 million; Yen 1,038 million (half year ended September 30, 2006); Yen 1,539 million (year ended March 31, 2007)
(2) Financial Position (Millions of yen) -------------------------------------------------------------------------------- September 30, 2006 September 30, 2007 March 31, 2007 -------------------------------------------------------------------------------- Total assets 2,090,974 2,299,845 2,243,406 Shareholders' investment 1,001,948 1,114,571 1,070,913 Equity ratio (%) 47.9 48.5 47.7 Equity per share (yen) 1,373.28 1,527.18 1,467.03 --------------------------------------------------------------------------------
(3) Cash Flows (Millions of yen) -------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 March 31, 2007 -------------------------------------------------------------------------------------------------- Cash flows from operating activities 51,624 78,836 167,297 Cash flows from investing activities -39,259 -137,124 -115,432 Cash flows from financing activities 1,101 -7,256 9,282 Cash and cash equivalents at end of period 203,876 190,136 255,737 --------------------------------------------------------------------------------------------------
Year ended Year ending 2. DIVIDEND INFORMATION March 31, 2007 March 31, 2008 -------------------------------------------------------------------------- Cash dividends, applicable to the year (yen) 28.00 33.00 Half year (yen) 13.00 16.00 Year-end (yen) 15.00 17.00 --------------------------------------------------------------------------
3. FORECAST OF OPERATING RESULTS FROM APRIL 1, 2007 TO MARCH 31, 2008 (Millions of yen) --------------------------------------------------------------------------------------- Net sales 2,250,000 Operating income 195,000 Income before income taxes 192,000 Net income 117,000 Net income per share-basic (yen) 160.30 ---------------------------------------------------------------------------------------
* In accordance with Japanese regulations, Ricoh has issued forecast for its financial results for the fiscal year ending March 31, 2008. These forecast are forward-looking statements based on a number of assumptions and beliefs in light of the information currently available to management and subject to significant risks and uncertainties. 2 4. OTHERS (1)Change in significant subsidiaries has been made. 1 Removal (Lanier Worldwide, Inc.) (2)Change in accounting method has been made. (3)Number of common stock outstanding (including treasury stock): As of September 30, 2007 744,912,078 shares As of September 30, 2006 744,912,078 shares As of March 31, 2007 744,912,078 shares (4)Number of treasury stock: As of September 30, 2007 15,091,026 shares As of September 30, 2006 15,309,383 shares As of March 31, 2007 14,924,405 shares 3 1. PERFORMANCE (1) OPERATING RESULTS *Overview Ricoh Group's consolidated net sales for the first half of fiscal year 2008 (April 1, 2007 to March 31, 2008) increased by 10.3% as compared to the previous corresponding period, to Yen 1,088.3 billion. During this period, the average yen exchange rates were Yen 119.37 against the U.S. dollar (down Yen 3.97) and Yen 162.36 against the euro (down Yen 16.38). Sales would have increased by 6.0% if not for the effects of foreign currency exchange fluctuations. Sales in all the segments such as the Office Solutions, Industrial Products and Other increased. As for the Office Solutions, sales of its digital plain paper copiers (PPCs), multifunctional printers (MFPs) and laser printers, mainly for color products, continuously increased and Information Technology services also increased its sales resulting from the expansion of solutions business. As for Industrial Products, sales of its thermal media, semiconductor and electronic component products increased. As for Other, financing services and digital camera increased its sales. As a result, domestic sales increased by 2.4% from the previous corresponding period, to Yen 504.4 billion. Overseas sales also increased by 18.1% from the previous corresponding period, to Yen 583.9 billion. Gross profit increased by 10.6% from the previous corresponding period, to Yen 451.2 billion. This increase was primarily due to the increased sales of value-added high-margin products such as color MFPs in addition to ongoing cost management controls. Foreign currency fluctuations also served as a factor behind the profit increase. Selling, general and administrative expenses increased by 9.5% from the previous corresponding period, to Yen 366.6 billion. R&D expenses remain high level due to its focus on developing new products. Additionally due to our accelerated efforts in implementing measures for enhancing our capabilities to provide solutions and expanding business spheres, expenses increased. Ricoh did start to see the positive effect of its structural reform initiatives such as enhancing the efficiency of the core operations. Consequently, the percentage of general and administrative expenses against total sales decreased by 0.2 percentage points from the previous corresponding period, to 33.7%. R&D expenses increased by Yen 5.0 billion from the previous corresponding period, to Yen 61.5 billion (5.7% of total sales). As a result, operating income increased by 15.6% from the previous corresponding period, to Yen 84.5 billion. In the other (income) expense, the decrease in other income was due to an income from the sales of marketable securities as compared to the previous corresponding period. As a result, income from continuing operations before income taxes increased by 14.5% from the previous corresponding period, to Yen 85.0 billion. The effective tax rate was 35.1%. As a result, net income from continuing operations increased by 14.2% from the previous corresponding period, to Yen 53.1 billion. Net income increased by 2.1% from the previous corresponding period, to Yen 53.1 billion while a gain from the sale of the discontinued operations was recognized in the previous corresponding period. Ricoh Company, Ltd. decided to increase its interim dividend by Yen 3.00 from the previous corresponding period, to Yen 16.00 per share. [Graph 1] Consolidated performance The graphs are omitted. The data in the omitted graphs can be shown at the schedule 1 in APPENDIX B. 4 * Consolidated Sales by Product Line Office Solutions (Sales up 10.3% to Yen 924.6 billion) ------------------------------------------------------ Net sales in the Office Solutions segment which consists of image solutions and network system solutions increased by 10.3% from the previous corresponding period, to Yen 924.6 billion despite stiff competition against other manufacturers regarding the color equipment and solution business. The breakdown of sales for Imaging Solutions and Network System Solutions is as shown below. The sales would have increased by 5.5% excluding the effects of foreign currency fluctuations. Imaging Solutions (Sales up 11.3% to Yen 827.3 billion) ------------------------------------------------------- Sales of PPCs, MFPs and printers, mainly color equipment, increased both in Japan and overseas due to its expanding product lines and enhanced solution sales structures. The new color MFP products launched as a standard new-generation color model played a large role in this sales increase. Overall sales increased by 11.3% from the previous corresponding period, to Yen 827.3 billion. The sales would have increased by 5.9% excluding the effects of foreign currency fluctuations. Network System Solutions (Sales up 2.9% to Yen 97.2 billion) ------------------------------------------------------------ The increase in sales of IT services was due to the expansion of solution business. The sales of personal computers and PC servers increased slightly in the domestic market. As a result, sales in this category increased by 2.9% from the previous corresponding period, to Yen 97.2 billion. Industrial Products (Sales up 13.5% to Yen 77.4 billion) -------------------------------------------------------- Net sales in the Industrial Products segment increased by 13.5% from the previous corresponding period, to Yen 77.4 billion. Sales in thermal media, semiconductors, electric components as well as measuring instruments increased. Other (Sales up 7.1% to Yen 86.2 billion) ----------------------------------------- Net sales in this category increased by 7.1% from the previous corresponding period, to Yen 86.2 billion. Sales of digital cameras in both the Japanese and overseas markets increased in addition to good performance of the financing services in Japan. [Graph 2] Consolidated sales by product line The graphs are omitted. The data in the omitted graphs can be shown at the schedule 2 in APPENDIX B. 5 * Consolidated Sales by Geographic Area Japan (Sales up 2.4% to Yen 504.4 billion) ------------------------------------------ While the Japanese economy was on the upswing, consumer spending remained flat. In this market circumstances, Ricoh launched its new products and offered a wide range of solutions in an effort to cultivate a growing customers' needs for solutions and color products in the office solutions market. This effort resulted in a significant sales increase in color MFPs as compared to the previous corresponding period. In the Industrial Products, sales in thermal media, electronic components and measuring instruments increased. Sales in the Other segment increased due to the favorable performance in financing business as well as digital cameras. Overall sales in Japan increased by 2.4% from the previous corresponding period. The Americas (Sales up 6.0% to Yen 215.7 billion) ------------------------------------------------- In the U.S., a competition in our product market become more intensified while the weakened demand in housing market and concerns to the subprime loans arise. Under such circumstances, the Office Solutions segment focused on strengthening sales structures and expanding product lines in order to provide the best solutions to meet the diverse range of customer needs for color, networking and high-speed products. Sales of Office Solutions increased owing to color MFPs and printers as compared to the previous corresponding period. As a result, sales in the Americas increased by 6.0% as comapred to the previous period. The increase in sales in this area would have increased by 2.5% excluding the effects of foreign currency fluctuations. Europe (Sales up 27.6% to Yen 289.1 billion) -------------------------------------------- As the European economy remaining on a steady footing, its Office Solutions segment proceeded with further strengthening sales structures and expanding product lines in order to provide the best solutions to meet a diverse range of customer needs through the acquisition of Infotec Europe B.V. As a result, sales of PPCs, MFPs and printers exceeded last year's level in both color and black/white product categories, bringing overall sales in Office Solutions segment up 26.8% over the previous corresponding period. Sales in the Industrial Products also increased due to the favorable performance of the thermal media and semiconductor businesses. These factors all resulted in a 27.6% increase in sales in Europe. The increase in sales in this area would have increased by 15.5% excluding the effects of foreign currency fluctuations. Other (Sales up 23.0% to Yen 79.1 billion) ------------------------------------------ Other including China, other Asian countries and Oceania generally experienced economic evolution, with the Chinese economic continuious rapid growth despite a slight slowdown in some areas. Against this backdrop, its Office Solutions segment achieved higher sales of PPCs, MFPs and printers, largely for color products, in comparison with the previous corresponding period due to the increasing demand for both color and monocrome products. As for the Industrial Products segment, the sales for thermal media, semiconductor and electronic component increased as compared to the previous corresponding period. These factors all resulted in a 23.0% increase in overall sales in this area. The sales increase in this area would have increased by 10.7% excluding the effects of foreign currency fluctuations. [Graph 3] Consolidated sales by geographic area The graphs are omitted. The data in the omitted graphs can be shown at the schedule 3 in APPENDIX B. 6 *Segment Information Business Segment ---------------- Office Solutions Ricoh expanded product lines in the office equipment market as well as in the production printing and low-end markets. Ricoh also strengthened sales structures for solutions business. This resulted in increased sales of PPCs, MFPs and printers, mainly for color products, both in Japan and overseas in addition to increased sales in service and support including IT services. Consequently, overall sales in this segment increased by 10.3% from the previous corresponding period, to Yen 924.6 billion. In terms of operating expenses, R&D expenses remain high level due to its focus on developing new products. Additionally due to its accelerated efforts in implementing measures for enhancing our capabilities to provide solutions and expanding business spheres, expenses increased. Ricoh has started to see the positive effect of its structural reform initiatives such as enhancing the efficiency of the core operations. As a result, operating income increased by 12.2% to Yen 110.8 billion from the previous corresponding period. Total assets increased from the previous corresponding period due to increases in its accounts receivables and inventory assets resulted from the sales increase as well as the investment to a joint venture company with IBM Corporation and the other business acquisitions. Industrial Products ------------------- Sales in semiconductor, thermal media and electronic component remained steady. As a result in the Industrial Products, the sales increased by 12.8% from the previous period, to Yen 79.6 billion. Operating income increased from the previous corresponding period due to an increase in its sales volume. Net assets increased from the previous period as a result of increased sales as well as construction of a new thermal media production facility in China. Other ----- Sales in financing service and digital camera businesses increased. However, this increase in sales did not have a significant effect on the overall profit. While net sales in Other segment increased by 7.1%, operating income decreased from the previous corresponding period.
