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 April 2006
Commission File Number 2 - 68279
RICOH COMPANY, LTD.
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(Translation of Registrant's name into English)
13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, Japan
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(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-__ )
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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.
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(Registrant)
By: /S/ Zenji Miura
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Zenji Miura
Director, Chief Financial Officer
Corporate Executive Vice President
April 26, 2006
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FLASH REPORT
Year ended March 31, 2006
(Results for the Period from April 1, 2005 to March 31, 2006)
Three months ended March 31, 2006
(Results for the Period from January 1, 2006 to March 31, 2006)
PERFORMANCE OUTLINE (CONSOLIDATED)
(1) Year ended March 31, 2006, 2005 and Year ending March 31, 2007 (Forecast)
(Billions of yen)
-------------------------------------------------------------------------------------------- -------------------------
Year ended Year ended Change Year ending Change
March 31, 2006 March 31, 2005 March 31, 2007
(Results) (Results) (Forecast)
-------------------------------------------------------------------------------------------- -------------------------
Domestic sales 972.0 972.9 -0.1% 1,000.0 2.9%
Overseas sales 943.0 841.1 12.1% 1,050.0 11.3%
Net sales 1,915.0 1,814.1 5.6% 2,050.0 7.0%
Gross profit 799.6 754.5 6.0% 850.0 6.3%
Operating income 152.0 135.5 12.2% 170.0 11.8%
Income before income taxes 156.1 135.3 15.4% 168.0 7.6%
Net income 97.0 83.1 16.7% 106.0 9.2%
-------------------------------------------------------------------------------------------- -------------------------
Exchange rate (Yen/US$) 113.26 107.58 5.68 115.00 1.74
Exchange rate (Yen/EURO) 137.86 135.25 2.61 140.00 2.14
-------------------------------------------------------------------------------------------- -------------------------
Net income per share (yen) 132.33 112.64 19.69 145.29 12.96
-------------------------------------------------------------------------------------------- -------------------------
Return on equity (%) 10.6 10.0 0.6 - -
Income before income taxes on total assets (%) 7.8 7.1 0.7 - -
Income before income taxes on net sales (%) 8.2 7.5 0.7 8.2 0.0
-------------------------------------------------------------------------------------------- -------------------------
Total assets 2,041.1 1,953.6 87.5 - -
Shareholders' equity 960.2 862.9 97.2 - -
Interest-bearing debt 381.2 410.0 -28.8 - -
-------------------------------------------------------------------------------------------- -------------------------
Equity ratio (%) 47.0 44.2 2.8 - -
-------------------------------------------------------------------------------------------- -------------------------
Shareholders' equity per share (yen) 1,316.21 1,175.67 140.54 - -
-------------------------------------------------------------------------------------------- -------------------------
Cash flows from operating activities 176.8 132.7 44.0 - -
Cash flows from investing activities -120.0 -96.1 -23.8 - -
Cash flows from financing activities -59.9 -56.4 -3.5 - -
Cash and cash equivalents at end of period 187.0 186.8 0.1 - -
-------------------------------------------------------------------------------------------- -------------------------
Capital expenditures 102.0 84.7 17.3 90.0 -12.0
Depreciation for tangible fixed assets 67.4 66.7 0.6 69.0 1.5
R&D expenditures 110.3 110.4 -0.0 120.0 9.6
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Number of employees (Japan) (thousand people) 39.9 40.1 -0.2 - -
Number of employees (Overseas) (thousand people) 36.2 35.0 1.2 - -
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RICOH COMPANY, LTD.
* The Company bases the forecast estimates for March 31, 2007 above upon
information currently available to management, which involves risks and
uncertainties that could cause actual results to differ materially from those
projected.
1
(2) Three months ended March 31, 2006 and 2005
(Billions of yen)
-------------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change
-------------------------------------------------------------------------------------------------
Domestic sales 260.2 272.4 -4.5%
Overseas sales 256.0 221.8 15.4%
Net sales 516.3 494.3 4.4%
Gross profit 210.2 198.5 5.8%
Operating income 48.0 39.0 23.0%
Income before income taxes 48.0 40.6 18.3%
Net income 31.1 25.0 24.3%
-------------------------------------------------------------------------------------------------
Exchange rate (Yen/US$) 117.01 104.60 12.41
Exchange rate (Yen/EURO) 140.72 137.26 3.46
-------------------------------------------------------------------------------------------------
Net income per share (yen) 42.59 34.08 8.51
-------------------------------------------------------------------------------------------------
Return on equity (%) 3.3 2.9 0.4
Income before income taxes on total assets (%) 2.4 2.1 0.3
Income before income taxes on net sales (%) 9.3 8.2 1.1
-------------------------------------------------------------------------------------------------
Capital expenditures 22.6 25.9 -3.3
Depreciation for tangible fixed assets 18.7 18.7 -0.0
R&D expenditures 28.2 30.8 -2.6
-------------------------------------------------------------------------------------------------
(3) Three months ending June 30, 2006 (Forecast) and Three months ended June 30,
2005
(Billions of yen)
------------------------------------------------------------------------------------------
Three months ending Three months ended
June 30, 2006 June 30, 2005 Change
(Forecast) (Results)
------------------------------------------------------------------------------------------
Domestic sales 237.0 233.9 1.3%
Overseas sales 236.0 218.9 7.8%
Net sales 473.0 452.9 4.4%
Gross profit 203.5 194.7 4.5%
Operating income 39.5 37.2 5.9%
Income before income taxes 39.0 38.0 2.4%
Net income 28.3 23.7 19.3%
------------------------------------------------------------------------------------------
Exchange rate (Yen/US$) 115.00 107.60 7.40
Exchange rate (Yen/EURO) 140.00 135.55 4.45
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Capital expenditures 21.0 34.7 -13.7
Depreciation for tangible fixed assets 16.0 15.6 0.3
R&D expenditures 26.5 25.5 0.9
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(4) Half year ending September 30, 2006 (Forecast) and Half year ended September
30, 2005
(Billions of yen)
-----------------------------------------------------------------------------------------
Half year ending Half year ended
September 30, 2006 September 30, 2005 Change
(Forecast) (Results)
-----------------------------------------------------------------------------------------
Domestic sales 487.0 480.9 1.3%
Overseas sales 490.0 442.1 10.8%
Net sales 977.0 923.0 5.8%
Gross profit 411.0 388.2 5.9%
Operating income 73.0 66.9 9.1%
Income before income taxes 72.0 69.4 3.7%
Net income 47.8 42.8 11.5%
-----------------------------------------------------------------------------------------
Exchange rate (Yen/US$) 115.00 109.42 5.58
Exchange rate (Yen/EURO) 140.00 135.67 4.33
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Capital expenditures 43.0 58.1 -15.1
Depreciation for tangible fixed assets 32.0 31.1 0.8
R&D expenditures 58.0 54.9 3.0
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2
RICOH COMPANY, LTD. AND CONSOLIDATED SUBSIDIARIES
FLASH REPORT (CONSOLIDATED RESULTS FOR THE YEAR ENDED MARCH 31, 2006)
DATE OF APPROVAL FOR THE FINANCIAL RESULTS FOR THE YEAR ENDED MARCH 31, 2006,
AT THE BOARD OF DIRECTORS' MEETING: APRIL 26, 2006
1. RESULTS FOR THE PERIOD FROM APRIL 1, 2005 TO MARCH 31, 2006
(1) Operating Results
(Millions of yen)
--------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005
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Net sales 1,915,090 1,814,108
(% change from the previous fiscal year) 5.6 1.9
Operating income 152,014 135,506
(% change from the previous fiscal year) 12.2 -9.7
Income before income taxes 156,199 135,383
(% change from the previous fiscal year) 15.4 -5.4
Net income 97,057 83,143
(% change from the previous fiscal year) 16.7 -9.4
Net income per share-basic (yen) 132.33 112.64
Net income per share-diluted (yen) - -
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Notes:
i. Equity in income of affiliates: Yen 2,606 million (Yen 3,120 million in
previous fiscal year)
ii. No change in accounting method have been made.
iii. Average number of shares outstanding (consolidated): 733,434,414 shares
(738,160,042 shares in previous fiscal year)
iv. Percentage changes in net sales, operating income, income before income
taxes, and net income based on the previous corresponding periods.
v. Net income per share is calculated as required by SFAS No. 128.
(2) Financial Position
(Millions of yen)
--------------------------------------------------------------------------------
March 31, 2006 March 31, 2005
--------------------------------------------------------------------------------
Total assets 2,041,183 1,953,669
Shareholders' equity 960,245 862,998
Equity ratio (%) 47.0 44.2
Equity per share (yen) 1,316.21 1,175.67
--------------------------------------------------------------------------------
Note: Number of shares outstanding as of March 31, 2006: 729,552,274 shares
(734,045,879 shares as of March 31, 2005)
(3) Cash Flows
(Millions of yen)
--------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005
--------------------------------------------------------------------------------
Cash flows from operating activities 176,869 132,780
Cash flows from investing activities -120,065 -96,198
Cash flows from financing activities -59,989 -56,439
Cash and cash equivalents at end of period 187,055 186,857
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(4) Items relating to the scale of consolidation and the application of the
equity method:
Number of consolidated subsidiaries: 259; nonconsolidated subsidiaries: 39;
affiliated companies: 20
(5) Changes relating to the scale of consolidation and the application of the
equity method:
Consolidated subsidiaries: 6 additions; 32 removals
Companies accounted for by the equity method: 3 removals
Note:
Consolidated financial statements of the Company and its consolidated
subsidiaries have been prepared in conformity with accounting principles
generally accepted in the United States of America.
2. FORECAST OF OPERATING RESULTS FROM APRIL 1, 2006 TO MARCH 31, 2007
(Millions of yen)
--------------------------------------------------------------------------------
Half year ending Year ending
September 30, 2006 March 31, 2007
--------------------------------------------------------------------------------
Net sales 977,000 2,050,000
Operating income 73,000 170,000
Income before income taxes 72,000 168,000
Net income 47,800 106,000
--------------------------------------------------------------------------------
Note: Net income per share (Consolidated) 145.29 yen
In accordance with Japanese regulations, Ricoh has issued forecast for its
financial results for the fiscal year ending March 31, 2007. 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.
3
GROUP POSITION
The Ricoh Group comprises 298 subsidiaries and 20 affiliates.
Their development, manufacturing, sales, and service activities center on Office
Solution Business, Industry Business, and Other Business.
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 Solution Business]
In this business category, Ricoh provides products and systems that support the
enhancement of the office productivity of customers. Major products include:
Digital/analog copiers, MFPs (multifunctional printers), laser printers,
facsimile machines, 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 Corporation, Lanier Worldwide, Inc.
Europe...Ricoh Europe B.V., Ricoh Deutschland GmbH, Ricoh UK Ltd.,
Ricoh France S.A., Ricoh Espana S.A., Ricoh Italia S.p.A., and
NRG Group PLC
Other regions...Ricoh China Co., Ltd., Ricoh Hong Kong Ltd.,
Ricoh Asia Pacific Pte. Ltd., Ricoh Australia Pty, Ltd., and
Ricoh New Zealand Ltd.
[Industry Business]
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 Business]
Supplying optical discs and digital camera, and providing leasing and logistics
services
[Main Subsidiaries and Affiliates]
Sales
Ricoh Corporation, Ricoh Europe B.V.
Other
Ricoh Leasing Co., Ltd., Ricoh Logistics System Co., Ltd., and
Coca-Cola West Japan Co., Ltd. (affiliated company)
4
[Chart of Business System]
The chart of group position is omitted.
5
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 Office Solution Business, 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 Office Solution Business, we have identified "printing" as an area that
presents an outstanding opportunity for growth. Consequently, we will shift a
higher portion of our business resources to this area. Namely, we will continue
to advance such printing solutions as BC (black-color) conversion and TCO (total
cost of ownership) reduction solutions in the office, enter the high-end
production printing market, boost low-end color laser printers and expand gel
jet printers to expand the business domain and size. Furthermore, we will revamp
our sales system solutions and solutions platform in order to promote document
solution, which enables improved document workflow, and to capture a greater
share of major customers, particularly major global accounts.
On the other hand, we will allocate greater business resources to promising
businesses in the Industry Business. In addition, we will seek for greater
business shares of both Office Solutions and Industry Business in emerging
markets. As technological differentiation is the key to realizing customer value
in each business and increasing profitability, we will continue our aggressive
R&D activities to boost our technical power.
The following shows our achievements in the basic policies during this term.
In Office Solution Business, we have continuously introduced new multifunctional
color printers and color laser printers in order to provide more comprehensive
product line. During this term, we have increased our market share by launching
various products: "imagio Neo C600Pro (sold overseas as Aficio Color 5560)",
which is a new generation of multifunctional color printer and high-speed copy
or print at 55 ppm(pages per minute); "imagio MP C3000/2500 series", which
enable to produce higher images with better quality by utilizing Color PxP toner
with Ricoh's own polymerization method and features high security functions such
as protection to prevent unauthorized copying, which is the fastest in the
industry of color printers; "imagio MP C1500", which targets low-end business
printer market employing the Gel Jet technology.
Through these measures, the Ricoh Group obtained high market share in the major
color copier markets in Japan, the Americas and Europe.