(Billions of yen) -------------------------------------------------------------------------------------------- Half year ended Half year ended September September 30, 2006 30, 2007 Change (%) -------------------------------------------------------------------------------------------- Office Solutions: Net sales 838.0 924.6 10.3 Operating income 98.7 110.8 12.2 Operating income on sales(%) 11.8 12.0 0.2point Identifiable assets 1,474.2 1,681.7 14.1 Capital expenditures 34.4 34.9 1.4 Depreciation 29.4 30.4 3.3 -------------------------------------------------------------------------------------------- Industrial Products: Net sales 70.5 79.6 12.8 Operating income 0.8 2.6 201.3 Operating income on sales(%) 1.3 3.4 2.1points Identifiable assets 86.5 97.2 12.4 Capital expenditures 2.8 3.3 18.5 Depreciation 2.7 3.2 20.2 -------------------------------------------------------------------------------------------- Other: Net sales 80.5 86.2 7.1 Operating income 1.8 1.1 -38.6 Operating income on sales(%) 2.4 1.4 -1.0points Identifiable assets 114.1 113.3 -0.7 Capital expenditures 1.4 0.8 -38.5 Depreciation 0.9 1.1 21.7 --------------------------------------------------------------------------------------------
7 Geographic Segment ------------------ Japan ----- Sales in the Japan increased in the Office Solutions, Industrial Products and Other. Additionally exports, mainly consisting of color MFPs and high-speed MFPs increased. Due to these factors as well as the effect of the appreciation of both the U.S. Dollar and the Euro in relation to the Japanese Yen, overall sales in Japan increased by 2.6% from the previous corresponding period, to Yen 769.9 billion. Operating expenses increased by 2.9% due to an increase in the net sales as well as increases in R&D for new products, reinforcement for solution initiatives and further development on business expansion. Consequently, operating income decreased by 2.1% to Yen 50.5 billion and operating income on net sales decreased by 0.3 percentage point to 6.6%. The Americas ------------ Sales of PPCs, MFPs and printers increased from the previous corresponding period, both for color MFP and printer products. Net sales in the Americas increased by 5.2% to Yen 215.9 billion. Operating income decreased by 39.1% to Yen 5.4 billion due to an increase in expenses for developement on business expansion. Operating income as a percentage of net sales decreased by 1.9 percentage point to 2.5%. Europe ------ Sales significantly increased for both color and black/white PPCs and MFPs as compared to the previous corresponding period. As a result net sales in Europe increased by 27.3% to Yen 291.0 billion. Operating income increased by 65.1% from the pervious corresponding period, to Yen 15.8 billion due primarily to the sales increase. Operating income as a percentage of net sales also increased 1.2 percentage point from the previous corresponding period, to 5.4%. Other ----- Sales in the Chinese, Asian and Oceana markets increased from the previous corresponding period, mainly for color PPCs, MFPs and printers. A large number of products primarily including color MFPs manufactured in its Chinese production base were supplied on a global basis, significantly boosting the value of exports in China. Consequently, net sales in these areas were up 24.3% to Yen 154.7 billion on a year-on-year basis. Operating income rose 38.7% to Yen 12.2 billion due to increased production volume in these markets. The ratio of operating income to net sales also increased by 0.8 percentage point compared with the previous corresponding period, to 7.9%.
(Billions of yen) ------------------------------------------------------------------------------------------------ Half year ended Half year ended September 30, 2006 September 30, 2007 Change (%) ------------------------------------------------------------------------------------------------ Japan: Net sales 750.4 769.9 2.6% Operating income 51.6 50.5 -2.1% Operating income on sales(%) 6.9 6.6 -0.3 point Identifiable assets 1,246.6 1,294.9 3.9% ------------------------------------------------------------------------------------------------ The Americas: Net sales 205.2 215.9 5.2% Operating income 8.9 5.4 -39.1% Operating income on sales(%) 4.4 2.5 -1.9 points Identifiable assets 249.4 355.1 42.4% ------------------------------------------------------------------------------------------------ Europe: Net sales 228.5 291.0 27.3% Operating income 9.5 15.8 65.1% Operating income on sales(%) 4.2 5.4 1.2 points Identifiable assets 262.5 307.2 17.0% ------------------------------------------------------------------------------------------------ Other: Net sales 124.5 154.7 24.3% Operating income 8.8 12.2 38.7% Operating income on sales(%) 7.1 7.9 0.8 point Identifiable assets 93.5 112.8 20.7% -----------------------------------------------------------------------------------------------
8 *Forecast for the entire fiscal year Economic projections and Ricoh Group's strategies for fiscal year 2008 ---------------------------------------------------------------------- The global economy is expected to continue its gradual expansion although remain sluggish in some countries. The US economy is likely to remain stagnant due to the deterioration in the housing market while the economy in Europe and Asian countries other than China will slow down. The Chinese economy is expected to continue growing at a fast rate. The Japanese economy is likely to continue expanding at a gradual pace although consumer spending trends cannot be accurately predicted. Customer needs will become increasingly diversified in the Ricoh Group's markets. Competition is expected to heat up in the area of office solutions, especially the area of color products and solution business. Competition is expected to be fierce in both the Industrial Products and Other segments as companies try to respond to ever-diversifying customer needs. Working against this backdrop, the Ricoh Group aims to enhance its competitive edge by creating new value and developing a highly efficient management that will promote grow and further development. We will launch new products and services throughout fiscal year 2008 with an aim to creating new value. We will also step up our efforts to implement structural reforms and strengthening our business foundation in order to further enhance our operational efficiency. Our performance forecast for fiscal year 2008 is as follows: Exchange Rate Assumptions for the 2nd half year US$ 1 = Yen 115.00 (Yen 119.37 in 1st half year) EURO 1 = Yen 155.00 (Yen 162.36 in 1st half year) Exchange Rate Assumptions for the full year ended March 31, 2008 US$ 1 = Yen 117.19 (Yen 117.02 in previous fiscal year) EURO 1 = Yen 158.68 (Yen 150.08 in previous fiscal year)
(Billions of yen) -------------------------------------------------------------------------- Year ended Year ending March 31, 2007 March 31, 2008 (Results) (Forecast) Change -------------------------------------------------------------------------- Domestic sales 1,002.2 1,040.0 3.8% Overseas sales 1,066.6 1,210.0 13.4% Net sales 2,068.9 2,250.0 8.8% Gross profit 862.4 940.0 9.0% Operating income 174.3 195.0 11.8% Income before income taxes 174.5 192.0 10.0% Net income 111.7 117.0 4.7% --------------------------------------------------------------------------
Notes: * Ricoh bases the forecast estimates for the year ending March 31, 2008 above upon information currently available to management, which involves risks and uncertainties that could cause actual results to differ materially from those projected. 9 (2) FINANCIAL POSITION A) Assets, Liabilities, And Shareholders' Investment At Year-end
(Billions of yen) ---------------------------------------------------------------------------------- September 30, 2006 September 30, 2007 Change ---------------------------------------------------------------------------------- Total Assets 2,090.9 2,299.8 208.8 Shareholders' Investment 1,001.9 1,114.5 112.6 Equity Ratio 47.9% 48.5% 0.6 point ----------------------------------------------------------------------------------
In assets, trade receivables, inventories and financial receivables increased along with the expansion of business from the end of the previous corresponding period. Other investments increased due to the increase in goodwill resulted from the commencement of the joint venture (InfoPrint Solutions company, LLC) with IBM and the acquisition of European operations acquired from Danka Business Systems PLC. As a result, total assets increased by Yen 208.8 billion to Yen 2,299.8 billion. As for Liabilities, trade payables and other current liabilities increased from the end of the previous corresponding period. Despite our effort to reduce interest-bearing debt through the enhancement of cash management in Japan, the Americas and Europe, the financing for business investments exceeded the reduction. As a result, total liabilities increased by Yen 92.0 billion to Yen 1,126.1 billion. In Shareholders' Investment, there was no major change in common stock or additional paid-in capital. Accumulated other comprehensive income increased due to the increase in cumulative translation adjustments. As a result, total Shareholders' Investment increased by Yen 112.6 billion to Yen 1,114.5 billion due to the increase in retained earnings resulting from earning profit. B) Cash Flows
(Billions of yen) -------------------------------------------------------------------------------- Half year ended Half year ended September 30, 2006 September 30, 2007 Change -------------------------------------------------------------------------------- Cash flows from operating activities 51.6 78.8 27.2 Cash flows from investing activities -39.2 -137.1 -97.8 Cash flows from financing activities 1.1 -7.2 -8.3 Cash and Cash Equivalents at end of period 203.8 190.1 -13.7 --------------------------------------------------------------------------------
Net cash provided by operating activities increased by Yen 27.2 billion from the previous corresponding period, to Yen 78.8 billion due to increase in net income and depreciation increased. Net cash used in investing activities increased by Yen 97.8 billion from the previous corresponding period, to Yen 137.1 billion, due primarily to the commencement of the joint venture (InfoPrint Solutions company, LLC) with IBM. As a result, free cash flow generated by operating activities and investment activities decreased by Yen 70.6 billion from the previous corresponding period, to Yen 58.2 billion. Net cash used in financing activities consisted primarily of repayment of long-term indebtedness, increase in short-term borrowings and dividend payments, to Yen 7.2 billion. As a result of the above, the ending balance of cash and cash equivalents decreased by Yen 65.6 billion from the end of the previous corresponding period, to Yen 190.1 billion. C) Cash Flow Indices
-------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Half year ended Half year ended Half year ended September 30, September 30, September 30, September 30, September 30, 2003 2004 2005 2006 2007 -------------------------------------------------------------------------------------------------------------- Shareholders' investment / Total assets 36.8% 44.2% 46.5% 47.9% 48.5% Market capitalization / Total assets 77.3% 81.7% 66.8% 82.0% 77.1% Interest bearing debt / Operating cash flow 8.2 7.8 5.2 7.6 5.3 Operating cash flow / Interest expense 20.8 24.1 32.7 15.9 29.0 --------------------------------------------------------------------------------------------------------------