6
In the high-end production printing market, we have released new 4 models
including "IPSiO SP 9500Pro (sold overseas as EMP156)", which is a printer for
main systems and actualizes high-speed printing at 156 ppm with high durability.
This allowed us to have more comprehensive product line from center printers,
which perform centralized printing of documents, to desktop printers, which
perform distributed printing at each location. By combining those printers, we
will provide efficient printing environment.
In the low-end business printer market, we have "IPSiO G series (sold overseas
as Aficio G series)", which is a printer with Gel Jet technology aimed to
replace other companies' black and white laser printers or inkjet printers.
Because of its high speed output, high quality image with plain paper and low
running cost, it received great reviews as a business printer, and we will
continue to promote creating such products of high value-added in the future.
As for the promoting our printing solution, we have developed business on a
global scale by proposing TCO reduction solutions utilizing copiers and printers
together and earning high reputation for our worldwide support and services. In
addition, in developing document solution in order to improve workflow, we have
provided software tools to link multifunctional printers with host systems,
improved the support structure of technology centers to propose the optimum
environment and support the introduction for those systems in Japan, the
Americas and Europe, and strengthened the sales structures for solutions.
On the other hand, we have promoted allocation of management resources on
promising markets and businesses in the area of industry. The example for this
is the establishment of a thermal paper production and sales company in China.
Furthermore, we have continued priority investment during this term to achieve
growth strategies and to improve revenue base.
In sales and services, we have integrated the maintenance service department of
domestic sales companies to Ricoh Technosystems Co., Ltd. in order to improve
the system to enhance contacts with customers and to strengthen abilities to
provide solutions. As for development, Ebina Technology Center was established
to consolidate all the functions of forefront color products from the
development of elemental technology, to designing, to preparing the production
and to evaluation of the products. This center allows us to enhance the
cross-functional development structure and to further improve the development
efficiency.
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.
In creating customer value, it is important that we forecast customer needs and
improve our products and services to meet these needs. To this end, we will
increase the scope of CS (Customer Satisfaction) management, in which we
aggressively cultivate new values by more than ever placing ourselves in the
shoes of our customers. We will also continue to boost our technical ability to
materialize products and services that provide new values.
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.
4. 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.
7
5. Concept and Policy of Reducing the Trading Unit
Ricoh plans to keep investment patterns and shareholder composition under close
scrutiny, and we will consider taking the appropriate steps to alter the minimum
investment lot if so required. By reducing the minimum number of shares required
to invest in the company, Ricoh believes that a broader range of investors can
be attracted to equity markets, while at the same time, the liquidity of this
company's shares may be enhanced. Nevertheless, many investors already trade in
Ricoh's shares, and for this reason, management has concluded that there is no
immediate need for reduction of the minimum investment lots.
Furthermore, we intend to pay attention to the condition of business partners
and of shareholder makeup as we carefully study both the necessity and the
timing of implementation of these measures.
6. Parent Information
Description is omitted since there is no parent company.
8
PERFORMANCE
*Overview
The Ricoh Group's consolidated net sales for the fiscal 2006 (extending from
April 1, 2005 to March 31, 2006) increased 5.6% from the previous corresponding
period to Yen 1,915.0 billion. This marks the twelfth consecutive year of
year-on-year revenue growth. During this period, the average yen exchange rates
were at Yen 113.26 against the U.S. dollar (down Yen 5.68) and Yen 137.86
against the euro (down Yen 2.61). Accordingly, the sales would have increased by
3.8% excluding the effects of such foreign currency fluctuations.
As for sales, domestic sales of Imaging Solution increased by 3.8% from the
previous corresponding period. This was primarily due to the continuous increase
in sales of digital PPCs(pain paper copiers), MFPs (multifunctional printers)
and laser printers - especially color products. On the other hand, sales of
personal computers and PC servers, optical equipments, which were in sluggish
demand, and some of Other Business decreased. As a result, domestic sales
decreased by 0.1% from the previous corresponding period to Yen 972.0 billion.
Overseas sales of Imaging Solution increased. Influenced by the depreciation of
the yen, the sales of Imaging Solution increased by 12.1% from the previous
corresponding period. In the Americas, the increase in sales was largely driven
by sales digital PPCs, color PPCs, MFPs and laser printers had good result. In
Europe and Other, the sales of these products also increased. The increase in
sales of the Industry Business was due to the recovery of demand for
semiconductor, which was offset by a decrease in the optical discs business as
we withdrew from a part of the business during the previous fiscal year. As a
result, overseas net sales increased by 12.1% from the previous corresponding
period to Yen 943.0 billion. Excluding effects of foreign currency fluctuations,
net sales in overseas would have increased by 8.2% from the previous
corresponding period.
Gross profit increased by 6.0% from the previous corresponding period to Yen
799.6 billion. This increase was primarily due to the effect of new launched
products, increased sales of value-added high-margin products such as MFPs and
laser printers, a completed cost management system from the product development
stage and successful implementation of effective cost-cutting activities for
logistics, manufacturing and so on.
Selling, general and administrative expenses increased by 4.6% from the previous
corresponding period to Yen 647.5 billion.
This consisted of strategic expenses as follows: R&D expenses (Yen 110.3
billion, 5.8% compared to the sales) including new product developments,
increased sales expenses accompanying the increased sales; integration of
headquarters operations and domestic R&D bases; enhanced sales and marketing
structure overseas; expenses on Information Technologies for the core operating
system development in Japan, overseas and so on.
As a result, operating income increased by 12.2% from the previous corresponding
period to Yen 152.0 billion.
In the other (income) expenses, we had financial improvement and an increase in
gain from foreign exchange. As a result, income before income taxes increased
15.4% from the previous corresponding period to Yen 156.1 billion.
Income taxes were affected by tax exemption of R&D expenses and expenditures for
Information Technologies.
As a result, net income for the period increased by 16.7% to Yen 97.0 billion,
recording the best net income.
The operating results of business segments are as follows. For Office Solution
Business, the operating income increased from the previous corresponding period.
This is due to the increased net sales of the Imaging Solution, which is our
core business, the effects of new launched products, and the cost reducing
activities, covering the strategic expenses mentioned above. For Industry
Business, the semiconductor business seems to be recovering; however, the
operating income decreased due to the decrease in demand of optical equipment
business and countermeasures taken for quality improvement in the measuring
equipments business. In Other Business, the financing business performed well.
The optical discs business, which has withdrawn from a part of the business
during the previous corresponding period, improved performance, and consequently
the operating income increased from the previous corresponding period.
With regard to the states of geographic segments, the operating profit in Europe
decreased due to the realignment and enhancement of its sales structure.
However, because the sales increased due to the effect of new products mentioned
above and improved productivity, the strategic expenses were covered and the
operating income in Japan, the Americas and Other increased.
In terms of assets, the increase in finance receivables and increase in tangible
fixed assets in Japan resulted in the increase of total assets by Yen 87.5
billion from the end of the previous corresponding period to Yen 2,041.1
billion. The interest-bearing liabilities decreased due to the enhancement of
cash management in each area: Japan, the Americas and Europe. The shareholders'
equity increased by Yen 97.2 billion from the end of the previous corresponding
period to Yen 960.2 billion. The equity ratio improved 2.8 points to 47.0%
compared to the previous corresponding period.
Year-end cash dividend are proposed Yen 12.00 per share, and which combined with
the interim dividend of Yen 12.00, total dividend for the current fiscal year
2006 will be Yen 24.00.
[Graph 1] Consolidated sales by product line
The graphs are omitted. The data in the omitted graphs can be shown at the
schedule 1 in APPENDIX B.
9
*Conditions by Product Line
Office Solution Business (Sales up 6.9% to Yen 1,637.2 billion)
---------------------------------------------------------------
The sales of color PPCs, MFPs and laser printers in Japan and overseas
increased. We responded to our customers needs to improve or upgrade the
technology used in their business, which are accompanied by the advancement of
digitalized and networked and computerized information, coloration and massive
quantities. In order to support the efficient and effective management of
customers' TDV (total document volume), the Ricoh Group is promoting the
optimization of the customers' total printing cost. Although the sales of
personal computers and PC servers decreased, net sales in the Office Solution
Business increased by 6.9% from the previous corresponding period to Yen 1,637.2
billion.
Imaging Solution (Sales up 8.6% to Yen 1,446.6 billion)
-------------------------------------------------------
Although domestic sales of digital PPCs decreased due primarily to a shift
in customers needs to MFPs from stand-alone products, overseas sales of
digital PPCs continued performing well. The sales of color PPCs increased
in Japan and overseas by our effort to continuous offer of new product
lineups.
As for MFPs, the following new product lineups were offered in response to
customers needs for high speed, networking and coloration, resulting in the
continuous sales increase.
MFPs: Imagio Neo 353/453 series, Imagio MP6000/7500 series in Japan
Aficio 3035/3045 series, Aficio 2016/2020 series overseas
Color MFPs: Imagio Neo C355it/C455it series, Imagio MPC2500/3000 in Japan
Aficio 3235C/3245C series, Aficio 3260C overseas
The sales of laser printers continued to increase in Japan and overseas. As
a result, sales in this category increased by 8.6%.
Network System Solution (Sales down 4.3% to Yen 190.5 billion)
--------------------------------------------------------------
The sales of Solution Business such as support and service continue to
increase both in Japan and overseas due to our successful promotion of
optimizing the customers' total printing cost. However, the sales of
personal computers and PC servers continue to decrease in Japan. As a
result, the sales in this category decreased by 4.3% from the previous
corresponding period to Yen 190.5 billion.
Industry Business (Sales up 1.0% to Yen 120.6 billion)
------------------------------------------------------
Net sales in the Industry Business increased by 1.0%, as compared to the
previous corresponding period to Yen 120.6 billion. The sales of thermal
business and electric component business increased and the demand for
semiconductor products is recovering; however, the sales of optical equipment
business decreased due to a sluggish demand.
Other Business (Sales down 3.7% to Yen 157.2 billion)
-----------------------------------------------------
The digital camera business performed well. During the previous corresponding
period, the withdrawal from the self-developed drive business and its
key-module/parts business in optical discs business was executed; therefore, its
sales for this period decreased especially overseas. There was a sale of
non-core business subsidiary in Japan. As a result, sales in this segment
decreased by 3.7% from the previous corresponding period to Yen 157.2 billion.
[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.
11
* Consolidated Sales by Geographic Area
Japan (Sales down 0.1% to Yen 972.0 billion)
--------------------------------------------
As for the economy in Japan, the stock market, capital investment and corporate
performance show a recovery; however, it was affected by the escalating prices
of materials and crude oil and overall demand in the market was below our
expectations. In Office Solution Business, the sales of Imaging Solution,
including color PPCs, MFPs and laser printers, and solution business, such as
support and service, increased due to the implementation of the product and
sales strategies to meet our customers needs. This increase in sales was offset
by the decreased sales of the stand-alone products due to the transition to MFPs
and color products and personal computers and PC servers. The sales in the
Office Solution Business increased by 1.3% from the previous corresponding
period.
The sales of Industry Business decreased from the previous corresponding period
due to the lower demand in optical equipment business and the sale of non-core
business subsidiary. As a result, the sales in Japan decreased by 0.1% from the
previous corresponding period to Yen 972.0 billion.
The Americas (Sales up 19.0% to Yen 387.4 billion)
--------------------------------------------------
The economy in the Americas continues good condition even though they were
repeatedly affected by hurricanes. However, the competition in the market is
becoming more intense. In such conditions, we focused on expanding our sales of
MFPs and laser printers, which meet the change of customers needs for color
PPCs, networked, coloration and high speed, utilizing the improved and enhanced
sales to major accounts. As a result, the sales in the Americas increased by
19.0% from the previous corresponding period to Yen 387.4 billion. Excluding the
effects of the depreciation of the yen to dollar, the sales in the Americas
would have increased by 13.0% from the previous corresponding period.
Europe (Sales up 6.3% to Yen 434.8 billion)
-------------------------------------------
The economy in Europe was relatively stable, however, the competition in each
country's market is intensifying. Under such circumstance, our sales of MFPs and
laser printers increased and we maintain the first place in terms of market
share in the sales of office machines in Europe. Influenced by the effects of
the depreciation of the yen to euro, the sales in Europe would have increased by
6.3% from the previous corresponding period to Yen 434.8 billion.
Others (Sales up 13.3% to Yen 120.8 billion)
--------------------------------------------
In other regions including China and Asian countries, the need for coloration
and MFPs for office equipment are accelerating. Our MFPs and laser printers,
which meet such customers needs, increased their sales. Additionally, the demand
for semiconductor recovered. As a result, the sales in Others increased by 13.3%
to from the previous corresponding period Yen 120.8 billion.
[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.
12
*Segment Information
Business Segment
----------------
Office Solution Business
------------------------
As measures to realize Ricoh Group's core strategies, namely, (1) BC conversion,
replacing monochrome products with color models, (2) Increase sales of
high-speed models, and (3) Provision of printing solutions, we have enhanced the
sales structure in Japan and overseas, released a series of high value-added
products with document functionality ranging from input/output to sharing and
management, and endeavored to expand their sales. Accordingly, sales of color
PPCs and MFPs and laser printers increased both in Japan and overseas. As a
result, sale of the Office Solution Business increased by 6.9% from the previous
corresponding period to Yen 1,637.2 billion.