Notes: i. All indices are calculated based on consolidated data. ii. Market capitalization equals the stock price at the end of fiscal year multiples by the number of shares outstanding at the end of fiscal year. iii. Operating cash flows is shown in consolidated statement of cash flow. Interest bearing debt equals all debt in consolidated balance sheets. 10 (3) DIVIDEND POLICY Ricoh endeavors to ensure that policies are regularly updated to take the dividend payout ratio into consideration in the payment of dividends, while at the same time increasing retained earnings for the enhancement of corporate structure and the new business generation. Furthermore, these retained earnings will be used both in the reinforcement of core businesses and for investment in new fields with both medium-term and long-term perspectives. Ricoh Company, Ltd. decided to increase its interim dividend by Yen 3.00 from the previous corresponding period, to Yen 16.00 per share, and expect to increase its annual dividend by Yen 5.00 from the previous year, to Yen 33.00 per share. (4) RISK FACTORS Ricoh is exposed to various risks which include the risks listed below. Although certain risks that may affect Ricoh's businesses are listed in this section, this list is not exhaustive. Ricoh's business may in the future also be affected by other risks that are currently unknown or that are not currently considered significant or material. . Ability to respond to rapid technological changes in the document imaging and management industry . Highly competitive markets . The risks of international operations and the risks of overseas expansion . Economic trends in Ricoh's major markets . Foreign exchange fluctuations . Crude oil price fluctuations . Government regulation that can limit its activities or increase its cost of operations . Internal control evaluations and attestation over financial reporting under section 404 of the Sarbanes-Oxley Act of 2002 . Dependence on protecting its intellectual property rights . Dependence on securing and retaining specially skilled personnel . Adverse affection by its employee benefit obligations . Environmental laws and regulations . Risks associated with Ricoh's equipment financing business . Product liability claims that could significantly affect its financial condition . Alliances with other entities . Inadvertent or accidental leakage or disclosure of confidential or sensitive information . Catastrophic disaster, information technology problems or infectious diseases 11 2. GROUP POSITION The Ricoh Group comprises 324 subsidiaries and 15 affiliates. Their development, manufacturing, sales, and service activities center on Office Solutions, Industrial Products, and Other. Ricoh Company, Ltd., a parent company, heads development. The parent company and subsidiaries or affiliates maintain an integrated domestic and international manufacturing structure. Below, we have listed our main product areas and the positions of key subsidiaries and affiliates. [Office Solutions] In this business category, Ricoh provides products and systems that support the enhancement of the office productivity of customers. Major products include: Digital/analog copiers, MFPs (multifunctional printers), laser printers, facsimile machines, and digital duplicators. Ricoh also provides solution systems including personal computers and servers, utilizing its information technology. Another business Ricoh also provides are support, service, and related supplies, as well as support and service including IT environment setup and network administration. [Main Subsidiaries and Affiliates] Production Japan... Tohoku Ricoh Co., Ltd., Ricoh Elemex Corporation, Ricoh Unitechno Co., Ltd., Hasama Ricoh Inc., Ricoh Microelectronics Co., Ltd., Ricoh Keiki Co., Ltd., and Ricoh Printing Systems, Ltd. The Americas...Ricoh Electronics, Inc. Europe... Ricoh UK Products Ltd., Ricoh Industrie France S.A.S. Other regions... Ricoh Asia Industry (Shenzhen) Ltd., Shanghai Ricoh Facsimile Co., Ltd., and Sindo Ricoh Co., Ltd. (affiliated company) Sales and Service Japan... Hokkaido Ricoh Co., Ltd., Ricoh Tohoku Co., Ltd., Ricoh Sales Co., Ltd. Ricoh Chubu Co., Ltd., Ricoh Kansai Co., Ltd., Ricoh Chugoku Co., Ltd., Ricoh Kyushu Co., Ltd., and 32 other sales companies nationwide, Ricoh Technosystems Co., Ltd., Ricoh Leasing Co., Ltd., and Ricoh Logistics System Co., Ltd. The Americas... Ricoh Americas Corporation, InfoPrint Solutions Company Europe... Ricoh Europe Ltd., Ricoh Deutschland GmbH, Ricoh UK Ltd., Ricoh France S.A., Ricoh Espana S.A., Ricoh Italia S.p.A., NRG Group PLC and Infotec Europe B.V. Other regions... Ricoh China Co., Ltd., Ricoh Hong Kong Ltd., Ricoh Asia Pacific Pte. Ltd., Ricoh Australia Pty, Ltd., and Ricoh New Zealand Ltd. [Industrial Products] Manufacturing and marketing thermal media, optical equipments, semiconductors, electronic component and measuring equipments [Main Subsidiaries and Affiliates] Production and Sales Japan... Ricoh Optical Industries Co., Ltd., Ricoh Elemex Corporation, and Ricoh Microelectronics Co., Ltd. The Americas... Ricoh Electronics, Inc. Europe... Ricoh Industrie France S.A.S. [Other] Supplying optical discs and digital camera, and providing leasing and logistics services [Main Subsidiaries and Affiliates] Sales Ricoh Americas Corporation, Ricoh Europe Ltd. Other Ricoh Leasing Co., Ltd., Ricoh Logistics System Co., Ltd. [Chart of Business System] The chart of group position is omitted. 12 3. POLICIES (1) Basic Management 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. Our 15th medium-term management plan--which extends from April 2005 to March 2008--features the following five basic management policies: 1. Foster a "Vital and motivated culture" with high objectives and achieve them; 2. Aim at "World No.1 manufacturer" through unique, competitive technology with leading-edge technologies; 3. Provide customers with "Sensitivity to people's needs", "Sensitivity to the earth" and "Simplify knowledge creation"; 4. Invest smartly in growth areas and expand business foundation; and 5. Innovate group management and maximize capital efficiency. (2) Medium-Term Management Strategies 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 the Office Solutions segment, in particular, we are confident that we can further solidify 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 addition, 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. In June, 2007, Ricoh and International Business Machines Corporation ("IBM") completed formation of a joint venture company (named InfoPrint Solutions Company ("IPS") ) based on IBM's Printing Systems Division to enlarge business in production printing area. IPS will be a wholly owned subsidiary of Ricoh in three years. IPS unites the development and productivity of hard and software that is the strong point of Ricoh group and service, software and IT solution power that IBM possesses, and offers higher customer value. On the other hand, we will allocate greater business resources to promising businesses in the Industrial Products segment. In addition, we will seek for greater business shares of both the Office Solutions and Industrial Products segment 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. This fiscal year is the final year of 15th medium-term management plan. Ricoh group achieve the plan by executing steadily the above main strategy. 13 (3)Challenges As customers' needs become ever more diverse, customers are no longer satisfied with purchasing products or receiving ordinary service. The competition has also intensified in the transition to color and in solutions marketing. In order for the Ricoh Group to achieve growth and development with a focus on these growth areas, it is essential that we boost our corporate competitiveness by creating new values for customers and improving managerial efficiency. Our effort will also continue in improving the efficiency of management to enhance our profitability. Structural reform will streamline operational processes and improve the earnings from each project. Furthermore, we will more carefully select projects and concentrate resources to the selected projects to improve managerial efficiency. In addition, we will make sure that our priority investment for the group's growth up to now contributes to the company's earnings and will work towards strengthening business foundation further. The profit generated from such activities will be aggressively allocated to investments in growth areas and technologies to further increase profits and raise corporate value. 14 4. CONSOLIDATED FINANCIAL STATEMENTS (1) CONSOLIDATED BALANCE SHEETS (March 31, 2007 and September 30, 2007)
Assets (Millions of yen) --------------------------------------------------------------------------------------------------------------------- March 31, 2007 September 30, 2007 Change --------------------------------------------------------------------------------------------------------------------- Current Assets Cash and time deposits 257,154 191,331 -65,823 Trade receivables 693,237 704,020 10,783 Marketable securities 177 228 51 Inventories 184,354 203,303 18,949 Other current assets 65,170 65,582 412 Total Current Assets 1,200,092 1,164,464 -35,628 Fixed Assets Tangible fixed assets 264,668 261,703 -2,965 Finance receivables 435,874 442,128 6,254 Other investments 342,772 431,550 88,778 Total Fixed Assets 1,043,314 1,135,381 92,067 --------------------------------------------------------------------------------------------------------------------- Total Assets 2,243,406 2,299,845 56,439 --------------------------------------------------------------------------------------------------------------------- Note: Contents of cash and time deposits: Cash and cash equivalents 255,737 190,136 Time deposits 1,417 1,195 Liabilities and Shareholders' Investment (Millions of yen) --------------------------------------------------------------------------------------------------------------------- March 31, 2007 September 30, 2007 Change --------------------------------------------------------------------------------------------------------------------- Current Liabilities Trade payables 367,211 377,054 9,843 Short-term borrowings 178,847 175,116 -3,731 Other current liabilities 189,554 180,960 -8,594 Total Current Liabilities 735,612 733,130 -2,482 Fixed Liabilities Long-term indebtedness 236,801 245,379 8,578 Accrued pension and severance costs 99,028 99,221 193 Other fixed liabilities 44,183 48,398 4,215 Total Fixed Liabilities 380,012 392,998 12,986 --------------------------------------------------------------------------------------------------------------------- Total Liabilities 1,115,624 1,126,128 10,504 --------------------------------------------------------------------------------------------------------------------- Minority Interest 56,869 59,146 2,277 --------------------------------------------------------------------------------------------------------------------- Shareholders' Investment Common stock 135,364 135,364 -- Additional paid-in capital 186,454 186,457 3 Retained earnings 752,398 793,613 41,215 Accumulated other comprehensive income (loss) 26,998 29,895 2,897 Treasury stock -30,301 -30,758 -457 Total Shareholders' Investment 1,070,913 1,114,571 43,658 --------------------------------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Investment 2,243,406 2,299,845 56,439 --------------------------------------------------------------------------------------------------------------------- Note: Other comprehensive income; Net unrealized holding gains on available-for-sale securities 9,001 9,059 58 Pension liability adjustments -9,406 -12,917 -3,511 Net unrealized gains (losses) on derivative instruments -28 -11 17 Cumulative translation adjustments 27,431 33,764 6,333
Reference: Exchange rate March 31, 2007 September 30, 2007 ---------------------------------------------------------- US$ 1 (Yen)118.05 (Yen)115.43 EURO 1 (Yen)157.33 (Yen)163.38
15 (2) CONSOLIDATED STATEMENTS OF INCOME
(Three months ended September 30, 2006 and 2007) (Millions of yen) ------------------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change % ------------------------------------------------------------------------------------------------------------------------------- Net sales 502,346 558,260 55,914 11.1 Cost of sales 296,995 335,777 38,782 13.1 Percentage of net sales (%) 59.1 60.1 Gross Profit 205,351 222,483 17,132 8.3 Percentage of net sales (%) 40.9 39.9 Selling, general and administrative expenses 172,835 184,531 11,696 6.8 Percentage of net sales (%) 34.4 33.1 Operating income 32,516 37,952 5,436 16.7 Percentage of net sales (%) 6.5 6.8 Other (income) expense Interest and dividend income 884 1,855 971 109.8 Percentage of net sales (%) 0.2 0.3 Interest expense 1,654 1,572 -82 -5.0 Percentage of net sales (%) 0.3 0.3 Other, net -3,818 6,457 10,275 -- Percentage of net sales (%) -0.7 1.1 Income before income taxes, equity income and minority interests 35,564 31,778 -3,786 -10.6 Percentage of net sales (%) 7.1 5.7 Provision for income taxes 11,654 11,686 32 0.3 Percentage of net sales (%) 2.3 2.1 Minority interests in earnings of subsidiaries 1,542 1,337 -205 -13.3 Percentage of net sales (%) 0.3 0.2 Equity in earnings of affiliates 552 550 -2 -0.4 Percentage of net sales (%) 0.1 0.1 Net income 22,920 19,305 -3,615 -15.8 Percentage of net sales (%) 4.6 3.5 ------------------------------------------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 (Yen) 116.26 (Yen) 117.98 EURO 1 (Yen) 148.16 (Yen) 162.00
(Half year ended September 30, 2006 and 2007 and Year ended March 31, 2007) (Millions of yen) --------------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 Change % March 31, 2007 --------------------------------------------------------------------------------------------------------------------------- Net sales 986,922 1,088,373 101,451 10.3 2,068,925 Cost of sales 579,006 637,120 58,114 10.0 1,206,519 Percentage of net sales (%) 58.7 58.5 58.3 Gross Profit 407,916 451,253 43,337 10.6 862,406 Percentage of net sales (%) 41.3 41.5 41.7 Selling, general and administrative expenses 334,753 366,685 31,932 9.5 688,026 Percentage of net sales (%) 33.9 33.7 33.3 Operating income 73,163 84,568 11,405 15.6 174,380 Percentage of net sales (%) 7.4 7.8 8.4 Other (income) expense Interest and dividend income 1,981 3,160 1,179 59.5 5,501 Percentage of net sales (%) 0.2 0.3 0.3 Interest expense 3,238 2,721 -517 -16.0 7,350 Percentage of net sales (%) 0.3 0.3 0.4 Other, net -2,362 -35 2,327 -- -1,988 Percentage of net sales (%) -0.2 0.0 -0.1 Income before income taxes, equity income and minority interests 74,268 85,042 10,774 14.5 174,519 Percentage of net sales (%) 7.5 7.8 8.4 Provision for income taxes 25,880 29,878 3,998 15.4 64,326 Percentage of net sales (%) 2.6 2.7 3.1 Minority interests in earnings of subsidiaries 2,881 2,959 78 2.7 5,508 Percentage of net sales (%) 0.3 0.3 0.3 Equity in earnings of affiliates 1,038 955 -83 -8.0 1,539 Percentage of net sales (%) 0.1 0.1 0.1 Income from continuing operations 46,545 53,160 6,615 14.2 106,224 Percentage of net sales (%) 4.7 4.9 5.1 Income from discontinued operations, net of tax 5,500 -- -5,500 -- 5,500 Percentage of net sales (%) 0.6 -- 0.3 Net income 52,045 53,160 1,115 2.1 111,724 Percentage of net sales (%) 5.3 4.9 5.4 --------------------------------------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 (Yen) 115.40 (Yen) 119.37 (Yen) 117.02 EURO 1 (Yen) 145.98 (Yen) 162.36 (Yen) 150.08
16 (3)-1. CONSOLIDATED SALES BY PRODUCT CATEGORY
(Three months ended September 30, 2006 and 2007) (Millions of yen) ------------------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change % ------------------------------------------------------------------------------------------- [Office Solutions] Imaging Solutions 370,871 415,209 44,338 12.0 Percentage of net sales (%) 73.8 74.4 Network System Solutions 55,417 56,580 1,163 2.1 Percentage of net sales (%) 11.1 10.1 Total Office Solutions 426,288 471,789 45,501 10.7 Percentage of net sales (%) 84.9 84.5 ------------------------------------------------------------------------------------------- [Industrial Products] Industrial Products 33,547 41,940 8,393 25.0 Percentage of net sales (%) 6.7 7.5 ------------------------------------------------------------------------------------------- [Other] Other 42,511 44,531 2,020 4.8 Percentage of net sales (%) 8.4 8.0 ------------------------------------------------------------------------------------------- Grand Total 502,346 558,260 55,914 11.1 Percentage of net sales (%) 100.0 100.0 ------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 (Yen) 116.26 (Yen) 117.98 EURO 1 (Yen) 148.16 (Yen) 162.00
(Half year ended September 30, 2006 and 2007 and Year ended March 31, 2007) (Millions of yen) -------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 Change % March 31, 2007 -------------------------------------------------------------------------------------------------------------- [Office Solutions] Imaging Solutions 743,626 827,392 83,766 11.3 1,580,155 Percentage of net sales (%) 75.3 76.0 76.4 Network System Solutions 94,464 97,235 2,771 2.9 194,312 Percentage of net sales (%) 9.6 9.0 9.4 Total Office Solutions 838,090 924,627 86,537 10.3 1,774,467 Percentage of net sales (%) 84.9 85.0 85.8 -------------------------------------------------------------------------------------------------------------- [Industrial Products] Industrial Products 68,256 77,476 9,220 13.5 133,387 Percentage of net sales (%) 6.9 7.1 6.4 -------------------------------------------------------------------------------------------------------------- [Other] Other 80,576 86,270 5,694 7.1 161,071 Percentage of net sales (%) 8.2 7.9 7.8 -------------------------------------------------------------------------------------------------------------- Grand Total 986,922 1,088,373 101,451 10.3 2,068,925 Percentage of net sales (%) 100.0 100.0 100.0 -------------------------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 (Yen) 115.40 (Yen) 119.37 (Yen) 117.02 EURO 1 (Yen) 145.98 (Yen) 162.36 (Yen) 150.08
* Each category includes the following product line: Imaging Solutions Digital PPCs, color PPCs, digital duplicators, facsimile machines, analog PPCs, diazo copiers, scanners, MFPs(multifunctional printers), laser printers and software Network System Solutions Personal computers, PC servers, network systems and network related software Industrial Products Thermal media, optical equipments, semiconductors, electronic component and measuring equipments Other Optical discs and digital camera
17 (3)-2. CONSOLIDATED SALES BY GEOGRAPHIC AREA
(Three months ended September 30, 2006 and 2007) (Millions of yen) -------------------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change % -------------------------------------------------------------------------------------------- [Domestic] 252,060 259,705 7,645 3.0 Percentage of net sales (%) 50.2 46.5 [Overseas] 250,286 298,555 48,269 19.3 Percentage of net sales (%) 49.8 53.5 The Americas 102,949 112,527 9,578 9.3 Percentage of net sales (%) 20.5 20.2 Europe 112,994 142,267 29,273 25.9 Percentage of net sales (%) 22.5 25.5 Other 34,343 43,761 9,418 27.4 Percentage of net sales (%) 6.8 7.8 Grand Total 502,346 558,260 55,914 11.1 Percentage of net sales (%) 100.0 100.0 -------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 Yen 116.26 Yen 117.98 EURO 1 Yen 148.16 Yen 162.00
(Half year ended September 30, 2006 and 2007 and Year ended March 31, 2007) (Millions of yen) -------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 Change % March 31, 2007 -------------------------------------------------------------------------------------------------------------- [Domestic] 492,491 504,439 11,948 2.4 1,002,251 Percentage of net sales (%) 49.9 46.3 48.4 [Overseas] 494,431 583,934 89,503 18.1 1,066,674 Percentage of net sales (%) 50.1 53.7 51.6 The Americas 203,584 215,701 12,117 6.0 426,453 Percentage of net sales (%) 20.6 19.8 20.6 Europe 226,504 289,116 62,612 27.6 507,158 Percentage of net sales (%) 23.0 26.6 24.5 Other 64,343 79,117 14,774 23.0 133,063 Percentage of net sales (%) 6.5 7.3 6.5 Grand Total 986,922 1,088,373 101,451 10.3 2,068,925 Percentage of net sales (%) 100.0 100.0 100.0 -------------------------------------------------------------------------------------------------------------- Reference : Exchange rate US$ 1 (Yen) 115.40 (Yen) 119.37 (Yen) 117.02 EURO 1 (Yen) 145.98 (Yen) 162.36 (Yen) 150.08
18 (4) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
Half year ended September 30,2006 (Millions of yen) --------------------------------------------------------------------------------------------------------------------------- Accumulated Additional other Total Common paid-in Retained comprehensive Treasury Shareholders' stock capital earnings income (loss) stock Investment --------------------------------------------------------------------------------------------------------------------------- Beginning balance 135,364 186,450 665,394 4,099 -31,062 960,245 Cumulative effect of adjustment resulted from applying SAB No.108 -- -- -6,464 -- -- -6,464 --------------------------------------------------------------------------------------------------------------------------- Beginning balance (after adjustment) 135,364 186,450 658,930 4,099 -31,062 953,781 --------------------------------------------------------------------------------------------------------------------------- Gain (Loss) on disposal of treasury stock 1 1 Dividends declared and approved -8,764 -8,764 Comprehensive income Net income 52,045 52,045 Net unrealized holding gains on available-for-sale securities -2,485 -2,485 Minimum pension liability adjustments 830 830 Net unrealized gains on derivative instruments -123 -123 Cumulative translation adjustments 7,010 7,010 --------------------------------------------------------------------------------------------------------------------------- Total comprehensive income 57,277 --------------------------------------------------------------------------------------------------------------------------- Purchase of treasury stocks, net -347 -347 --------------------------------------------------------------------------------------------------------------------------- Ending balance 135,364 186,451 702,211 9,331 -31,409 1,001,948 ===========================================================================================================================