In terms of operating expenses, there was strategic spending such as investment
in research and development on main products, IT investment of core operating
system development, enhancement of overseas sales and marketing structure, and
improvement of systems at headquarters and domestic R&D bases. On the other
hand, complete cost management system from the product development stage and
successful implementation of effective cost-cutting activities for logistics,
manufacturing resulted in the increase in operating income by 3.4% to Yen 202.9
billion from the previous corresponding period.
Capital investment increased from the previous corresponding period due
primarily to investment in R&D facilities such as the Technology Center in
Ebina, Kanagawa Prefecture, in order to improve MFPs and printers, integration
and transferring of operations at headquarters, new plant for producing high
quality, heavy-duty and eco-friendly toner, and reinforcing production line for
new products.
Total assets increased from the previous corresponding period due primarily to
an increase in fixed assets for above-mentioned capital expenditures and lease
receivables from the sales increase.
Industry Business
-----------------
Sales of semiconductor business were flagging from the effect of demand cycle;
however, its demand is recovering and the sales of thermal business and
electronic component business showed steady increase. Sales decreased in the
optical equipments due to the sluggish demand. As a result, total sales of
Industry Business increased by 1.1% from the previous corresponding period to
Yen 123.2 billion.
Operating income decreased from the previous corresponding period due to decline
in productivity of the optical equipment business and countermeasures taken for
quality improvements in the measuring equipment business.
Other Business
--------------
The digital camera business performed well. During the previous corresponding
period, the withdrawal from the self-developed drive business and its
key-module/parts business in the optical discs business was executed; therefore,
its sales for this period decreased. There were sales of non-core business
subsidiary in Japan. As a result, sales in this segment decreased by 3.7% from
the previous corresponding period to Yen 157.2 billion.
Operating income increased from the previous corresponding period due to almost
completion of the above-mentioned withdrawal. Total assets decreased from the
previous corresponding period.
(Billions of yen)
-------------------------------------------------------------------------------------
Year ended
September 30, 2005 Year ended Change (%)
March 31, 2006 March 31, 2005
-------------------------------------------------------------------------------------
Office Solution Business:
Net sales 1,637.2 1,531.4 6.9
Operating income 202.9 196.3 3.4
Operating income on sales(%) 12.4 12.8 -0.4point
Identifiable assets 1,426.6 1,358.1 5.0
Capital expenditures 90.3 70.6 28.0
Depreciation 57.3 53.4 7.3
-------------------------------------------------------------------------------------
Industry Business:
Net sales 123.2 121.9 1.1
Operating income -0.9 0.0 -
Operating income on sales(%) -0.7 0.0 -0.7point
Identifiable assets 84.5 72.4 16.8
Capital expenditures 7.4 8.5 -12.4
Depreciation 6.6 7.4 -11.0
-------------------------------------------------------------------------------------
Other Business:
Net sales 157.2 163.2 -3.7
Operating income 6.1 -4.1 -
Operating income on sales(%) 3.9 -2.5 6.4points
Identifiable assets 114.9 125.2 -8.3
Capital expenditures 2.3 3.4 -31.4
Depreciation 2.3 2.6 -10.6
-------------------------------------------------------------------------------------
13
Geographic Segment
------------------
Japan
-----
In the Office Solution Business, the overall demand fell below our expectations
which made the competition even more severe. Under such circumstances, we have
pursued the aggressive marketing strategies and the BC (black-color) conversion
strategies, and succeeded in increasing the sales of MFPs and laser printers in
Japan and exports to overseas markets. As a result, sales in Japan increased
1.8% from the previous corresponding period to Yen 1,411.8 billion. In addition
to the effect of the increased sales, we implemented the transition to high
value-added products and cost-cutting activities such as SCM (supply chain
management), which compensated the following strategic expenses: R&D expenses
for the future, realignment of the domestic headquarters and the R&D bases
operations and IT investments, mainly for development of the mission-critical
system. As a result, the operating income increased by 12.7% from the previous
corresponding period to Yen 99.2 billion.
The Americas
------------
We saw effects of the strategies deployed to increase the sales of digital PPCs,
color PPCs, MFPs and laser printers, and to step up sales to major accounts
through the sales channels that we have improved and reinforced over the years.
Sales in the Americas increased by 19.0% from the previous corresponding period
to Yen 393.3 billion. Operating income increased by 10.6% from the previous
corresponding period to Yen 15.2 billion as a result of the increased sales of
those high value-added products and the yen's depreciation against the US
dollar.
Europe
------
The sales of Imaging Solution Business, which is our main business, grew in
every country and company in Europe. We continue to hold the first place in
terms of market share in the sales of office machines in Europe. As a result,
sales in Europe increased by 5.6 % from the previous corresponding period to Yen
438.7 billion. Operating income decreased by 12.1% from the previous
corresponding period to Yen 21.4 billion due to the nonrecurring expenses for
redevelopment of the bought-out sales channels for the future.
Other
-----
The accelerated demand shift of office equipment to coloration and network in
China, other part of Asia and Oceania, the sales of imaging solution equipment
increased. The export from the manufacturing base in China keeps increasing. As
a result, sales in the Other increased by 15.1% from the previous corresponding
period to Yen 200.2 billion. As we have maintained high productivity to
accommodate the need for increased supply around the world, operating income
increased by 26.0% from the previous corresponding period to Yen 15.0 billion.
[Graph 4] Geographic segment information
The graphs are omitted. The data in the omitted graphs can be shown at the
schedule 4.
14
* Financial Position
(1) Assets, Liabilities, and Shareholders' Equity at Year-End
(Billions of yen)
--------------------------------------------------------------------------------
March 31, 2006 March 31, 2005 Change
--------------------------------------------------------------------------------
Total Assets 2,041.1 1,953.6 87.5
Shareholders' Equity 960.2 862.9 97.2
Equity Ratio 47.0% 44.2% 2.8points
--------------------------------------------------------------------------------
Assets, trade receivables and inventories increased along with the sales growth,
primarily overseas, Yen 9.9 billion to Yen 630.5 billion and Yen 1.8 billion to
Yen 169.2 billion, respectively, from the end of the previous period. Tangible
fixed assets increased Yen 20.8 billion to Yen 268.2 billion, while finance
receivables increased Yen 23.4 billion to Yen 415.4 billion, due to increase of
domestic sales. Other investments increased Yen 29.3 billion to Yen 313.9
billion as a result of recognizing intangible fixed assets. Consequently, total
assets increased Yen 87.5 billion to Yen 2,041.1 billion.
As for Liabilities, trade payables increased Yen 2.6 billion to Yen 339.1
billion. Interest-bearing debt decreased Yen 28.8 billion to Yen 381.2 billion
as a result of effective cash management in Ricoh group. In addition, other
current liabilities increased Yen 7.7 billion to Yen 159.2 billion as a result
of increased tax reserve. Accrued pension and severance costs increased Yen 4.3
billion to Yen 97.0 billion. As a result, total liabilities decreased Yen 11.4
billion to Yen 1,028.0 billion.
In Shareholders' Investment, there was no major change in common stock or
additional paid-in capital. Retained earnings increased Yen 80.8 billion to Yen
665.3. Accumulated other comprehensive income increased Yen 26.0 billion and
treasury stock increased Yen 9.5 billion. As a result, total shareholders'
equity increased by Yen 97.2 billion to Yen 960.2 billion.
(2) Cash Flows
(Billions of yen)
-------------------------------------------------------------------------------------
Year ended Year ended Change
March 31, 2006 March 31, 2005
-------------------------------------------------------------------------------------
Cash flows from operating activities 176.8 132.7 44.0
Cash flows from investing activities -120.0 -96.1 -23.8
Cash flows from financing activities -59.9 -56.4 -3.5
Cash and Cash Equivalents at end of period 187.0 186.8 0.1
-------------------------------------------------------------------------------------
Net cash provided by operating activities increased by Yen 44.0 billion from the
end of the previous corresponding period, to Yen 176.8 billion. It was a result
of the fact that net income and depreciation increased and the fact that the
decrease of trade receivables and inventories compensated for the increase of
finance receivables due to the sales growth.
Net cash used in investing activities increased by Yen 23.8 billion from the end
of the previous corresponding period, to Yen 120.0 billion, due primarily to
capital investments to reinforce production lines for new products and to
redevelop the headquarters operations and the R&D bases.
As a result, free cash flow generated by operating activities and investment
activities increased Yen 20.2 billion from the previous corresponding period to
Yen 56.8 billion.
Outgoing cash flow was incurred for reducing interest-bearing debt by
encouraging financing between group companies, Yen 16.1 billion for payment of
dividends, and Yen 10.6 billion for acquisition of treasury stock. As a result,
the net cash used in financing activities amounted to Yen 59.9 billion.
As a result of the above, the ending balance of cash and cash equivalents
increased Yen 0.1 billion from the end of the previous corresponding period to
Yen 187.0 billion.
(3) Cash Flow Indices
---------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended
March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006
---------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity / Total assets 34.5% 34.9% 42.9% 44.2% 47.0%
Market capitalization / Total assets 95.6% 73.0% 85.3% 69.1% 82.2%
Interest bearing debt / Operating cash flow 5.3 2.6 2.8 3.1 2.2
Operating cash flow / Interest expense 12.8 27.1 29.3 28.3 33.7
---------------------------------------------------------------------------------------------------------------------------------
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.
15
* Forecast for the entire fiscal year
Economic projections and Ricoh Group's strategies for fiscal year 2007
----------------------------------------------------------------------
To see the domestic aspects of the fiscal year 2007 (extending from April 1,
2006 to March 31, 2007), we see recovery in the stock market, corporate
performance and capital investment. In consideration of such circumstances, we
can say Japan has entered a stage for full-fledged economic recovery. The
overseas economic situation, on the other hand, is stable at the moment, but
there are political and economic concerns in some countries.
In the market environment surrounding Ricoh Group, our customers needs have
become increasingly diversified, and we cannot satisfy them all merely by
providing particular products and services. Additionally, the competition for
colorization and other solutions is severe. Recognizing such drastic changes in
the market environment, we consider such market conditions as a great
opportunity to increase profits, and will give full play to our ability and
strength to cope with such changes, setting our target areas and creating new
value, and provide products and services that satisfy customers needs ahead of
other competitors.
Based on such consideration, we chose three target areas to contribute to our
growth in the 15th Medium-term management plan begun in fiscal year 2006;
printing, the emerging markets, and the industrial area. The Ricoh Group must
strengthen its competitive edge by creating new value and developing highly
efficient management if it is to grow and develop in those areas.
We aim to increase profitability of each business area by raising process
efficiency through structural reforms and improve our management efficiency by
selecting and focusing our businesses. We will aggressively invest profits for
our future growth and technology enhancement in order to enhance the sales and
profits and further increase our corporate value.
To lead such approaches to actual business results, we have continued
investments in the research and development as well as in the redevelopment of
bases and systems. We believe such investments will enable us to provide the
market with cost-effective products and customers usability more than ever, and
to develop various activities that ensure contribution to our profit.
Our performance forecast for fiscal year 2007 is as follows:
Exchange Rate Assumptions for the full year ended March 31, 2007
US$ 1 = Yen 115.00 (Yen 113.26 in previous fiscal year)
EURO 1 = Yen 140.00 (Yen 137.86 in previous fiscal year)
(Billions of yen)
----------------------------------------------------------------------
Year ending Year ended
March 31, 2007 March 31, 2006 Change
(Forecast) (Results)
----------------------------------------------------------------------
Domestic sales 1,000.0 972.0 2.9%
Overseas sales 1,050.0 943.0 11.3%
Net sales 2,050.0 1,915.0 7.0% (*1)
Gross profit 850.0 799.6 6.3%
Operating income 170.0 152.0 11.8%
Income before income taxes 168.0 156.1 7.6%
Net income 106.0 97.0 9.2% (*2)
----------------------------------------------------------------------
Notes:
*1...Net sales would be thirteenth consecutive year of growth.
*2...Net income would reach record high.
* Ricoh bases the forecast estimates for the year ending March 31, 2007 above
upon information currently available to management, which involves risks and
uncertainties that could cause actual results to differ materially from those
projected.