Half year ended September 30,2007 (Millions of yen) --------------------------------------------------------------------------------------------------------------------------- Accumulated Additional other Total Common paid-in Retained comprehensive Treasury Shareholders' stock capital earnings income (loss) stock Investment --------------------------------------------------------------------------------------------------------------------------- Beginning balance 135,364 186,454 752,398 26,998 -30,301 1,070,913 Cumulative effect of adjustment resulted from applying EITF No.06-2 -- -- -995 -- -- -995 --------------------------------------------------------------------------------------------------------------------------- Beginning balance (after adjustment) 135,364 186,454 751,403 26,998 -30,301 1,069,918 --------------------------------------------------------------------------------------------------------------------------- Gain (Loss) on disposal of treasury stock 3 3 Dividends declared and approved -10,950 -10,950 Comprehensive income Net income 53,160 53,160 Net unrealized holding gains on available-for-sale 58 58 securities Pension liability adjustments -3,511 -3,511 Net unrealized gains on derivative instruments 17 17 Cumulative translation adjustments 6,333 6,333 --------------------------------------------------------------------------------------------------------------------------- Total comprehensive income 56,057 --------------------------------------------------------------------------------------------------------------------------- Purchase of treasury stocks, net -457 -457 --------------------------------------------------------------------------------------------------------------------------- Ending balance 135,364 186,457 793,613 29,895 -30,758 1,114,571 =========================================================================================================================== Year ended March 31, 2007 (Millions of yen) --------------------------------------------------------------------------------------------------------------------------- Accumulated Additional other Total Common paid-in Retained comprehensive Treasury Shareholders' stock capital earnings income (loss) stock Investment --------------------------------------------------------------------------------------------------------------------------- Beginning balance 135,364 186,450 665,394 4,099 -31,062 960,245 Cumulative effect of adjustment resulted from applying SAB No.108 -- -- -6,464 -- -- -6,464 --------------------------------------------------------------------------------------------------------------------------- Beginning balance (after adjustment) 135,364 186,450 658,930 4,099 -31,062 953,781 --------------------------------------------------------------------------------------------------------------------------- Gain (Loss) on disposal of treasury stock 4 4 Dividends declared and approved -18,256 -18,256 Comprehensive income Net income 111,724 111,724 Net unrealized holding gains on available-for-sale 73 73 securities Minimum pension liability adjustments 970 970 Net unrealized gains on derivative instruments -185 -185 Cumulative translation adjustments 24,774 24,774 --------------------------------------------------------------------------------------------------------------------------- Total comprehensive income 137,356 --------------------------------------------------------------------------------------------------------------------------- Adjustment to initially apply SFAS No.158 -2,733 -2,733 --------------------------------------------------------------------------------------------------------------------------- Purchase of treasury stocks, net 761 761 --------------------------------------------------------------------------------------------------------------------------- Ending balance 135,364 186,454 752,398 26,998 -30,301 1,070,913 ===========================================================================================================================
19 (5) CONSOLIDATED STATEMENTS OF CASH FLOWS
(Half year ended September 30, 2006 and 2007 and Year ended march 31, 2007) (Millions of yen) ------------------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 March 31, 2007 ------------------------------------------------------------------------------------------------------------------------------- I. Cash Flows from Operating Activities: Net income 52,045 53,160 111,724 Income from discontinued operations, net of tax -5,500 -- -5,500 ------------------------------------------------------ Income from continuing operations 46,545 53,160 106,224 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 42,851 46,662 89,632 Equity in earnings of affiliates, net of dividends received -209 -380 -711 Deferred income taxes -2,755 1,965 -2,197 Loss on disposal and sales of tangible fixed assets 988 936 3,722 Pension and severance costs, less payments -701 -3,352 -773 Changes in assets and liabilities-- (Increase)decrease in trade receivables 7,057 -2,705 -15,919 Increase in inventories -12,693 -1,895 -1,494 Increase in finance receivables -14,045 -7,357 -28,047 (Decrease)increase in trade payables -20,354 -2,363 2,199 (Decrease)increase in accrued income taxes and accrued expenses and other 4,608 -11,396 11,175 Other, net 332 5,561 3,486 ------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 51,624 78,836 167,297 ------------------------------------------------------------------------------------------------------------------------------- II. Cash Flows from Investing Activities: Proceeds from sales of property, plant and equipment 265 36 463 Expenditures for tangible fixed assets -39,089 -39,677 -85,747 Payments for purchases of available-for-sale securities -49,036 -48,486 -97,158 Proceeds from sales of available-for-sale securities 48,006 49,930 96,087 (Increase) decrease in time deposits, net -43 242 64 Proceeds from sales of discontinued operations 12,000 -- 12,000 Purchase of business, net of cash acquired -- -89,863 -23,200 Other, net -11,362 -9,306 -17,941 ------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities -39,259 -137,124 -115,432 ------------------------------------------------------------------------------------------------------------------------------- III. Cash Flows from Financing Activities: Proceeds from long-term indebtedness 42,885 44,521 60,157 Repayment of long-term indebtedness -20,861 -46,972 -49,115 Increase in short-term borrowings, net 6,633 17,194 8,362 Proceeds from issuance of long-term debt securities -- -- 65,274 Repayment of long-term debt securities -18,000 -10,000 -55,000 Dividends paid -8,764 -10,950 -18,240 Payment for purchase of treasury stock -355 -469 -799 Other, net -437 -580 -1,357 ------------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 1,101 -7,256 9,282 ------------------------------------------------------------------------------------------------------------------------------- IV. Net Increase in Cash and Cash Equivalents from discontinued operations 825 -- 825 ------------------------------------------------------------------------------------------------------------------------------- V. Effect of Exchange Rate Changes on Cash and Cash Equivalents 2,530 -57 6,710 ------------------------------------------------------------------------------------------------------------------------------- VI. Net (Increase) Decrease in Cash and Cash Equivalents 16,821 -65,601 68,682 ------------------------------------------------------------------------------------------------------------------------------- VII. Cash and Cash Equivalents at Beginning of Year 187,055 255,737 187,055 ------------------------------------------------------------------------------------------------------------------------------- VIII. Cash and Cash Equivalents at End of Period 203,876 190,136 255,737 -------------------------------------------------------------------------------------------------------------------------------
20 (6) SIGNIFICANT ACCOUNTING POLICIES (CONSOLIDATED) A) CHANGES IN THE SCALE OF CONSOLIDATION AND THE APPLICATION OF THE EQUITY METHOD FROM APRIL 1, 2007 TO SEPTEMBER 30, 2007. Consolidated subsidiaries: 22 Additions 5 Removals Companies accounted for by the equity method: No Addition No Removal B) CONSOLIDATED ACCOUNTING POLICIES (SUMMARY) a. Principles of Consolidation The consolidated financial statements include the accounts of Ricoh and its consolidated subsidiaries. Investments in 20% to 50% owned companies when the Company has the ability to exercise significant influence are accounted for on the equity basis. All significant inter-company balances and transactions have been eliminated in consolidation. b. Securities In conformity with SFAS No.115, securities are mainly classified as available-for-sale securities. Available-for-sale securities are reported at fair value with unrealized gains and losses, net of related taxes, excluded from earnings and reported in accumulated other comprehensive income (loss). The cost of the securities sold is computed based on the average cost of each security held at the time of sale. c. Inventories Inventories are mainly stated at the lower of average cost or market. Inventory costs include raw materials, labor and manufacturing overheads. d. Plant and Equipment Depreciation of plant and equipment is computed principally by using the declining-balance method over the estimated useful lives. Most of the foreign subsidiaries have adopted the straight-line method for computing depreciation. Certain leased buildings, machinery and equipment are accounted for as capital leases in conformity with SFAS No.13, "Accounting for Leases." e. Goodwill and Other Intangible Assets In conformity with SFAS No.142, Goodwill and intangible asset determined to have an indefinite useful life are not amortized. SFAS No.142 requires annual impairment testing thereof. f. Pension and Retirement Allowances Plans The measurement of pension costs and liabilities is determined in accordance with SFAS No.87, "Employers' Accounting for Pensions" and SFAS No.158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans." g. Use of Estimates Management of the Company has made a number of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including impairment losses of long-lived assets and the disclosures of fair value of financial instruments and contingent assets and liabilities, to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates. 21 (7) CHANGES IN SIGNIFICANT ACCOUNTING POLICIES (CONSOLIDATED) In June 2006, the FASB ratified the EITF consensus on EITF Issue No.06-2, "Accounting for sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No.43". Accordingly, Ricoh recorded an increase in accrued expenses of Yen 1,680 million as of April 1, 2007, with a reduction of the beginning balance of retained earnings of Yen 995 millon. 22 (8) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A) SEGMENT INFORMATION a. Operating Segment Information
(Three months ended September 30, 2006 and 2007) (Millions of yen) ---------------------------------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change % ---------------------------------------------------------------------------------------------------------- OFFICE SOLUTIONS: Net sales: Unaffiliated customers 426,288 471,789 45,501 10.7 Intersegment -- -- -- -- Total 426,288 471,789 45,501 10.7 ---------------------------------------------------------------------------------------------------------- Operating expenses 378,862 421,691 42,829 11.3 ---------------------------------------------------------------------------------------------------------- Operating income 47,426 50,098 2,672 5.6 Operating income on sales in Office Solutions (%) 11.1 10.6 ---------------------------------------------------------------------------------------------------------- INDUSTRIAL PRODUCTS: Net sales: Unaffiliated customers 33,547 41,940 8,393 25.0 Intersegment 1,120 1,036 -84 -7.5 Total 34,667 42,976 8,309 24.0 ---------------------------------------------------------------------------------------------------------- Operating expenses 35,007 41,383 6,376 18.2 ---------------------------------------------------------------------------------------------------------- Operating income -340 1,593 1,933 -- Operating income on sales in Industrial Products (%) -1.0 3.7 ---------------------------------------------------------------------------------------------------------- OTHER: Net sales: Unaffiliated customers 42,511 44,531 2,020 4.8 Intersegment -- -- -- -- Total 42,511 44,531 2,020 4.8 ---------------------------------------------------------------------------------------------------------- Operating expenses 41,296 44,208 2,912 7.1 ---------------------------------------------------------------------------------------------------------- Operating income 1,215 323 -892 -73.4 Operating income on sales in Other (%) 2.9 0.7 ---------------------------------------------------------------------------------------------------------- CORPORATE AND ELIMINATIONS: Net sales: Intersegment -1,120 -1,036 84 -- Total -1,120 -1,036 84 -- ---------------------------------------------------------------------------------------------------------- Operating expenses: Intersegment -1,120 -1,039 81 -- Corporate 15,785 14,065 -1,720 -- Total 14,665 13,026 -1,639 -- ---------------------------------------------------------------------------------------------------------- Operating income -15,785 -14,062 1,723 -- ---------------------------------------------------------------------------------------------------------- CONSOLIDATED: Net sales: Unaffiliated customers 502,346 558,260 55,914 11.1 Intersegment -- -- -- -- Total 502,346 558,260 55,914 11.1 ---------------------------------------------------------------------------------------------------------- Operating expenses 469,830 520,308 50,478 10.7 --------------------------------------------------------------------- ----------------------------------- Operating income 32,516 37,952 5,436 16.7 Operating income on consolidated net sales (%) 6.5 6.8 ---------------------------------------------------------------------------------------------------------- Capital expenditures: (Millions of yen) ---------------------------------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change % ---------------------------------------------------------------------------------------------------------- Office Solutions 20,085 19,831 -254 -1.3 Industrial Products 2,124 1,799 -325 -15.3 Other 616 465 -151 -24.5 Corporate 399 476 77 19.3 ---------------------------------------------------------------------------------------------------------- Total 23,224 22,571 -653 -2.8 ---------------------------------------------------------------------------------------------------------- Depreciation: (Millions of yen) ---------------------------------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change % ---------------------------------------------------------------------------------------------------------- Office Solutions 15,648 16,045 397 2.5 Industrial Products 1,385 1,802 417 30.1 Other 427 567 140 32.8 Corporate 313 399 86 27.5 Total 17,773 18,813 1,040 5.9 ---------------------------------------------------------------------------------------------------------- Identifiable assets: (Millions of yen) ---------------------------------------------------------------------------------------------------------- September 30, 2006 September 30, 2007 Change % ---------------------------------------------------------------------------------------------------------- Office Solutions 1,474,258 1,681,781 207,523 14.1 Industrial Products 86,565 97,262 10,697 12.4 Other 114,145 113,320 -825 -0.7 Eliminations -1,924 -1,185 739 -- Corporate assets 417,930 408,667 -9,263 -2.2 ---------------------------------------------------------------------------------------------------------- Total 2,090,974 2,299,845 208,871 10.0 ----------------------------------------------------------------------------------------------------------
23
(Half year ended September 30, 2006 and 2007 and Year ended March 31, 2007) (Millions of yen) ------------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 Change % March 31, 2007 ------------------------------------------------------------------------------------------------------------------------- OFFICE SOLUTIONS: Net sales: Unaffiliated customers 838,090 924,627 86,537 10.3 1,774,467 Intersegment -- -- -- -- -- Total 838,090 924,627 86,537 10.3 1,774,467 Operating expenses 739,320 813,772 74,452 10.1 1,549,156 ------------------------------------------------------------------------------------------------------------------------- Operating income 98,770 110,855 12,085 12.2 225,311 Operating income on sales in Office Solutions (%) 11.8 12.0 12.7 ------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL PRODUCTS: Net sales: Unaffiliated customers 68,256 77,476 9,220 13.5 133,387 Intersegment 2,325 2,155 -170 -7.3 4,725 Total 70,581 79,631 9,050 12.8 138,112 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 69,687 76,937 7,250 10.4 135,164 ------------------------------------------------------------------------------------------------------------------------- Operating income 894 2,694 1,800 201.3 2,948 Operating income on sales in Industrial products (%) 1.3 3.4 2.1 ------------------------------------------------------------------------------------------------------------------------- OTHER: Net sales: Unaffiliated customers 80,576 86,270 5,694 7.1 161,071 Intersegment -- -- -- -- -- Total 80,576 86,270 5,694 7.1 161,071 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 78,678 85,105 6,427 8.2 158,868 ------------------------------------------------------------------------------------------------------------------------- Operating income 1,898 1,165 -733 -38.6 2,203 Operating income on sales in Other (%) 2.4 1.4 1.4 ------------------------------------------------------------------------------------------------------------------------- CORPORATE AND ELIMINATIONS: Net sales: Intersegment -2,325 -2,155 170 -- -4,725 Total -2,325 -2,155 170 -- -4,725 ------------------------------------------------------------------------------------------------------------------------- Operating expenses: Intersegment -2,370 -2,156 214 -- -4,727 Corporate 28,444 30,147 1,703 -- 56,084 Total 26,074 27,991 1,917 -- 51,357 ------------------------------------------------------------------------------------------------------------------------- Operating income -28,399 -30,146 -1,747 -- -56,082 ------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED: Net sales: Unaffiliated customers 986,922 1,088,373 101,451 10.3 2,068,925 Intersegment -- -- -- -- -- Total 986,922 1,088,373 101,451 10.3 2,068,925 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 913,759 1,003,805 90,046 9.9 1,894,545 ------------------------------------------------------------------------------------------------------------------------- Operating income 73,163 84,568 11,405 15.6 174,380 Operating income on consolidated net sales (%) 7.4 7.8 8.4 ------------------------------------------------------------------------------------------------------------------------- Capital expenditures: (Millions of yen) ------------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 Change % March 31, 2007 ------------------------------------------------------------------------------------------------------------------------- Office Solutions 34,429 34,925 496 1.4 72,465 Industrial Products 2,855 3,383 528 18.5 8,580 Other 1,411 868 -543 -38.5 2,630 Corporate 483 502 19 3.9 2,125 ------------------------------------------------------------------------------------------------------------------------- Total 39,178 39,678 500 1.3 85,800 ------------------------------------------------------------------------------------------------------------------------- Depreciation: (Millions of yen) ------------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 Change % March 31, 2007 ------------------------------------------------------------------------------------------------------------------------- Office Solutions 29,439 30,417 978 3.3 62,862 Industrial Products 2,715 3,264 549 20.2 6,099 Other 980 1,193 213 21.7 2,072 Corporate 604 819 215 35.6 1,399 ------------------------------------------------------------------------------------------------------------------------- Total 33,738 35,693 1,955 5.8 72,432 ------------------------------------------------------------------------------------------------------------------------- Identifiable assets: (Millions of yen) ------------------------------------------------------------------------------------------------------------------------- September 30, 2006 September 30, 2007 Change % March 31, 2007 ------------------------------------------------------------------------------------------------------------------------- Office Solutions 1,474,258 1,681,781 207,523 14.1 1,570,757 Industrial Products 86,565 97,262 10,697 12.4 93,346 Other 114,145 113,320 -825 -0.7 112,255 Eliminations -1,924 -1,185 739 -- -1,327 Corporate assets 417,930 408,667 -9,263 -2.2 468,375 ------------------------------------------------------------------------------------------------------------------------- Total 2,090,974 2,299,845 208,871 10.0 2,243,406 -------------------------------------------------------------------------------------------------------------------------
24 b. Geographic Segment Information
(Three months ended September 30, 2006 and 2007) (Millions of yen) ------------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended September 30, 2006 September 30, 2007 Change % ------------------------------------------------------------------------------------------------------------------------- JAPAN: Net sales: External customers 258,289 269,226 10,937 4.2 Intersegment 122,964 106,946 -16,018 -13.0 Total 381,253 376,172 -5,081 -1.3 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 361,781 360,737 -1,044 -0.3 ------------------------------------------------------------------------------------------------------------------------- Operating income 19,472 15,435 -4,037 -20.7 Operating income on sales in Japan(%) 5.1 4.1 ------------------------------------------------------------------------------------------------------------------------- THE AMERICAS: Net sales: External customers 102,935 111,314 8,379 8.1 Intersegment 742 1,271 529 71.3 Total 103,677 112,585 8,908 8.6 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 96,748 108,970 12,222 12.6 ------------------------------------------------------------------------------------------------------------------------- Operating income 6,929 3,615 -3,314 -47.8 Operating income on sales in the Americas(%) 6.7 3.2 ------------------------------------------------------------------------------------------------------------------------- EUROPE: Net sales: External customers 113,314 142,690 29,376 25.9 Intersegment 842 521 -321 -38.1 Total 114,156 143,211 29,055 25.5 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 109,194 134,146 24,952 22.9 ------------------------------------------------------------------------------------------------------------------------- Operating income 4,962 9,065 4,103 82.7 Operating income on sales in Europe(%) 4.3 6.3 ------------------------------------------------------------------------------------------------------------------------- OTHER: Net sales: External customers 27,808 35,030 7,222 26.0 Intersegment 40,055 43,479 3,424 8.5 Total 67,863 78,509 10,646 15.7 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 63,357 71,935 8,578 13.5 ------------------------------------------------------------------------------------------------------------------------- Operating income 4,506 6,574 2,068 45.9 Operating income on sales in Other(%) 6.6 8.4 ------------------------------------------------------------------------------------------------------------------------- CORPORATE AND ELIMINATIONS: Net sales: Intersegment -164,603 -152,217 12,386 -- Total -164,603 -152,217 12,386 -- ------------------------------------------------------------------------------------------------------------------------- Operating expenses: -161,250 -155,480 5,770 -- ------------------------------------------------------------------------------------------------------------------------- Operating income -3,353 3,263 6,616 -- ------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED: Net sales: External customers 502,346 558,260 55,914 11.1 Intersegment -- -- -- -- Total 502,346 558,260 55,914 11.1 ------------------------------------------------------------------------------------------------------------------------- Operating expenses 469,830 520,308 50,478 10.7 ------------------------------------------------------------------------------------------------------------------------- Operating income 32,516 37,952 5,436 16.7 Operating income on consolidated net sales(%) 6.5 6.8 ------------------------------------------------------------------------------------------------------------------------- Identifiable assets: (Millions of yen) ------------------------------------------------------------------------------------------------------------------------- September 30, 2006 September 30, 2007 Change % ------------------------------------------------------------------------------------------------------------------------- Japan 1,246,639 1,294,958 48,319 3.9 The Americas 249,432 355,155 105,723 42.4 Europe 262,571 307,204 44,633 17.0 Other 93,550 112,876 19,326 20.7 Eliminations -179,148 -179,015 133 -- Corporate assets 417,930 408,667 -9,263 -2.2 ------------------------------------------------------------------------------------------------------------------------- Total 2,090,974 2,299,845 208,871 10.0 -------------------------------------------------------------------------------------------------------------------------