16
CONSOLIDATED PERFORMANCE
1. CONSOLIDATED STATEMENTS OF INCOME
(Three months ended March 31, 2006 and 2005) (Millions of yen)
---------------------------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change %
---------------------------------------------------------------------------------------------------------------
Net sales 516,300 494,306 21,994 4.4
Cost of sales 306,096 295,712 10,384 3.5
Percentage of net sales (%) 59.3 59.8
Gross Profit 210,204 198,594 11,610 5.8
Percentage of net sales (%) 40.7 40.2
Selling, general and administrative expenses 162,183 159,555 2,628 1.6
Percentage of net sales (%) 31.4 32.3
Operating income 48,021 39,039 8,982 23.0
Percentage of net sales (%) 9.3 7.9
Other (income) expense
Interest and dividend income 626 809 -183 -22.6
Percentage of net sales (%) 0.1 0.2
Interest expense 1,597 1,092 505 46.2
Percentage of net sales (%) 0.3 0.2
Other, net -1,035 -1,902 867 -
Percentage of net sales (%) -0.2 -0.3
Income before income taxes,
equity income and minority interests 48,085 40,658 7,427 18.3
Percentage of net sales (%) 9.3 8.2
Provision for income taxes 17,308 14,355 2,953 20.6
Percentage of net sales (%) 3.4 2.9
Minority interests in earnings of subsidiaries 496 1,358 -862 -63.5
Percentage of net sales (%) 0.0 0.2
Equity in earnings of affiliates 909 154 755 490.3
Percentage of net sales (%) 0.1 0.0
Net income 31,190 25,099 6,091 24.3
Percentage of net sales (%) 6.0 5.1
---------------------------------------------------------------------------------------------------------------
Reference : Exchange rate
US$ 1 Yen 117.01 Yen 104.60
EURO 1 Yen 140.72 Yen 137.26
(Year ended March 31, 2006 and 2005) (Millions of yen)
-------------------------------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005 Change %
-------------------------------------------------------------------------------------------------------
Net sales 1,915,090 1,814,108 100,982 5.6
Cost of sales 1,115,479 1,059,531 55,948 5.3
Percentage of net sales (%) 58.2 58.4
Gross Profit 799,611 754,577 45,034 6.0
Percentage of net sales (%) 41.8 41.6
Selling, general and administrative expenses 647,597 619,071 28,526 4.6
Percentage of net sales (%) 33.9 34.1
Operating income 152,014 135,506 16,508 12.2
Percentage of net sales (%) 7.9 7.5
Other (income) expense
Interest and dividend income 2,896 2,240 656 29.3
Percentage of net sales (%) 0.2 0.1
Interest expense 5,242 4,684 558 11.9
Percentage of net sales (%) 0.3 0.3
Other, net -6,531 -2,321 -4,210 -
Percentage of net sales (%) -0.4 -0.2
Income before income taxes,
equity income and minority interests 156,199 135,383 20,816 15.4
Percentage of net sales (%) 8.2 7.5
Provision for income taxes 57,563 50,634 6,929 13.7
Percentage of net sales (%) 3.0 2.8
Minority interests in earnings of subsidiaries 4,185 4,726 -541 -11.4
Percentage of net sales (%) 0.2 0.3
Equity in earnings of affiliates 2,606 3,120 -514 -16.5
Percentage of net sales (%) 0.1 0.2
Net income 97,057 83,143 13,914 16.7
Percentage of net sales (%) 5.1 4.6
-------------------------------------------------------------------------------------------------------
Reference : Exchange rate
US$ 1 Yen 113.26 Yen 107.58
EURO 1 Yen 137.86 Yen 135.25
17
2-1. CONSOLIDATED SALES BY PRODUCT CATEGORY
(Three months ended March 31, 2006 and 2005) (Millions of yen)
------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change %
------------------------------------------------------------------------------------------
[Office Solution Business]
Imaging Solution Business 386,298 355,169 31,129 8.8
Percentage of net sales (%) 74.8 71.9
Network System Solution Business 56,663 61,671 -5,008 -8.1
Percentage of net sales (%) 11.0 12.4
Total Office Solution Business 442,961 416,840 26,121 6.3
Percentage of net sales (%) 85.8 84.3
------------------------------------------------------------------------------------------
[Industry Business]
Industry Business 32,462 34,557 -2,095 -6.1
Percentage of net sales (%) 6.3 7.0
------------------------------------------------------------------------------------------
[Other Business]
Other Business 40,877 42,909 -2,032 -4.7
Percentage of net sales (%) 7.9 8.7
------------------------------------------------------------------------------------------
Grand Total 516,300 494,306 21,994 4.4
Percentage of net sales (%) 100.0 100.0
------------------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 117.01 Yen 104.60
EURO 1 Yen 140.72 Yen 137.26
(Year ended March 31, 2006 and 2005) (Millions of yen)
-----------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005 Change %
-----------------------------------------------------------------------------------
[Office Solution Business]
Imaging Solution Business 1,446,635 1,332,299 114,336 8.6
Percentage of net sales (%) 75.5 73.4
Network System Solution Business 190,593 199,129 -8,536 -4.3
Percentage of net sales (%) 10.0 11.0
Total Office Solution Business 1,637,228 1,531,428 105,800 6.9
Percentage of net sales (%) 85.5 84.4
-----------------------------------------------------------------------------------
[Industry Business]
Industry Business 120,636 119,408 1,228 1.0
Percentage of net sales (%) 6.3 6.6
-----------------------------------------------------------------------------------
[Other Business]
Other Business 157,226 163,272 -6,046 -3.7
Percentage of net sales (%) 8.2 9.0
-----------------------------------------------------------------------------------
Grand Total 1,915,090 1,814,108 100,982 5.6
Percentage of net sales (%) 100.0 100.0
-----------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 113.26 Yen 107.58
EURO 1 Yen 137.86 Yen 135.25
Note: Effective from this financial period, our business segments are
reclassified into three categories, "Office Solution", "Industry" and "Other".
Accordingly, information for the previous corresponding period has been
reclassified to conform with the current classification.
Each category includes the following product line:
Imaging Solution Business Digital PPCs, color PPCs, digital
duplicators, facsimile machines, analog PPCs,
diazo copiers, scanners, MFPs(multifunctional
printers), laser printers and software
Network System Solution Business Personal computers, PC servers, network
systems and network related software
Industry Business Thermal media, optical equipments,
semiconductors, electronic component and
measuring equipments
Other Business Optical discs and digital camera
18
2-2. CONSOLIDATED SALES BY GEOGRAPHIC AREA
(Three months ended March 31, 2006 and 2005) (Millions of yen)
-----------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change %
-----------------------------------------------------------------------------------------------
[Domestic] 260,274 272,478 -12,204 -4.5
Percentage of net sales (%) 50.4 55.1
[Overseas] 256,026 221,828 34,198 15.4
Percentage of net sales (%) 49.6 44.9
The Americas 105,321 86,021 19,300 22.4
Percentage of net sales (%) 20.4 17.4
Europe 118,292 108,309 9,983 9.2
Percentage of net sales (%) 22.9 21.9
Other 32,413 27,498 4,915 17.9
Percentage of net sales (%) 6.3 5.6
Grand Total 516,300 494,306 21,994 4.4
Percentage of net sales (%) 100.0 100.0
------------------------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 117.01 Yen 104.60
EURO 1 Yen 140.72 Yen 137.26
(Year ended March 31, 2006 and 2005) (Millions of yen)
---------------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005 Change %
---------------------------------------------------------------------------------------
[Domestic] 972,076 972,975 -899 -0.1
Percentage of net sales (%) 50.8 53.6
[Overseas] 943,014 841,133 101,881 12.1
Percentage of net sales (%) 49.2 46.4
The Americas 387,412 325,597 61,815 19.0
Percentage of net sales (%) 20.2 17.9
Europe 434,800 408,906 25,894 6.3
Percentage of net sales (%) 22.7 22.5
Other 120,802 106,630 14,172 13.3
Percentage of net sales (%) 6.3 6.0
Grand Total 1,915,090 1,814,108 100,982 5.6
Percentage of net sales (%) 100.0 100.0
---------------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 113.26 Yen 107.58
EURO 1 Yen 137.86 Yen 135.25
19
3. CONSOLIDATED BALANCE SHEETS
(March 31, 2006 and 2005)
Assets (Millions of yen)
------------------------------------------------------------------------------------------------------------------------
March 31, 2006 March 31, 2005 Change
------------------------------------------------------------------------------------------------------------------------
Current Assets
Cash and time deposits 188,525 188,311 214
Trade receivables 630,501 620,568 9,933
Marketable securities 162 138 24
Inventories 169,245 167,365 1,880
Other current assets 55,110 53,365 1,745
Total Current Assets 1,043,543 1,029,747 13,796
Fixed Assets
Tangible fixed assets 268,243 247,410 20,833
Finance receivables 415,435 391,947 23,488
Other investments 313,962 284,565 29,397
Total Fixed Assets 997,640 923,922 73,718
------------------------------------------------------------------------------------------------------------------------
Total Assets 2,041,183 1,953,669 87,514
------------------------------------------------------------------------------------------------------------------------
Note:
Contents of cash and time deposits:
Cash and cash equivalents 187,055 186,857
Time deposits 1,470 1,454
Liabilities and Shareholders' Investment (Millions of yen)
------------------------------------------------------------------------------------------------------------------------
March 31, 2006 March 31, 2005 Change
------------------------------------------------------------------------------------------------------------------------
Current Liabilities
Trade payables 339,152 336,499 2,653
Short-term borrowings 185,651 183,518 2,133
Other current liabilities 159,225 151,497 7,728
Total Current Liabilities 684,028 671,514 12,514
Fixed Liabilities
Long-term indebtedness 195,626 226,567 -30,941
Accrued pension and severance costs 97,020 92,672 4,348
Other fixed liabilities 51,374 48,767 2,607
Total Fixed Liabilities 344,020 368,006 -23,986
------------------------------------------------------------------------------------------------------------------------
Total Liabilities 1,028,048 1,039,520 -11,472
------------------------------------------------------------------------------------------------------------------------
Minority Interest 52,890 51,151 1,739
------------------------------------------------------------------------------------------------------------------------
Shareholders' Investment
Common stock 135,364 135,364 -
Additional paid-in capital 186,450 186,551 -101
Retained earnings 665,394 584,515 80,879
Accumulated other comprehensive income (loss) 4,099 -21,963 26,062
Treasury stock -31,062 -21,469 -9,593
Total Shareholders' Investment 960,245 862,998 97,247
------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Investment 2,041,183 1,953,669 87,514
------------------------------------------------------------------------------------------------------------------------
Note: Other comprehensive income;
Net unrealized holding gains on available-for-sale securities 8,928 4,791 4,137
Pension liability adjustments -7,643 -14,652 7,009
Net unrealized gains (losses) on derivative instruments 157 117 40
Cumulative translation adjustments 2,657 -12,219 14,876
Reference: Exchange rate March 31, 2006 March 31, 2005
US$ 1 Yen 117.47 Yen 107.39
EURO 1 Yen 142.81 Yen 138.87
4. RETAINED EARNINGS
(Year ended March 31, 2006 and 2005) (Millions of yen)
-----------------------------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005
-----------------------------------------------------------------------------------------------------
Retained earnings (beginning balance) 584,515 515,372
Adjustment for change of fiscal period on consolidated subsidiaries - 777
Net income 97,057 83,143
Cash dividends 16,178 14,777
Retained earnings (ending balance) 665,394 584,515
-----------------------------------------------------------------------------------------------------
20
5. CONSOLIDATED STATEMENTS OF CASH FLOWS
(Year ended March 31, 2006 and 2005) (Millions of yen)
----------------------------------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005
----------------------------------------------------------------------------------------------------------
I. Cash Flows from Operating Activities:
1. Net income 97,057 83,143
2. Adjustments to reconcile net income to net cash
provided by operating activities--
Depreciation and amortization 84,460 78,201
Equity in earnings of affiliates, net of dividends received -1,431 -1,966
Deferred income taxes -3,294 11,353
Loss on disposal and sales of tangible fixed assets 920 4,056
Pension and severance costs, less payments 3,342 4,307
Changes in assets and liabilities--
(Increase)Decrease in trade receivables 13,429 -26,429
(Increase)Decrease in inventories 3,726 -12,885
Increase in finance receivables -30,029 -30,294
(Decrease)Increase in trade payables -4,495 27,276
(Decrease)Increase in accrued income taxes and
accrued expenses and other 2,497 -13,719
Other, net 10,687 9,737
----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 176,869 132,780
----------------------------------------------------------------------------------------------------------
II. Cash Flows from Investing Activities:
1. Proceeds from sales of property, plant and equipment 3,085 721
2. Expenditures for tangible fixed assets -101,793 -84,076
3. Payments for purchases of available-for-sale securities -138,607 -79,431
4. Proceeds from sales of available-for-sale securities 141,620 118,120
5. (Increase) decrease in time deposits, net 61 -511
6. Acquisition of new subsidiaries, net of cash acquired - -43,214
7. Other, net -24,431 -7,807
----------------------------------------------------------------------------------------------------------
Net cash used in investing activities -120,065 -96,198
----------------------------------------------------------------------------------------------------------
III. Cash Flows from Financing Activities:
1. Proceeds from long-term indebtedness 63,751 72,206
2. Repayment of long-term indebtedness -93,752 -60,613
3. (Decrease)Increase in short-term borrowings, net 39,618 -38,052
4. Proceeds from issuance of long-term debt securities 10,000 18,000
5. Repayment of long-term debt securities -52,000 -22,000
6. Dividends paid -16,178 -14,793
7. Payment for purchase of treasury stock -10,653 -10,624
8. Other, net -775 -563
----------------------------------------------------------------------------------------------------------
Net cash used in financing activities -59,989 -56,439
----------------------------------------------------------------------------------------------------------
IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents 3,383 1,200
----------------------------------------------------------------------------------------------------------
V. Net Increase (Decrease) in Cash and Cash Equivalents 198 -18,657
----------------------------------------------------------------------------------------------------------
VI. Cash and Cash Equivalents at Beginning of Year 186,857 203,039
VII. Adjustment for Change of Fiscal Period on Consolidated Subsidiaries - 2,475
----------------------------------------------------------------------------------------------------------
VIII. Cash and Cash Equivalents at End of Period 187,055 186,857
----------------------------------------------------------------------------------------------------------
21
6. SEGMENT INFORMATION
(1) Industry Segment Information
(Three months ended March 31, 2006 and 2005) (Millions of yen)
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change %
-----------------------------------------------------------------------------------------------------------------------------------
OFFICE SOLUTION BUSINESS:
Net sales:
Unaffiliated customers 442,961 416,840 26,121 6.3
Intersegment - - - -
Total 442,961 416,840 26,121 6.3
-----------------------------------------------------------------------------------------------------------------------------------
Operating expenses 381,817 359,156 22,661 6.3
-----------------------------------------------------------------------------------------------------------------------------------
Operating income 61,144 57,684 3,460 6.0
Operating income on sales in Office Solution Business (%) 13.8 13.8
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY BUSINESS:
Net sales:
Unaffiliated customers 32,462 34,557 -2,095 -6.1
Intersegment 662 644 18 2.8
Total 33,124 35,201 -2,077 -5.9
-----------------------------------------------------------------------------------------------------------------------------------
Operating expenses 33,160 35,448 -2,288 -6.5
-----------------------------------------------------------------------------------------------------------------------------------
Operating income -36 -247 211 -
Operating income on sales in Industry Business (%) -0.1 -0.7
------------------------------------------------------------------------------------------------------------------------------------
OTHER BUSINESS:
Net sales:
Unaffiliated customers 40,877 42,909 -2,032 -4.7
Intersegment - - - -
Total 40,877 42,909 -2,032 -4.7
-----------------------------------------------------------------------------------------------------------------------------------
Operating expenses 39,375 46,177 -6,802 -14.7
-----------------------------------------------------------------------------------------------------------------------------------
Operating income 1,502 -3,268 4,770 -
Operating income on sales in Other Business (%) 3.7 -7.6
-----------------------------------------------------------------------------------------------------------------------------------
CORPORATE AND ELIMINATIONS:
Net sales:
Intersegment -662 -644 -18 -
Total -662 -644 -18 -
-----------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Intersegment -653 -615 -38 -
Corporate 14,580 15,101 -521 -
Total 13,927 14,486 -559 -
-----------------------------------------------------------------------------------------------------------------------------------
Operating income -14,589 -15,130 541 -
-----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED:
Net sales:
Unaffiliated customers 516,300 494,306 21,994 4.4
Intersegment - - - -
Total 516,300 494,306 21,994 4.4
-----------------------------------------------------------------------------------------------------------------------------------
Operating expenses 468,279 455,267 13,012 2.9
-----------------------------------------------------------------------------------------------------------------------------------
Operating income 48,021 39,039 8,982 23.0
Operating income on consolidated net sales (%) 9.3 7.9
-----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets: (Millions of yen)
-----------------------------------------------------------------------------------------------------------------------------------
March 31, 2006 March 31, 2005 Change %
-----------------------------------------------------------------------------------------------------------------------------------
Office Solution Business 1,426,635 1,358,136 68,499 5.0
Industry Business 84,595 72,406 12,189 16.8
Other Business 114,925 125,278 -10,353 -8.3
Elimination -2,088 -10,174 8,086 -
Corporate assets 417,116 408,023 9,093 2.2
-----------------------------------------------------------------------------------------------------------------------------------
Total 2,041,183 1,953,669 87,514 4.5
-----------------------------------------------------------------------------------------------------------------------------------
Capital expenditures: (Millions of yen)
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change %
-----------------------------------------------------------------------------------------------------------------------------------
Office Solution Business 18,797 20,475 -1,678 -8.2
Industry Business 2,258 3,015 -757 -25.1
Other Business 666 1,734 -1,068 -61.6
Corporate 903 740 163 22.0
-----------------------------------------------------------------------------------------------------------------------------------
Total 22,624 25,964 -3,340 -12.9
-----------------------------------------------------------------------------------------------------------------------------------
Depreciation: (Millions of yen)
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change %
-----------------------------------------------------------------------------------------------------------------------------------
Office Solution Business 16,023 13,864 2,159 15.6
Industry Business 1,732 3,021 -1,289 -42.7
Other Business 640 837 -197 -23.5
Corporate 332 1,050 -718 -68.4
-----------------------------------------------------------------------------------------------------------------------------------
Total 18,727 18,772 -45 -0.2
-----------------------------------------------------------------------------------------------------------------------------------
Note: Effective from this financial period, our business segments are
reclassified into three categories, "Office Solution", "Industry" and "Other".
Accordingly, information for the previous corresponding period has been
reclassified to conform with the current classification.
22
(Year ended March 31, 2006 and 2005) (Millions of yen)
------------------------------------------------------------------------------------------------------------------
Year ended Year ended Change %
March 31, 2006 March 31, 2005
------------------------------------------------------------------------------------------------------------------
OFFICE SOLUTION BUSINESS:
Net sales:
Unaffiliated customers 1,637,228 1,531,428 105,800 6.9
Intersegment - - - -
Total 1,637,228 1,531,428 105,800 6.9
------------------------------------------------------------------------------------------------------------------
Operating expenses 1,434,279 1,335,059 99,220 7.4
------------------------------------------------------------------------------------------------------------------
Operating income 202,949 196,369 6,580 3.4
Operating income on sales in Office Solution Business (%) 12.4 12.8
------------------------------------------------------------------------------------------------------------------
INDUSTRY BUSINESS:
Net sales:
Unaffiliated customers 120,636 119,408 1,228 1.0
Intersegment 2,564 2,506 58 2.3
Total 123,200 121,914 1,286 1.1
------------------------------------------------------------------------------------------------------------------
Operating expenses 124,108 121,872 2,236 1.8
------------------------------------------------------------------------------------------------------------------
Operating income -908 42 -950 -
Operating income on sales in Industry Business (%) -0.7 0.0
------------------------------------------------------------------------------------------------------------------
OTHER BUSINESS:
Net sales:
Unaffiliated customers 157,226 163,272 -6,046 -3.7
Intersegment - - - -
Total 157,226 163,272 -6,046 -3.7
------------------------------------------------------------------------------------------------------------------
Operating expenses 151,114 167,431 -16,317 -9.7
------------------------------------------------------------------------------------------------------------------
Operating income 6,112 -4,159 10,271 -
Operating income on sales in Other Business (%) 3.9 -2.5
------------------------------------------------------------------------------------------------------------------
CORPORATE AND ELIMINATIONS:
Net sales:
Intersegment -2,564 -2,506 -58 -
Total -2,564 -2,506 -58 -
------------------------------------------------------------------------------------------------------------------
Operating expenses:
Intersegment -2,594 -2,475 -119 -
Corporate 56,169 56,715 -546 -
Total 53,575 54,240 -665 -
------------------------------------------------------------------------------------------------------------------
Operating income -56,139 -56,746 607 -
------------------------------------------------------------------------------------------------------------------
CONSOLIDATED:
Net sales:
Unaffiliated customers 1,915,090 1,814,108 100,982 5.6
Intersegment - - - -
Total 1,915,090 1,814,108 100,982 5.6
------------------------------------------------------------------------------------------------------------------
Operating expenses 1,763,076 1,678,602 84,474 5.0
------------------------------------------------------------------------------------------------------------------
Operating income 152,014 135,506 16,508 12.2
Operating income on consolidated net sales (%) 7.9 7.5
------------------------------------------------------------------------------------------------------------------
Identifiable assets: (Millions of yen)
------------------------------------------------------------------------------------------------------------------
March 31, 2006 March 31, 2005 Change %
------------------------------------------------------------------------------------------------------------------
Office Solution Business 1,426,635 1,358,136 68,499 5.0
Industry Business 84,595 72,406 12,189 16.8
Other Business 114,925 125,278 -10,353 -8.3
Elimination -2,088 -10,174 8,086 -
Corporate assets 417,116 408,023 9,093 2.2
------------------------------------------------------------------------------------------------------------------
Total 2,041,183 1,953,669 87,514 4.5
------------------------------------------------------------------------------------------------------------------
Capital expenditures: (Millions of yen)
------------------------------------------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005 Change %
------------------------------------------------------------------------------------------------------------------
Office Solution Business 90,383 70,638 19,745 28.0
Industry Business 7,451 8,509 -1,058 -12.4
Other Business 2,366 3,451 -1,085 -31.4
Corporate 1,854 2,103 -249 -11.8
------------------------------------------------------------------------------------------------------------------
Total 102,054 84,701 17,353 20.5
------------------------------------------------------------------------------------------------------------------
Depreciation: (Millions of yen)
------------------------------------------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005 Change %
------------------------------------------------------------------------------------------------------------------
Office Solution Business 57,326 53,439 3,887 7.3
Industry Business 6,631 7,450 -819 -11.0
Other Business 2,355 2,635 -280 -10.6
Corporate 1,156 3,272 -2,116 -64.7
------------------------------------------------------------------------------------------------------------------
Total 67,468 66,796 672 1.0
------------------------------------------------------------------------------------------------------------------
Note: Effective from this financial period, our business segments are
reclassified into three categories, "Office Solution", "Industry" and "Other".
Accordingly, information for the previous corresponding period has been
reclassified to conform with the current classification.