25
(Half year ended September 30, 2006 and 2007 and Year ended March 31, 2007) (Millions of yen) --------------------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2006 September 30, 2007 Change % March 31, 2007 --------------------------------------------------------------------------------------------------------------------------------- JAPAN: Net sales: External customers 504,429 521,352 16,923 3.4 1,026,663 Intersegment 246,032 248,573 2,541 1.0 495,304 Total 750,461 769,925 19,464 2.6 1,521,967 --------------------------------------------------------------------------------------------------------------------------------- Operating expenses 698,853 719,417 20,564 2.9 1,411,653 --------------------------------------------------------------------------------------------------------------------------------- Operating income 51,608 50,508 -1,100 -2.1 110,314 Operating income on sales in Japan(%) 6.9 6.6 7.2 --------------------------------------------------------------------------------------------------------------------------------- THE AMERICAS: Net sales:. External customers 203,560 213,825 10,265 5.0 426,009 Intersegment 1,731 2,100 369 21.3 3,253 Total 205,291 215,925 10,634 5.2 429,262 --------------------------------------------------------------------------------------------------------------------------------- Operating expenses 196,341 210,474 14,133 7.2 408,150 --------------------------------------------------------------------------------------------------------------------------------- Operating income 8,950 5,451 -3,499 -39.1 21,112 Operating income on sales in the Americas(%) 4.4 2.5 4.9 --------------------------------------------------------------------------------------------------------------------------------- EUROPE: Net sales: External customers 226,823 289,308 62,485 27.5 508,200 Intersegment 1,740 1,731 -9 -0.5 3,595 Total 228,563 291,039 62,476 27.3 511,795 --------------------------------------------------------------------------------------------------------------------------------- Operating expenses 218,977 275,209 56,232 25.7 478,380 --------------------------------------------------------------------------------------------------------------------------------- Operating income 9,586 15,830 6,244 65.1 33,415 Operating income on sales in Europe(%) 4.2 5.4 6.5 --------------------------------------------------------------------------------------------------------------------------------- OTHER: Net sales: External customers 52,110 63,888 11,778 22.6 108,053 Intersegment 72,402 90,905 18,503 25.6 160,990 Total 124,512 154,793 30,281 24.3 269,043 --------------------------------------------------------------------------------------------------------------------------------- Operating expenses 115,687 142,549 26,862 23.2 251,486 --------------------------------------------------------------------------------------------------------------------------------- Operating income 8,825 12,244 3,419 38.7 17,557 Operating income on sales in Other(%) 7.1 7.9 6.5 --------------------------------------------------------------------------------------------------------------------------------- CORPORATE AND ELIMINATIONS: Net sales: Intersegment -321,905 -343,309 -21,404 -- -663,142 Total -321,905 -343,309 -21,404 -- -663,142 --------------------------------------------------------------------------------------------------------------------------------- Operating expenses: -316,099 -343,844 -27,745 -- -655,124 --------------------------------------------------------------------------------------------------------------------------------- Operating income -5,806 535 6,341 -- -8,018 --------------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED: Net sales: External customers 986,922 1,088,373 101,451 10.3 2,068,925 Intersegment -- -- -- -- -- Total 986,922 1,088,373 101,451 10.3 2,068,925 --------------------------------------------------------------------------------------------------------------------------------- Operating expenses 913,759 1,003,805 90,046 9.9 1,894,545 --------------------------------------------------------------------------------------------------------------------------------- Operating income 73,163 84,568 11,405 15.6 174,380 Operating income on consolidated net sales(%) 7.4 7.8 8.4 --------------------------------------------------------------------------------------------------------------------------------- Identifiable assets: (Millions of yen) --------------------------------------------------------------------------------------------------------------------------------- September 30, 2006 September 30, 2007 Change % March 31, 2007 --------------------------------------------------------------------------------------------------------------------------------- Japan 1,246,639 1,294,958 48,319 3.9 1,282,085 The Americas 249,432 355,155 105,723 42.4 256,049 Europe 262,571 307,204 44,633 17.0 314,815 Other 93,550 112,876 19,326 20.7 101,550 Eliminations -179,148 -179,015 133 -- -179,468 Corporate assets 417,930 408,667 -9,263 -2.2 468,375 --------------------------------------------------------------------------------------------------------------------------------- Total 2,090,974 2,299,845 208,871 10.0 2,243,406 ---------------------------------------------------------------------------------------------------------------------------------
26 B) FAIR VALUE OF MARKETABLE SECURITIES The securities and the respective cost, gross unrealized holding gains, gross unrealized holding losses and fair value as of March 31, 2007 and September 30, 2007 are as follows:
(Millions of yen) ------------------------------------------------------------------------------------------------- March 31, 2007 ------------------------------------------------------------------------------------------------- Gross unrealized Gross unrealized Cost holding gains holding losses Fair value ------------------------------------------------------------------------------------------------- Current: Corporate debt securities 176 -- -- 176 Other 1 -- -- 1 ------------------------------------------------------------------------------------------------- 177 -- -- 177 ------------------------------------------------------------------------------------------------- Noncurrent: Equity securities 49,261 14,991 142 64,110 Corporate debt securities 6,000 10 -- 6,010 Other 242 -- -- 242 Nonmarketable securities (at cost) 4,474 -- -- 4,474 ------------------------------------------------------------------------------------------------- 59,977 15,001 142 74,836 ------------------------------------------------------------------------------------------------- (Millions of yen) ------------------------------------------------------------------------------------------------- September 30, 2007 ------------------------------------------------------------------------------------------------- Gross unrealized Gross unrealized Cost holding gains holding losses Fair value ------------------------------------------------------------------------------------------------- Current: Equity securities 227 -- -- 227 Corporate debt securities -- -- -- -- Other 1 -- -- 1 ------------------------------------------------------------------------------------------------- 228 -- -- 228 ------------------------------------------------------------------------------------------------- Noncurrent: Equity securities 50,810 14,685 238 65,257 Corporate debt securities 6,000 -- 122 5,878 Other -- -- -- 0 Nonmarketable securities (at cost) 3,034 -- -- 3,034 ------------------------------------------------------------------------------------------------- 59,844 14,685 360 74,169 -------------------------------------------------------------------------------------------------
C) DERIVATIVES The Company and certain of its subsidiaries enter into various financial instrument contracts in the normal course of business and in connection with the management of their assets and liabilities. The outstanding agreements, carrying amount and estimated fair value of derivative financial instruments as of March 31, 2007 and September 30, 2007 are as follows:
(Millions of yen) ---------------------------------------------------------------- March 31, 2007 ---------------------------------------------------------------- Carrying Estimated Fair amount value ---------------------------------------------------------------- Interest rate swap agreements, net 751 751 Foreign currency contracts-net credit 633 633 Currency options-net credit -2 -2 ---------------------------------------------------------------- Total 1,382 1,382 ---------------------------------------------------------------- (Millions of yen) ---------------------------------------------------------------- September 30, 2007 ---------------------------------------------------------------- Carrying Estimated Fair amount value ---------------------------------------------------------------- Interest rate swap agreements, net 602 602 Foreign currency contracts-net credit 2,537 2,537 Currency options -1,625 -1,625 ---------------------------------------------------------------- Total 1,514 1,514 ----------------------------------------------------------------
D) TRANSACTIONS OF RICOH WITH AFFILIATES
(Millions of yen) ----------------------------------------------------- March 31, 2007 September 30,2007 -----------------------------------+----------------- Account balances: Receivables 3,541 2,499 Payables 2,611 3,426 ----------------------------------------------------- (Millions of yen) ----------------------------------------------------- Year ended Half year ended March 31, 2007 September 30,2007 ----------------------------------------------------- Transactions: Sales 16,158 8,845 Purchases 28,993 10,240 Dividend income 828 575 -----------------------------------------------------
27 E) PER SHARE DATA
(Yen) -------------------------------------------------------------- March 31,2007 September 30, 2007 -------------------------------------------------------------- Shareholders' equity per share 1,467.03 1,527.18 Net income per share-basic 153.10 72.83 Net income per share-diluted 151.89 70.90 --------------------------------------------------------------
A reconciliation of the numerator and the denominators of the basic and diluted per share computations for income is as follows:
(Millions of yen) ---------------------------------------------------------------------------- March 31, 2007 September 30, 2007 ---------------------------------------------------------------------------- Net income 111,724 53,160 Effect of dilutive securities -8 -13 ---------------------------------------------------------------------------- Diluted net income 111,716 53,147 ---------------------------------------------------------------------------- (Shares) ---------------------------------------------------------------------------- March 31, 2007 September 30, 2007 ---------------------------------------------------------------------------- Weighted average common shares outstanding 729,744,656 729,901,240 Effect of dilutive securities 5,757,813 19,741,071 ---------------------------------------------------------------------------- Diluted common shares outstanding 735,502,469 749,642,311 ----------------------------------------------------------------------------
28 -APPENDIX- (Half year ended September 30, 2007) 1. CONSOLIDATED SALES BY PRODUCT CATEGORY