23
(2) Geographic Segment Information
(Three months ended March 31, 2006 and 2005) (Millions of yen)
------------------------------------------------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2006 March 31, 2005 Change %
------------------------------------------------------------------------------------------------------------------
JAPAN:
Net sales:
External customers 266,036 277,023 -10,987 -4.0
Intersegment 104,444 97,677 6,767 6.9
Total 370,480 374,700 -4,220 -1.1
------------------------------------------------------------------------------------------------------------------
Operating expenses 346,014 355,371 -9,357 -2.6
------------------------------------------------------------------------------------------------------------------
Operating income 24,466 19,329 5,137 26.6
Operating income on sales in Japan(%) 6.6 5.2
------------------------------------------------------------------------------------------------------------------
THE AMERICAS:
Net sales:
External customers 105,305 85,645 19,660 23.0
Intersegment 472 1,345 -873 -64.9
Total 105,777 86,990 18,787 21.6
------------------------------------------------------------------------------------------------------------------
Operating expenses 98,773 80,940 17,833 22.0
------------------------------------------------------------------------------------------------------------------
Operating income 7,004 6,050 954 15.8
Operating income on sales in the Americas(%) 6.6 7.0
------------------------------------------------------------------------------------------------------------------
EUROPE:
Net sales:
External customers 118,557 110,307 8,250 7.5
Intersegment 1,134 774 360 46.5
Total 119,691 111,081 8,610 7.8
------------------------------------------------------------------------------------------------------------------
Operating expenses 112,681 102,883 9,798 9.5
------------------------------------------------------------------------------------------------------------------
Operating income 7,010 8,198 -1,188 -14.5
Operating income on sales in Europe(%) 5.9 7.4
------------------------------------------------------------------------------------------------------------------
OTHER:
Net sales:
External customers 26,402 21,331 5,071 23.8
Intersegment 30,691 24,328 6,363 26.2
Total 57,093 45,659 11,434 25.0
------------------------------------------------------------------------------------------------------------------
Operating expenses 52,320 42,329 9,991 23.6
------------------------------------------------------------------------------------------------------------------
Operating income 4,773 3,330 1,443 43.3
Operating income on sales in Other(%) 8.4 7.3
------------------------------------------------------------------------------------------------------------------
CORPORATE AND ELIMINATIONS:
Net sales:
Intersegment -136,741 -124,124 -12,617 -
Total -136,741 -124,124 -12,617 -
------------------------------------------------------------------------------------------------------------------
Operating expenses: -141,509 -126,256 -15,253 -
------------------------------------------------------------------------------------------------------------------
Operating income 4,768 2,132 2,636 -
------------------------------------------------------------------------------------------------------------------
CONSOLIDATED:
Net sales:
External customers 516,300 494,306 21,994 4.4
Intersegment - - - -
Total 516,300 494,306 21,994 4.4
------------------------------------------------------------------------------------------------------------------
Operating expenses 468,279 455,267 13,012 2.9
------------------------------------------------------------------------------------------------------------------
Operating income 48,021 39,039 8,982 23.0
Operating income on consolidated net sales(%) 9.3 7.9
------------------------------------------------------------------------------------------------------------------
Identifiable assets: (Millions of yen)
--------------------------------------------------------------------------------
March 31, 2006 March 31, 2005 Change %
--------------------------------------------------------------------------------
Japan 1,220,780 1,187,190 33,590 2.8
The Americas 240,726 206,979 33,747 16.3
Europe 235,897 228,568 7,329 3.2
Other 79,102 66,319 12,783 19.3
Elimination -152,438 -143,410 -9,028 -
Corporate assets 417,116 408,023 9,093 2.2
--------------------------------------------------------------------------------
Total 2,041,183 1,953,669 87,514 4.5
--------------------------------------------------------------------------------
24
(Year ended March 31, 2006 and 2005) (Millions of yen)
-------------------------------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005 Change %
-------------------------------------------------------------------------------------------------------
JAPAN:
Net sales:
External customers 998,797 994,499 4,298 0.4
Intersegment 413,087 392,216 20,871 5.3
Total 1,411,884 1,386,715 25,169 1.8
-------------------------------------------------------------------------------------------------------
Operating expenses 1,312,655 1,298,640 14,015 1.1
-------------------------------------------------------------------------------------------------------
Operating income 99,229 88,075 11,154 12.7
Operating income on sales in Japan(%) 7.0 6.4
-------------------------------------------------------------------------------------------------------
THE AMERICAS:
Net sales:
External customers 385,746 322,975 62,771 19.4
Intersegment 7,630 7,486 144 1.9
Total 393,376 330,461 62,915 19.0
-------------------------------------------------------------------------------------------------------
Operating expenses 378,108 316,651 61,457 19.4
-------------------------------------------------------------------------------------------------------
Operating income 15,268 13,810 1,458 10.6
Operating income on sales in the Americas(%) 3.9 4.2
-------------------------------------------------------------------------------------------------------
EUROPE:
Net sales:
External customers 434,304 412,333 21,971 5.3
Intersegment 4,449 3,310 1,139 34.4
Total 438,753 415,643 23,110 5.6
-------------------------------------------------------------------------------------------------------
Operating expenses 417,341 391,271 26,070 6.7
-------------------------------------------------------------------------------------------------------
Operating income 21,412 24,372 -2,960 -12.1
Operating income on sales in Europe(%) 4.9 5.9
-------------------------------------------------------------------------------------------------------
OTHER:
Net sales:
External customers 96,243 84,301 11,942 14.2
Intersegment 104,045 89,647 14,398 16.1
Total 200,288 173,948 26,340 15.1
-------------------------------------------------------------------------------------------------------
Operating expenses 185,283 162,042 23,241 14.3
-------------------------------------------------------------------------------------------------------
Operating income 15,005 11,906 3,099 26.0
Operating income on sales in Other(%) 7.5 6.8
-------------------------------------------------------------------------------------------------------
CORPORATE AND ELIMINATIONS:
Net sales:
Intersegment -529,211 -492,659 -36,552 -
Total -529,211 -492,659 -36,552 -
-------------------------------------------------------------------------------------------------------
Operating expenses: -530,311 -490,002 -40,309 -
-------------------------------------------------------------------------------------------------------
Operating income 1,100 -2,657 3,757 -
-------------------------------------------------------------------------------------------------------
CONSOLIDATED:
Net sales:
External customers 1,915,090 1,814,108 100,982 5.6
Intersegment - - - -
Total 1,915,090 1,814,108 100,982 5.6
-------------------------------------------------------------------------------------------------------
Operating expenses 1,763,076 1,678,602 84,474 5.0
-------------------------------------------------------------------------------------------------------
Operating income 152,014 135,506 16,508 12.2
Operating income on consolidated net sales(%) 7.9 7.5
-------------------------------------------------------------------------------------------------------
Identifiable assets: (Millions of yen)
--------------------------------------------------------------------------------
March 31, 2006 March 31, 2005 Change %
--------------------------------------------------------------------------------
Japan 1,220,780 1,187,190 33,590 2.8
The Americas 240,726 206,979 33,747 16.3
Europe 235,897 228,568 7,329 3.2
Other 79,102 66,319 12,783 19.3
Elimination -152,438 -143,410 -9,028 -
Corporate assets 417,116 408,023 9,093 2.2
--------------------------------------------------------------------------------
Total 2,041,183 1,953,669 87,514 4.5
--------------------------------------------------------------------------------
25
7. SIGNIFICANT ACCOUNTING POLICIES (CONSOLIDATED)
1. CHANGE RELATING TO THE SCALE OF CONSOLIDATION AND THE APPLICATION OF THE
EQUITY METHOD FROM APRIL 1, 2005 TO MARCH 31, 2006.
Consolidated subsidiaries:
6 Additions
32 Removals
Companies accounted for by the equity method:
3 Removals
2. CONSOLIDATED ACCOUNTING POLICIES (SUMMARY)
(1) Principles of Consolidation
The consolidated financial statements include the accounts of Ricoh and its
consolidated subsidiaries. Investments in 20% to 50% owned companies when the
Company has the ability to exercise significant influence are accounted for on
the equity basis. All significant inter-company balances and transactions have
been eliminated in consolidation.
(2) Securities
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.
(3) Inventories
Inventories are mainly stated at the lower of average cost or market. Inventory
costs include raw materials, labor and manufacturing overheads.
(4) Plant and Equipment
Depreciation of plant and equipment is computed principally by using the
declining-balance method over the estimated useful lives. Most of the foreign
subsidiaries have adopted the straight-line method for computing depreciation.
Certain leased buildings, machinery and equipment are accounted for as capital
leases in conformity with SFAS No. 13, "Accounting for Leases."
(5) Goodwill and Other Intangible Assets
In conformity with SFAS No.142, Goodwill and intangible asset determined to have
an indefinite useful life are not amortized. SFAS No. 142 requires annual
impairment testing thereof.
(6) Pension and Retirement Allowances Plans
The measurement of pension costs and liabilities is determined in accordance
with SFAS No.87, "Employers' Accounting for Pensions." Under SFAS 87, changes in
the amount of either the projected benefit obligation or plan assets resulting
from actual results different from that assumed and from changes in assumptions
can result in gains and losses not yet recognized in the consolidated financial
statements. Amortization of an unrecognized net gain or loss is included as a
component of the net periodic benefit plan cost for a year if, as of the
beginning of the year, that unrecognized net gain or loss exceeds 10 percent of
the greater of (1) the projected benefit obligation or (2) the fair value of
that plan's assets. In such case, the amount of amortization recognized is the
resulting excess divided by the average remaining service period of active
employees expected to receive benefits under the plan. The expected long-term
rate of return on plan assets used for pension accounting is determined based on
the historical long-term rate of return on plan assets. The discount rate is
determined based on the rates of return of high-quality fixed-income investments
currently available and expected to be available during the period to maturity
of the pension benefits.
(7) Use of Estimates
Management of the Company has made a number of estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses,
including impairment losses of long-lived assets and the disclosures of fair
value of financial instruments and contingent assets and liabilities, to prepare
these financial statements in conformity with accounting principles generally
accepted in the United States of America. Actual results could differ from those
estimates.
26
8. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) FAIR VALUE OF MARKETABLE SECURITIES
The securities and the respective cost, gross unrealized holding gains, gross
unrealized holding losses and fair value as of March 31, 2006 and March 31, 2005
are as follows:
(Millions of yen)
-------------------------------------------------------------------------------------------------
March 31, 2006
-------------------------------------------------------------------------------------------------
Gross unrealized Gross unrealized
Cost holding gains holding losses Fair value
-------------------------------------------------------------------------------------------------
Current:
Corporate debt securities 161 - - 161
Other 1 - - 1
-------------------------------------------------------------------------------------------------
162 - - 162
-------------------------------------------------------------------------------------------------
Noncurrent:
Equity securities 8,034 15,716 37 23,713
Corporate debt securities 6,000 50 - 6,050
Other 171 - - 171
Nonmarketable securities (at cost) 6,485 - - 6,485
-------------------------------------------------------------------------------------------------
20,690 15,766 37 36,419
-------------------------------------------------------------------------------------------------
(Millions of yen)
-------------------------------------------------------------------------------------------------
March 31, 2005
-------------------------------------------------------------------------------------------------
Gross unrealized Gross unrealized
Cost holding gains holding losses Fair value
-------------------------------------------------------------------------------------------------
Current:
Corporate debt securities 137 - - 137
Other 1 - - 1
-------------------------------------------------------------------------------------------------
138 - - 138
-------------------------------------------------------------------------------------------------
Noncurrent:
Equity securities 7,479 9,021 49 16,451
Corporate debt securities 6,000 45 - 6,045
Other 1,229 480 - 1,709
Nonmarketable securities (at cost) 6,949 - - 6,949
-------------------------------------------------------------------------------------------------
21,657 9,546 49 31,154
-------------------------------------------------------------------------------------------------
(2) 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, 2006 and March 31, 2005 are as follows:
(Millions of yen)
--------------------------------------------------------------------------------
March 31, 2006
--------------------------------------------------------------------------------
Carrying Estimated
amount Fair value
--------------------------------------------------------------------------------
Interest rate swap agreements, net 1,175 1,175
Foreign currency contracts-net credit -1,147 -1,147
Currency options-net credit -270 -270
--------------------------------------------------------------------------------
Total -242 -242
--------------------------------------------------------------------------------
(Millions of yen)
--------------------------------------------------------------------------------
March 31, 2005
--------------------------------------------------------------------------------
Carrying Estimated
amount Fair value
--------------------------------------------------------------------------------
Interest rate swap agreements, net 1,683 1,683
Foreign currency contracts-net credit 181 181
Currency options -813 -813
--------------------------------------------------------------------------------
Total 1,051 1,051
--------------------------------------------------------------------------------
(3) TRANSACTIONS OF RICOH WITH AFFILIATES
(Millions of yen)
--------------------------------------------------------------------------------
March 31, 2006 March 31, 2005
--------------------------------------------------------------------------------
Account balances:
Receivables 3,493 3,416
Payables 2,706 2,964
--------------------------------------------------------------------------------
(Millions of yen)
--------------------------------------------------------------------------------
Year ended Year ended
March 31, 2006 March 31, 2005
--------------------------------------------------------------------------------
Transactions:
Sales 20,205 19,365
Purchases 25,617 27,286
Dividend income 1,175 1,154
--------------------------------------------------------------------------------
27
(4) SUBSEQUENT EVENTS
Sales of content distribution business
--------------------------------------
On April 3, 2006, the board of directors of our subsidiary, San-Ai Co., Ltd.
approved the plan to sell the content distribution business currently under the
control of Giga Networks Company, a division of San-Ai, to Mobile Alliance Co.,
Ltd., a subsidiary of Faith, Inc. Consummation of the sale is scheduled to occur
on May 31, 2006. The sale price is Yen 12.0 billion. The gain on the sale is to
be reported in our forecasted consolidated business results is expected to be
approximately Yen 5.0 billion, net of income tax effect.
The decision to sell the content distribution business was made based on Ricoh
Group's judgment that it would be best for San-Ai Co., Ltd. and Ricoh Group as a
whole if such business is able to grow and develop by meeting the expectation of
customers and business partners by becoming a part of the Faith group's business
and further improving the quality of services.
28
-APPENDIX A- (YEAR ENDED MARCH 31, 2006)
1. CONSOLIDATED QUARTERLY PERFORMANCE OUTLINE
(1)Financial Statements Summary (Quarterly)
(Billions of yen)
------------------------------------------------------------------------------------------------------------------------------
1Q Change(%) 2Q Change(%) 3Q Change(%) 4Q Change(%)
------------------------------------------------------------------------------------------------------------------------------
Net sales 452.9 3.8 470.0 7.0 475.7 7.2 516.3 4.4
Gross profit 194.7 2.9 193.5 10.8 201.1 4.7 210.2 5.8
Operating income 37.2 -5.3 29.6 61.3 37.0 -4.2 48.0 23.0
Income before income taxes 38.0 -7.8 31.3 67.0 38.7 11.7 48.0 18.3
Net income 23.7 -4.7 19.1 75.2 23.0 3.5 31.1 24.3
------------------------------------------------------------------------------------------------------------------------------
Net income per share (yen) 32.32 - 26.08 - 31.34 - 42.59 -
------------------------------------------------------------------------------------------------------------------------------
Total assets 1,899.9 - 1,948.5 - 1,990.8 - 2,041.1 -
Shareholders' equity 879.6 - 905.6 - 929.5 - 960.2 -
------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity per share (yen) 1,198.48 - 1,233.08 - 1,265.83 - 1,316.21 -
------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities 48.3 - 25.0 - 20.1 - 83.3 -
Cash flows from investing activities -36.0 - -25.8 - -29.3 - -28.8 -
Cash flows from financing activities -52.4 - 2.6 - 17.7 - -27.9 -
Cash and cash equivalents at end of period 144.6 - 148.0 - 154.8 - 187.0 -
------------------------------------------------------------------------------------------------------------------------------
(2) Capital expenditures and Depreciation
(Billions of yen)
--------------------------------------------------------------------------------
1Q 2Q 3Q 4Q
--------------------------------------------------------------------------------
Capital expenditures 34.7 23.4 21.2 22.6
Depreciation for tangible fixed assets 15.6 15.4 17.6 18.7
--------------------------------------------------------------------------------
(3) R&D Expenditures
(Billions of yen)
--------------------------------------------------------------------------------
1Q 2Q 3Q 4Q
--------------------------------------------------------------------------------
R&D expenditures 25.5 29.4 27.2 28.2
R&D expenditures / Total Sales (%) 5.6 6.3 5.7 5.5
--------------------------------------------------------------------------------
(4) Interest income (expenses) net
(Billions of yen)
--------------------------------------------------------------------------------
1Q 2Q 3Q 4Q
--------------------------------------------------------------------------------
Interest income (expenses) net -0.3 -0.4 -0.5 -0.9
--------------------------------------------------------------------------------
(5) Exchange Rate
--------------------------------------------------------------------------------
1Q 2Q 3Q 4Q
--------------------------------------------------------------------------------
Exchange rate (Yen/US$) 107.60 111.22 117.24 117.01
Exchange rate (Yen/EURO) 135.55 135.79 139.41 140.72
--------------------------------------------------------------------------------
A1
2. CONSOLIDATED SALES BY PRODUCT CATEGORY
(Three months ended March 31, 2006 and 2005) (Millions of yen)
-----------------------------------------------------------------------------------------------------------------------
Three months ended Three months ended Change excluding
March 31, 2006 March 31, 2005 Change % exchange mpact %
-----------------------------------------------------------------------------------------------------------------------
[Office Solution Business]
Imaging Solution Business 386,298 355,169 31,129 8.8 16,433 4.6
Percentage of net sales (%) 74.8 71.9
Domestic 152,818 153,134 -316 -0.2 -316 -0.2
Overseas 233,480 202,035 31,445 15.6 16,749 8.3
Network System Solution Business 56,663 61,671 -5,008 -8.1 -5,134 -8.3
Percentage of net sales (%) 11.0 12.4
Domestic 53,769 59,476 -5,707 -9.6 -5,707 -9.6
Overseas 2,894 2,195 699 31.8 573 26.1
Office Solution Business Total 442,961 416,840 26,121 6.3 11,299 2.7
Percentage of net sales (%) 85.8 84.3
Domestic 206,587 212,610 -6,023 -2.8 -6,023 -2.8
Overseas 236,374 204,230 32,144 15.7 17,322 8.5
The Americas 99,842 82,901 16,941 20.4 6,852 8.3
Europe 112,186 101,998 10,188 10.0 7,326 7.2
Other 24,346 19,331 5,015 25.9 3,144 16.3
-----------------------------------------------------------------------------------------------------------------------
[Industry Business]
Industry Business 32,462 34,557 -2,095 -6.1 -2,762 -8.0
Percentage of net sales (%) 6.3 7.0
Domestic 18,639 24,404 -5,765 -23.6 -5,765 -23.6
Overseas 13,823 10,153 3,670 36.1 3,003 29.6
The Americas 5,249 2,587 2,662 102.9 2,168 83.8
Europe 4,503 4,251 252 5.9 156 3.7
Other 4,071 3,315 756 22.8 679 20.5
-----------------------------------------------------------------------------------------------------------------------
[Other Business]
Other Business 40,877 42,909 -2,032 -4.7 -2,353 -5.5
Percentage of net sales (%) 7.9 8.7
Domestic 35,048 35,464 -416 -1.2 -416 -1.2
Overseas 5,829 7,445 -1,616 -21.7 -1,937 -26.0
The Americas 230 533 -303 -56.8 -326 -61.2
Europe 1,603 2,060 -457 -22.2 -495 -24.0
Other 3,996 4,852 -856 -17.6 -1,116 -23.0
-----------------------------------------------------------------------------------------------------------------------
Grand Total 516,300 494,306 21,994 4.4 6,184 1.3
Percentage of net sales (%) 100.0 100.0
Domestic 260,274 272,478 -12,204 -4.5 -12,204 -4.5
Percentage of net sales (%) 50.4 55.1
Overseas 256,026 221,828 34,198 15.4 18,388 8.3
Percentage of net sales (%) 49.6 44.9
The Americas 105,321 86,021 19,300 22.4 8,694 10.1
Percentage of net sales (%) 20.4 17.4
Europe 118,292 108,309 9,983 9.2 6,987 6.5
Percentage of net sales (%) 22.9 21.9
Other 32,413 27,498 4,915 17.9 2,707 9.8
Percentage of net sales (%) 6.3 5.6
-----------------------------------------------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 117.01 Yen 104.60 Yen 12.41
EURO 1 Yen 140.72 Yen 137.26 Yen 3.46
Each category includes the following product line:
Imaging Solution Business Digital PPCs, color PPCs, digital duplicators,
facsimile machines, analog PPCs, diazo copiers,
scanners, MFPs(multifunctional printers), laser
printers and software
Network System Solution Personal computers, PC servers, network systems
Business and network related software
Industry Business Thermal media, optical equipments, semiconductors,
electronic component and measuring equipments
Other Business Optical discs and digital camera
A2
(Year ended March 31, 2006 and 2005) (Millions of yen)
-----------------------------------------------------------------------------------------------------------------------
Year ended Year ended Change excluding
March 31, 2006 March 31, 2005 Change % exchange impact %
-----------------------------------------------------------------------------------------------------------------------
[Office Solution Business]
Imaging Solution Business 1,446,635 1,332,299 114,336 8.6 83,873 6.3
Percentage of net sales (%) 75.5 73.4
Domestic 585,363 564,163 21,200 3.8 21,200 3.8
Overseas 861,272 768,136 93,136 12.1 62,673 8.2
Network System Solution Business 190,593 199,129 -8,536 -4.3 -8,800 -4.4
Percentage of net sales (%) 10.0 11.0
Domestic 181,149 192,304 -11,155 -5.8 -11,155 -5.8
Overseas 9,444 6,825 2,619 38.4 2,355 34.5
Office Solution Business Total 1,637,228 1,531,428 105,800 6.9 75,073 4.9
Percentage of net sales (%) 85.5 84.4
Domestic 766,512 756,467 10,045 1.3 10,045 1.3
Overseas 870,716 774,961 95,755 12.4 65,028 8.4
The Americas 368,184 312,188 55,996 17.9 37,566 12.0
Europe 412,550 385,689 26,861 7.0 18,775 4.9
Other 89,982 77,084 12,898 16.7 8,687 11.3
-----------------------------------------------------------------------------------------------------------------------
[Industry Business]
Industry Business 120,636 119,408 1,228 1.0 10 0.0
Percentage of net sales (%) 6.3 6.6
Domestic 72,379 80,833 -8,454 -10.5 -8,454 -10.5
Overseas 48,257 38,575 9,682 25.1 8,464 21.9
The Americas 17,391 10,112 7,279 72.0 6,408 63.4
Europe 16,049 15,338 711 4.6 435 2.8
Other 14,817 13,125 1,692 12.9 1,621 12.4
-----------------------------------------------------------------------------------------------------------------------
[Other Business]
Other Business 157,226 163,272 -6,046 -3.7 -6,775 -4.1
Percentage of net sales (%) 8.2 9.0
Domestic 133,185 135,675 -2,490 -1.8 -2,490 -1.8
Overseas 24,041 27,597 -3,556 -12.9 -4,285 -15.5
The Americas 1,837 3,297 -1,460 -44.3 -1,504 -45.6
Europe 6,201 7,879 -1,678 -21.3 -1,783 -22.6
Other 16,003 16,421 -418 -2.5 -998 -6.1
-----------------------------------------------------------------------------------------------------------------------
Grand Total 1,915,090 1,814,108 100,982 5.6 68,308 3.8
Percentage of net sales (%) 100.0 100.0
Domestic 972,076 972,975 -899 -0.1 -899 -0.1
Percentage of net sales (%) 50.8 53.6
Overseas 943,014 841,133 101,881 12.1 69,207 8.2
Percentage of net sales (%) 49.2 46.4
The Americas 387,412 325,597 61,815 19.0 42,470 13.0
Percentage of net sales (%) 20.2 17.9
Europe 434,800 408,906 25,894 6.3 17,427 4.3
Percentage of net sales (%) 22.7 22.5
Other 120,802 106,630 14,172 13.3 9,310 8.7
Percentage of net sales (%) 6.3 6.0
-----------------------------------------------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 113.26 Yen 107.58 Yen 5.68
EURO 1 Yen 137.86 Yen 135.25 Yen 2.61
Each category includes the following product line:
Imaging Solution Business Digital PPCs, color PPCs, digital
duplicators, facsimile machines, analog PPCs,
diazo copiers, scanners, MFPs(multifunctional
printers), laser printers and software
Network System Solution Business Personal computers, PC servers, network
systems and network related software
Industry Business Thermal media, optical equipments,
semiconductors, electronic component and
measuring equipments
Other Business Optical discs and digital camera
A3
3. CONSOLIDATED SALES BY PREVIOUS PRODUCT CATEGORY
(Three months ended March 31, 2006 and 2005) (Millions of yen)
------------------------------------------------------------------------------------------------------------------------------------
Three months ended Three months ended Change excluding
March 31, 2006 March 31, 2005 Change % exchange impact %
------------------------------------------------------------------------------------------------------------------------------------
[Office Equipment]
Imaging Solutions:
Digital Imaging Systems 141,860 142,583 -723 -0.5 -6,968 -4.9
Percentage of net sales (%) 27.5 28.8
Domestic 56,223 60,962 -4,739 -7.8 -4,739 -7.8
Overseas 85,637 81,621 4,016 4.9 -2,229 -2.7
Other Imaging Systems 37,765 37,592 173 0.5 -1,209 -3.2
Percentage of net sales (%) 7.3 7.7
Domestic 12,532 12,989 -457 -3.5 -457 -3.5
Overseas 25,233 24,603 630 2.6 -752 -3.1
Total Imaging Solutions 179,625 180,175 -550 -0.3 -8,177 -4.5
Percentage of net sales (%) 34.8 36.5
Domestic 68,755 73,951 -5,196 -7.0 -5,196 -7.0
Overseas 110,870 106,224 4,646 4.4 -2,981 -2.8
------------------------------------------------------------------------------------------------------------------------------------
Network Input/Output Systems:
Printing Systems 217,034 184,704 32,330 17.5 24,784 13.4
Percentage of net sales (%) 42.0 37.4
Domestic 85,994 81,243 4,751 5.8 4,751 5.8
Overseas 131,040 103,461 27,579 26.7 20,033 19.4
Other Input/Output Systems 2,079 4,486 -2,407 -53.7 -2,427 -54.1
Percentage of net sales (%) 0.4 0.9
Domestic 938 1,326 -388 -29.3 -388 -29.3
Overseas 1,141 3,160 -2,019 -63.9 -2,039 -64.5
Total Network Input/Output Systems 219,113 189,190 29,923 15.8 22,357 11.8
Percentage of net sales (%) 42.4 38.3
Domestic 86,932 82,569 4,363 5.3 4,363 5.3
Overseas 132,181 106,621 25,560 24.0 17,994 16.9
------------------------------------------------------------------------------------------------------------------------------------
Network System Solutions 58,177 63,326 -5,149 -8.1 -5,275 -8.3
Percentage of net sales (%) 11.3 12.7
Domestic 55,283 61,131 -5,848 -9.6 -5,848 -9.6
Overseas 2,894 2,195 699 31.8 573 26.1
------------------------------------------------------------------------------------------------------------------------------------
Office Equipment Total 456,915 432,691 24,224 5.6 8,905 2.1
Percentage of net sales (%) 88.5 87.5
Domestic 210,970 217,651 -6,681 -3.1 -6,681 -3.1
Overseas 245,945 215,040 30,905 14.4 15,586 7.2
The Americas 102,809 85,853 16,956 19.8 6,547 7.6
Europe 116,600 106,523 10,077 9.5 7,115 6.7
Other 26,536 22,664 3,872 17.1 1,924 8.5
------------------------------------------------------------------------------------------------------------------------------------
[Other Businesses]
Other Businesses 59,385 61,615 -2,230 -3.6 -2,721 -4.4
Percentage of net sales (%) 11.5 12.5
Domestic 49,304 54,827 -5,523 -10.1 -5,523 -10.1
Overseas 10,081 6,788 3,293 48.5 2,802 41.3
The Americas 2,512 168 2,344 1,395.2 2,147 1,278.0
Europe 1,692 1,786 -94 -5.3 -128 -7.2
Other 5,877 4,834 1,043 21.6 783 16.2