(Three months ended September 30, 2006 and 2007) (Millions of yen) --------------------------------------------------------------------------------------------------------------------------------- Three months ended Three months ended Change excluding September 30, 2006 September 30, 2007 Change % exchange impact % --------------------------------------------------------------------------------------------------------------------------------- [Office Solutions] Imaging Solutions 370,871 415,209 44,338 12.0 28,678 7.7 Percentage of net sales (%) 73.8 74.4 Domestic 142,871 144,975 2,104 1.5 2,104 1.5 Overseas 228,000 270,234 42,234 18.5 26,574 11.7 Network System Solutions 55,417 56,580 1,163 2.1 854 1.5 Percentage of net sales (%) 11.1 10.1 Domestic 52,405 53,592 1,187 2.3 1,187 2.3 Overseas 3,012 2,988 -24 -0.8 -333 -11.1 Office Solutions Total 426,288 471,789 45,501 10.7 29,532 6.9 Percentage of net sales (%) 84.9 84.5 Domestic 195,276 198,567 3,291 1.7 3,291 1.7 Overseas 231,012 273,222 42,210 18.3 26,241 11.4 The Americas 97,889 107,636 9,747 10.0 8,021 8.2 Europe 106,863 133,351 26,488 24.8 16,537 15.5 Other 26,260 32,235 5,975 22.8 1,683 6.4 [Industrial Products] Industrial Products 33,547 41,940 8,393 25.0 7,772 23.2 Percentage of net sales (%) 6.7 7.5 Domestic 19,667 23,591 3,924 20.0 3,924 20.0 Overseas 13,880 18,349 4,469 32.2 3,848 27.7 The Americas 4,752 4,519 -233 -4.9 -319 -6.7 Europe 4,681 5,558 877 18.7 524 11.2 Other 4,447 8,272 3,825 86.0 3,643 81.9 [Other] Other 42,511 44,531 2,020 4.8 1,669 3.9 Percentage of net sales (%) 8.4 8.0 Domestic 37,117 37,547 430 1.2 430 1.2 Overseas 5,394 6,984 1,590 29.5 1,239 23.0 The Americas 308 372 64 20.8 61 19.8 Europe 1,450 3,358 1,908 131.6 1,644 113.4 Other 3,636 3,254 -382 -10.5 -466 -12.8 Grand Total 502,346 558,260 55,914 11.1 38,973 7.8 Percentage of net sales (%) 100.0 100.0 Domestic 252,060 259,705 7,645 3.0 7,645 3.0 Percentage of net sales (%) 50.2 46.5 Overseas 250,286 298,555 48,269 19.3 31,328 12.5 Percentage of net sales (%) 49.8 53.5 The Americas 102,949 112,527 9,578 9.3 7,763 7.5 Percentage of net sales (%) 20.5 20.2 Europe 112,994 142,267 29,273 25.9 18,705 16.6 Percentage of net sales (%) 22.5 25.5 Other 34,343 43,761 9,418 27.4 4,860 14.2 Percentage of net sales (%) 6.8 7.8 --------------------------------------------------------------------------------------------------------------------------------- Reference: Exchange rate US$ 1 Yen 116.26 Yen 117.98 Yen 1.72 EURO 1 Yen 148.16 Yen 162.00 Yen 13.84
Notes: * Each category includes the following product line: Imaging Solutions Digital PPCs, color PPCs, digital duplicators, facsimile machines, analog PPCs, diazo copiers, scanners, MFPs(multifunctional printers), laser printers and software Network System Solutions Personal computers, PC servers, network systems and network related software Industrial Products Thermal media, optical equipments, semiconductors, electronic component and measuring equipments Others Optical discs and digital camera
A1
(HALF YEAR ENDED SEPTEMBER 30, 2006 AND 2007 AND YEAR ENDED MARCH 31, 2008) (Millions of yen) -------------------------------------------------------------------------------------------------------------------------------- Half year ended Half year ended Change excluding September 30, 2006 September 30, 2007 Change % exchange impact % -------------------------------------------------------------------------------------------------------------------------------- [Office Solutions] Imaging Solutions 743,626 827,392 83,766 11.3 44,212 5.9 Percentage of net sales (%) 75.3 76.0 Domestic 294,392 296,648 2,256 0.8 2,256 0.8 Overseas 449,234 530,744 81,510 18.1 41,956 9.3 Network System Solutions 94,464 97,235 2,771 2.9 2,141 2.3 Percentage of net sales (%) 9.6 9.0 Domestic 89,647 91,630 1,983 2.2 1,983 2.2 Overseas 4,817 5,605 788 16.4 158 3.3 Office Solutions Total 838,090 924,627 86,537 10.3 46,353 5.5 Percentage of net sales (%) 84.9 85.0 Domestic 384,039 388,278 4,239 1.1 4,239 1.1 Overseas 454,051 536,349 82,298 18.1 42,114 9.3 The Americas 190,930 206,293 15,363 8.0 8,540 4.5 Europe 214,173 271,610 57,437 26.8 31,404 14.7 Other 48,948 58,446 9,498 19.4 2,170 4.4 [Industrial Products] Industrial Products 68,256 77,476 9,220 13.5 7,787 11.4 Percentage of net sales (%) 6.9 7.1 Domestic 38,497 44,251 5,754 14.9 5,754 14.9 Overseas 29,759 33,225 3,466 11.6 2,033 6.8 The Americas 12,091 8,013 -4,078 -33.7 -4,344 -35.9 Europe 9,381 11,526 2,145 22.9 1,232 13.1 Other 8,287 13,686 5,399 65.2 5,145 62.1 [Other] Other 80,576 86,270 5,694 7.1 4,819 6.0 Percentage of net sales (%) 8.2 7.9 Domestic 69,955 71,910 1,955 2.8 1,955 2.8 Overseas 10,621 14,360 3,739 35.2 2,864 27.0 The Americas 563 1,395 832 147.8 809 143.7 Europe 2,950 5,980 3,030 102.7 2,471 83.8 Other 7,108 6,985 -123 -1.7 -416 -5.9 Grand Total 986,922 1,088,373 101,451 10.3 58,959 6.0 Percentage of net sales (%) 100.0 100.0 Domestic 492,491 504,439 11,948 2.4 11,948 2.4 Percentage of net sales (%) 49.9 46.3 Overseas 494,431 583,934 89,503 18.1 47,011 9.5 Percentage of net sales (%) 50.1 53.7 The Americas 203,584 215,701 12,117 6.0 5,005 2.5 Percentage of net sales (%) 20.6 19.8 Europe 226,504 289,116 62,612 27.6 35,107 15.5 Percentage of net sales (%) 23.0 26.6 Other 64,343 79,117 14,774 23.0 6,899 10.7 Percentage of net sales (%) 6.5 7.3 -------------------------------------------------------------------------------------------------------------------------------- Reference: Exchange rate US$ 1 (Yen) 115.40 (Yen) 119.37 (Yen) 3.97 EURO 1 (Yen) 145.98 (Yen) 162.36 (Yen) 16.38
Notes: *Each category includes the following product line: Imaging Solutions Digital PPCs, color PPCs, digital duplicators, facsimile machines, analog PPCs, diazo copiers, scanners, MFPs(multifunctional printers), laser printers and software Network System Solutions Personal computers, PC servers, network systems and network related software Industrial Products Thermal media, optical equipments, semiconductors, electronic component and measuring equipments Others Optical discs and digital camera
A2 2. FORECAST OF CONSOLIDATED PERFORMANCE
(Billions of yen) --------------------------------------------------------------------------------------------------------------------------- Half year ended Three months ending Half year ending Year ending Sept. 30, 2007 Change Dec. 31, 2007 Change Mar. 31, 2008 Change Mar. 31, 2008 Change Results % Forecast % Forecast % Forecast % --------------------------------------------------------------------------------------------------------------------------- Net sales 1088.3 10.3 537.0 6.2 1,161.6 7.4 2,250.0 8.8 Gross profit 451.2 10.6 232.3 5.9 488.7 7.5 940.0 9.0 Operating income 84.5 15.6 49.0 0.7 110.4 9.1 195.0 11.8 Income before income taxes 85.0 14.5 49.0 0.4 106.9 6.7 192.0 10.0 Net income 53.1 2.1 31.3 0.2 63.8 7.0 117.0 4.7 Net income per share-basic (yen) 72.83 -- 42.88 -- 87.47 -- 160.30 -- Net income per share- diluted (yen) 70.90 -- 41.74 -- 85.14 -- 156.04 -- Capital expenditures 39.6 -- 18.0 -- 50.4 -- 90.0 -- Depreciation for tangible fixed assets 35.6 -- 19.5 -- 40.4 -- 76.0 -- R&D expenditures 61.5 -- 30.0 -- 66.5 -- 128.0 -- Exchange rate (Yen/US$) 119.37 -- 115.00 -- 115.00 -- 117.19 -- Exchange rate (Yen/EURO) 162.36 -- 155.00 -- 155.00 -- 158.68 -- ---------------------------------------------------------------------------------------------------------------------------
3. FORECAST OF CONSOLIDATED SALES BY PRODUCT CATEGORY
(Billions of yen) ------------------------------------------------------------------------------------------------------------------------ Half year ending March 31, 2008 Year ending March 31, 2008 ------------------------------- -------------------------- Change Change Change Change Forecast % Forecast(*) % Forecast % Forecast(*) % -------------------------------------------------------------------- --------------------------------------------------- [Office Solutions] Imaging Solutions 908.2 8.6 914.5 9.3 1,735.6 9.8 1,702.3 7.7 Domestic 330.3 6.7 330.3 6.7 627.0 3.8 627.0 3.8 Overseas 577.9 9.7 584.2 10.9 1,108.6 13.6 1,075.3 10.2 Network System Solutions 104.5 4.7 104.5 4.7 201.7 3.8 201.1 3.5 Domestic 99.5 4.7 99.5 4.7 191.1 3.5 191.1 3.5 Overseas 5.0 4.6 5.0 4.6 10.6 10.5 10.0 4.0 Office Solutions Total 1,012.8 8.2 1,019.1 8.8 1,937.4 9.2 1,903.5 7.3 Domestic 429.8 6.2 429.8 6.2 818.1 3.7 818.1 3.7 Overseas 582.9 9.6 589.2 10.8 1,119.2 13.5 1,085.4 10.1 The Americas 231.0 7.7 238.4 11.1 437.2 7.9 437.8 8.0 Europe 292.5 10.1 291.4 9.7 564.1 17.6 536.9 11.9 Other 59.4 15.5 59.4 15.5 117.8 17.4 110.5 10.1 [Industrial Products] Industrial Products 69.6 6.9 69.7 7.0 147.0 10.3 145.7 9.3 Domestic 37.7 -0.0 37.7 -0.0 81.9 7.5 81.9 7.5 Overseas 31.9 16.3 32.0 16.7 65.1 13.9 63.7 11.6 The Americas 8.2 12.4 8.4 15.1 16.2 -16.4 16.1 -16.7 Europe 10.1 1.0 10.0 0.0 21.6 11.6 20.6 6.4 Other 13.6 34.2 13.6 34.2 27.2 48.1 27.0 46.8 [Other] Other 79.2 -1.6 79.3 -1.4 165.4 2.7 164.7 2.3 Domestic 68.0 0.9 68.0 0.9 139.9 1.9 139.9 1.9 Overseas 11.2 -14.6 11.3 -13.6 25.5 7.7 24.8 4.6 The Americas 0.9 -13.9 1.0 -1.4 2.2 42.7 2.4 49.4 Europe 4.2 -15.5 4.2 -15.5 10.1 28.5 9.6 21.5 Other 6.1 -14.0 6.1 -14.0 13.1 -7.9 12.8 -9.9 Grand Total 1,161.6 7.4 1,168.1 8.0 2,250.0 8.8 2,214.0 7.0 Domestic 535.5 5.1 535.5 5.1 1,040.0 3.8 1,040.0 3.8 Overseas 626.0 9.4 632.5 10.5 1,210.0 13.4 1,174.0 10.1 The Americas 240.1 7.7 247.8 11.2 455.8 6.9 456.4 7.0 Europe 306.8 9.3 305.6 8.9 595.9 17.5 567.2 11.8 Other 79.1 15.2 79.1 15.2 158.2 19.0 150.4 13.0 -------------------------------------------------------------------- ---------------------------------------------------
* Excluding foreign exchange impact A3 -APPENDIX B- [SCHEDULE 1] CONSOLIDATED PERFORMANCE
-------------------------------------------------------------------------------------------------- Half year ended Half year ended Half year ended September 30, September 30, September 30, 2005 2006 2007 -------------------------------------------------------------------------------------------------- Net sales (left axis) 919.8 986.9 1,088.3 Net income (right axis) 42.8 52.0 53.1 Return on equity (right axis) 4.8 5.3 4.9 Return on assets (right axis) 3.5 3.6 3.7 Net income per share (left axis) 58.40 71.35 72.83 -------------------------------------------------------------------------------------------------- [SCHEDULE 2] CONSOLIDATED SALES BY PRODUCT LINE -------------------------------------------------------------------------------------------------- Half year ended Half year ended Half year ended September 30, September 30, September 30, 2005 2006 2007 -------------------------------------------------------------------------------------------------- Imaging Solution Business 693.1 743.6 827.3 Network System Solution Business 93.1 94.4 97.2 Industry Business 58.4 68.2 77.4 Other Business 75.1 80.5 86.2 -------------------------------------------------------------------------------------------------- Imaging Solution Business 75.4 75.3 76.0 Network System Solution Business 10.1 9.6 9.0 Industry Business 6.4 6.9 7.1 Other Business 8.1 8.2 7.9 100.0 100.0 100.0 -------------------------------------------------------------------------------------------------- [SCHEDULE 3] CONSOLIDATED SALES BY GEOGRAPHIC AREA -------------------------------------------------------------------------------------------------- Half year ended Half year ended Half year ended September 30, September 30, September 30, 2005 2006 2007 -------------------------------------------------------------------------------------------------- Japan 477.7 492.4 504.4 The Americas 183.9 203.5 215.7 Europe 201.3 226.5 289.1 Others 56.7 64.3 79.1 -------------------------------------------------------------------------------------------------- Japan (%) 51.9 49.9 46.3 The Americas (%) 20.0 20.6 19.8 Europe (%) 21.9 23.0 26.6 Others (%) 6.2 6.5 7.3 Total 100.0 100.0 100.0 --------------------------------------------------------------------------------------------------
32