------------------------------------------------------------------------------------------------------------------------------------
Grand Total 516,300 494,306 21,994 4.4 6,184 1.3
Percentage of net sales (%) 100.0 100.0
Domestic 260,274 272,478 -12,204 -4.5 -12,204 -4.5
Percentage of net sales (%) 50.4 55.1
Overseas 256,026 221,828 34,198 15.4 18,388 8.3
Percentage of net sales (%) 49.6 44.9
The Americas 105,321 86,021 19,300 22.4 8,694 10.1
Percentage of net sales (%) 20.4 17.4
Europe 118,292 108,309 9,983 9.2 6,987 6.5
Percentage of net sales (%) 22.9 21.9
Other 32,413 27,498 4,915 17.9 2,707 9.8
Percentage of net sales (%) 6.3 5.6
------------------------------------------------------------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 117.01 Yen 104.60 Yen 12.41
EURO 1 Yen 140.72 Yen 137.26 Yen 3.46
Each category includes the following product line:
Digital Imaging Systems Digital PPCs, color PPCs, digital duplicators and
facsimile machines
Other Imaging Systems Analog PPCs, diazo copiers, and thermal paper
Printing Systems MFPs (multifunctional printers), laser printers and
software
Other Input/Output Systems Optical discs and system scanners
Network System Solutions Personal computers, PC servers, network systems and
network related software
Other Businesses Optical equipments, metering equipments and
semiconductors
A4
(Year ended March 31, 2006 and 2005) (Millions of yen)
-----------------------------------------------------------------------------------------------------------------------
Year ended Year ended Change excluding
March 31, 2006 March 31, 2005 Change % exchange impact %
-----------------------------------------------------------------------------------------------------------------------
[Office Equipment]
Imaging Solutions:
Digital Imaging Systems 558,149 559,023 -874 -0.2 -13,428 -2.4
Percentage of net sales (%) 29.1 30.8
Domestic 222,421 231,526 -9,105 -3.9 -9,105 -3.9
Overseas 335,728 327,497 8,231 2.5 -4,323 -1.3
Other Imaging Systems 151,338 156,074 -4,736 -3.0 -7,596 -4.9
Percentage of net sales (%) 7.9 8.6
Domestic 57,966 59,371 -1,405 -2.4 -1,405 -2.4
Overseas 93,372 96,703 -3,331 -3.4 -6,191 -6.4
Total Imaging Solutions 709,487 715,097 -5,610 -0.8 -21,024 -2.9
Percentage of net sales (%) 37.0 39.4
Domestic 280,387 290,897 -10,510 -3.6 -10,510 -3.6
Overseas 429,100 424,200 4,900 1.2 -10,514 -2.5
-----------------------------------------------------------------------------------------------------------------------
Network Input/Output Systems:
Printing Systems 778,845 655,328 123,517 18.8 107,561 16.4
Percentage of net sales (%) 40.7 36.1
Domestic 315,169 283,141 32,028 11.3 32,028 11.3
Overseas 463,676 372,187 91,489 24.6 75,533 20.3
Other Input/Output Systems 9,941 15,508 -5,567 -35.9 -5,618 -36.2
Percentage of net sales (%) 0.5 0.9
Domestic 3,048 3,247 -199 -6.1 -199 -6.1
Overseas 6,893 12,261 -5,368 -43.8 -5,419 -44.2
Total Network Input/Output Systems 788,786 670,836 117,950 17.6 101,943 15.2
Percentage of net sales (%) 41.2 37.0
Domestic 318,217 286,388 31,829 11.1 31,829 11.1
Overseas 470,569 384,448 86,121 22.4 70,114 18.2
-----------------------------------------------------------------------------------------------------------------------
Network System Solutions 196,833 205,895 -9,062 -4.4 -9,326 -4.5
Percentage of net sales (%) 10.3 11.3
Domestic 187,389 199,070 -11,681 -5.9 -11,681 -5.9
Overseas 9,444 6,825 2,619 38.4 2,355 34.5
-----------------------------------------------------------------------------------------------------------------------
Office Equipment Total 1,695,106 1,591,828 103,278 6.5 71,593 4.5
Percentage of net sales (%) 88.5 87.7
Domestic 785,993 776,355 9,638 1.2 9,638 1.2
Overseas 909,113 815,473 93,640 11.5 61,955 7.6
The Americas 381,109 324,853 56,256 17.3 37,226 11.5
Europe 428,933 403,574 25,359 6.3 16,986 4.2
Other 99,071 87,046 12,025 13.8 7,743 8.9
-----------------------------------------------------------------------------------------------------------------------
[Other Businesses]
Other Businesses 219,984 222,280 -2,296 -1.0 -3,285 -1.5
Percentage of net sales (%) 11.5 12.3
Domestic 186,083 196,620 -10,537 -5.4 -10,537 -5.4
Overseas 33,901 25,660 8,241 32.1 7,252 28.3
The Americas 6,303 744 5,559 747.2 5,244 704.8
Europe 5,867 5,332 535 10.0 441 8.3
Other 21,731 19,584 2,147 11.0 1,567 8.0
-----------------------------------------------------------------------------------------------------------------------
Grand Total 1,915,090 1,814,108 100,982 5.6 68,308 3.8
Percentage of net sales (%) 100.0 100.0
Domestic 972,076 972,975 -899 -0.1 -899 -0.1
Percentage of net sales (%) 50.8 53.6
Overseas 943,014 841,133 101,881 12.1 69,207 8.2
Percentage of net sales (%) 49.2 46.4
The Americas 387,412 325,597 61,815 19.0 42,470 13.0
Percentage of net sales (%) 20.2 17.9
Europe 434,800 408,906 25,894 6.3 17,427 4.3
Percentage of net sales (%) 22.7 22.5
Other 120,802 106,630 14,172 13.3 9,310 8.7
Percentage of net sales (%) 6.3 6.0
-----------------------------------------------------------------------------------------------------------------------
Reference: Exchange rate
US$ 1 Yen 113.26 Yen 107.58 Yen 5.68
EURO 1 Yen 137.86 Yen 135.25 Yen 2.61
Each category includes the following product line:
Digital Imaging Systems Digital PPCs, color PPCs, digital duplicators and
facsimile machines
Other Imaging Systems Analog PPCs, diazo copiers, and thermal paper
Printing Systems MFPs(multifunctional printers), laser printers and
software
Other Input/Output Systems Optical discs and system scanners
Network System Solutions Personal computers, PC servers, network systems and
network related software
Other Businesses Optical equipments, metering equipments and
semiconductors
A5
4. FORECAST OF CONSOLIDATED SALES BY PRODUCT CATEGORY
(Billions of yen)
-----------------------------------------------------------------------------------------------------------------------------------
Year ending March 31, 2007 Half year ending September 30, 2006
---------------------------------------- ----------------------------------------
Year ended Change Change Change Change
Mar. 31, '06 Forecast % Forecast(*) % Forecast % Forecast(*) %
-----------------------------------------------------------------------------------------------------------------------------------
[Office Solution Business]
Imaging Solution Business 1,446.6 1,564.5 8.1 1,553.1 7.4 739.8 6.7 724.1 4.5
Domestic 585.3 608.5 4.0 608.5 4.0 293.9 1.6 293.9 1.6
Overseas 861.2 956.0 11.0 944.6 9.7 445.9 10.4 430.2 6.5
Network system Solution
Business 190.5 202.1 6.0 202.1 6.0 98.3 5.5 98.3 5.5
Domestic 181.1 190.4 5.1 190.4 5.1 93.0 4.5 93.0 4.5
Overseas 9.4 11.7 23.9 11.7 23.9 5.3 27.2 5.3 27.2
Office Solution Business Total 1,637.2 1,766.6 7.9 1,755.2 7.2 838.1 6.6 822.4 4.6
Domestic 766.5 798.9 4.2 798.9 4.2 386.9 2.3 386.9 2.3
Overseas 870.7 967.7 11.1 956.3 9.8 451.2 10.6 435.5 6.7
The Americas 368.1 409.0 11.1 404.0 9.7 191.5 9.8 182.4 4.6
Europe 412.5 456.5 10.7 450.2 9.1 211.1 10.5 204.7 7.1
Other 89.9 102.2 13.6 102.1 13.5 48.6 14.0 48.4 13.6
-----------------------------------------------------------------------------------------------------------------------------------
[Industry Business]
Industry Business 120.6 129.0 6.9 128.7 6.7 61.9 5.9 61.3 4.9
Domestic 72.3 73.4 1.4 73.4 1.4 36.2 0.3 36.2 0.3
Overseas 48.2 55.6 15.2 55.3 14.6 25.7 14.8 25.1 12.1
The Americas 17.3 21.3 22.5 21.2 21.9 9.1 10.7 8.7 5.8
Europe 16.0 17.3 7.8 17.1 6.5 8.6 15.1 8.4 12.4
Other 14.8 17.0 14.7 17.0 14.7 8.0 19.6 8.0 19.6
-----------------------------------------------------------------------------------------------------------------------------------
[Other Business]
Other Business 157.2 154.4 -1.8 154.4 -1.8 77.0 -1.6 77.0 -1.6
Domestic 133.1 127.7 -4.1 127.7 -4.1 63.9 -4.1 63.9 -4.1
Overseas 24.0 26.7 11.1 26.7 11.1 13.1 12.3 13.1 12.3
The Americas 1.8 3.2 74.2 3.2 74.2 1.7 28.7 1.7 28.7
Europe 6.2 6.6 6.4 6.6 6.4 3.7 29.3 3.7 29.3
Other 16.0 16.9 5.6 16.9 5.6 7.7 2.9 7.7 2.9
-----------------------------------------------------------------------------------------------------------------------------------
Grand Total 1,915.0 2,050.0 7.0 2,038.3 6.4 977.0 5.8 960.7 4.1
Domestic 972.0 1,000.0 2.9 1,000.0 2.9 487.0 1.3 487.0 1.3
Overseas 943.0 1,050.0 11.3 1,038.3 10.1 490.0 10.8 473.7 7.1
The Americas 387.4 433.5 11.9 428.4 10.6 202.3 10.0 192.8 4.8
Europe 434.8 480.4 10.5 473.9 9.0 223.4 10.9 216.8 7.6
Other 120.8 136.1 12.7 136.0 12.6 64.3 13.2 64.1 12.9
-----------------------------------------------------------------------------------------------------------------------------------
* Excluding foreign exchange impact
Reference: Year ended Mar. 31, '06 Year ending Mar. 31, '07 Half year ending Sept. 30, '06
Exchange rate (Results) (Forecast) (Forecast)
US$ 1 Yen 113.26 Yen 115.00 Yen 115.00
EURO 1 Yen 137.86 Yen 140.00 Yen 140.00
Each category includes the following product line:
Imaging Solution Business Digital PPCs, color PPCs, digital
duplicators, facsimile machines, analog PPCs,
diazo copiers, scanners, MFPs
(multifunctional printers), laser printers
and software
Network System Solution Business Personal computers, PC servers, network
systems and network related software
Industry Business Thermal media, optical equipments,
semiconductors, electronic component and
measuring equipments
Other Business Optical discs and digital camera
A6
-APPENDIX B-
[SCHEDULE 1] CONSOLIDATED PERFORMANCE
-----------------------------------------------------------------------------------
Year ended Year ended Year ended
March 31, 2004 March 31, 2005 March 31, 2006
-----------------------------------------------------------------------------------
Net sales (left axis) 1,780.2 1,814.1 1,915.0
Net income (right axis) 91.7 83.1 97.0
Return on equity (right axis) 12.6 10.0 10.6
Return on assets (right axis) 7.7 7.1 7.8
Net income per share (left axis) 123.63 112.64 132.33
-----------------------------------------------------------------------------------
[SCHEDULE 2] CONSOLIDATED SALES BY PRODUCT LINE
-----------------------------------------------------------------------------------
Year ended Year ended Year ended
March 31, 2004 March 31, 2005 March 31, 2006
-----------------------------------------------------------------------------------
Imaging Solution Business 1,276.6 1,332.2 1,446.6
Network System Solution Business 188.5 199.1 190.5
Industry Business 106.6 119.4 120.6
Other Business 208.4 163.2 157.2
-----------------------------------------------------------------------------------
Imaging Solution Business 71.7 73.4 75.5
Network System Solution Business 10.6 11.0 10.0
Industry Business 6.0 6.6 6.3
Other Business 11.7 9.0 8.2
Total 100.0 100.0 100.0
-----------------------------------------------------------------------------------
[SCHEDULE 3] CONSOLIDATED SALES BY GEOGRAPHIC AREA
-----------------------------------------------------------------------------------
Year ended Year ended Year ended
March 31, 2004 March 31, 2005 March 31, 2006
-----------------------------------------------------------------------------------
Japan 914.0 972.9 972.0
The Americas 326.3 325.5 387.4
Europe 402.3 408.9 434.8
Others 137.4 106.6 120.8
-----------------------------------------------------------------------------------
Japan (%) 51.3 53.6 50.8
The Americas (%) 18.3 17.9 20.2
Europe (%) 22.6 22.5 22.7
Others (%) 7.8 6.0 6.3
Total 100.0 100.0 100.0
-----------------------------------------------------------------------------------
[SCHEDULE 4] GEOGRAPHIC SEGMENT
-----------------------------------------------------------------------------------
Year ended Year ended Year ended
Japan March 31, 2004 March 31, 2005 March 31, 2006
-----------------------------------------------------------------------------------
Net sales (Billions of yen) 1,313.1 1,386.7 1,411.8
Operating income (Billions of yen) 97.3 88.0 99.2
Operating income on net sales (%) 7.4 6.4 7.0
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Year ended Year ended Year ended
The Americas March 31, 2004 March 31, 2005 March 31, 2006
-----------------------------------------------------------------------------------
Net sales (Billions of yen) 320.7 330.4 393.3
Operating income (Billions of yen) 15.4 13.8 15.2
Operating income on net sales (%) 4.8 4.2 3.9
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Year ended Year ended Year ended
Europe March 31, 2004 March 31, 2005 March 31, 2006
-----------------------------------------------------------------------------------
Net sales (Billions of yen) 404.4 415.6 438.7
Operating income (Billions of yen) 22.0 24.3 21.4
Operating income on net sales (%) 5.4 5.9 4.9
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Year ended Year ended Year ended
Others March 31, 2004 March 31, 2005 March 31, 2006
-----------------------------------------------------------------------------------
Net sales (Billions of yen) 193.3 173.9 200.2
Operating income (Billions of yen) 10.4 11.9 15.0
Operating income on net sales (%) 5.4 6.8 7.5
-----------------------------------------------------------------------------------