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KONICA MINOLTA HOLDINGS, INC. ANNUAL REPORT 2004
Breakthrough integration

Table of contents

  • Page 1
    Breakthrough integration KONICA MINOLTA HOLDINGS, INC. ANNUAL REPORT 2004

  • Page 2
    ... a holding company, Konica Minolta Holdings, Inc., founded on the concept of creating an entirely new corporate group. The new integrated company is seeking to maximize corporate value by adopting portfolio-based strategies in the fields of business technologies, optics, photo imaging, medical and...

  • Page 3
    Consolidated Financial Highlights Konica Minolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended March 31, 2004 and 2003 KONICA MINOLTA HOLDINGS, INC. 2004 Millions of yen Thousands of U.S. dollars (Note 1) 2004 2003 2004 For the Year: Net sales Operating income Net ...

  • Page 4
    To Our Shareholders 2

  • Page 5
    ... fiscal 2003, the fiscal year ended March 31, 2004. In the fiscal year under review, Konica Minolta implemented a number of innovative initiatives in response to the challenges the Company faced and in an effort to become a highly respected corporate group to all stakeholders. We are among the first...

  • Page 6
    ... & CEO Konica Minolta's medium-term management integration plan provides guidelines for maximizing the benefits of management integration, and is scheduled for completion in the fiscal year ending March 31, 2007. The plan was formulated to clarify the Group's fundamental management strategies and...

  • Page 7
    ... business portfolio management. 2. Promote Groupwide corporate governance focusing on transparency. 3. Promote Groupwide R&D strategies and ensure penetration of the Konica Minolta brand in the field of imaging. 4. Promote performance-oriented human resource policies. 5. Enhance corporate social...

  • Page 8
    ...multifunctional peripherals (MFPs), high-speed MFPs, and color laser printers (LBPs). Our goal is to evolve from simply a supplier of hardware equipment to a total solutions provider. We will make optimal use of Konica Minolta's technical expertise, accumulated over many years, and our sales network...

  • Page 9
    ... to Konica Minolta Photo Imaging, Inc. While conducting comprehensive cost reductions, we will develop unique cameras leveraging our unrivalled lens and anti-shake, superior auto-focusing technologies. Through these means, we aim to restructure our Photo Imaging business and to secure a platform...

  • Page 10
    ... former Minolta's competitive advantage in glass lenses, lens drive systems and zoom technologies. In combining the strengths of each company, we are able to meet highly extensive customer needs with high-value-added products and create new markets in which we maintain an overwhelming market share...

  • Page 11
    ... improve the Company's financial position and have reduced interest-bearing debt to ¥268 billion as of March 31, 2004. On the other hand, in order to secure acceptable growth, we recognize the need for capital and R&D investment, particularly in the Business Technologies and Optics businesses. Our...

  • Page 12
    ... dividend policy in relation to management integration. A. Our goals are to increase corporate value and to consistently raise business performance for the benefit of all our stakeholders, including our shareholders. The Company's medium- to long-term policy on profit sharing is to provide stable...

  • Page 13
    ... n In August 2003, the Konica Minolta Group announced details of its fundamental management policy. Under its current format, and based on this fundamental policy, Konica Minolta formulated its medium-term management integration plan, covering the period from April 1, 2004 through March 31, 2007. In...

  • Page 14
    ...Management Integration Plan Konica Minolta has identified three underlying initiatives as the basis for its medium-term management integration plan: • business portfolio management • the swift realization of synergy and integration benefits • the creation of a new corporate culture Net sales...

  • Page 15
    ...-generation optical pickup lenses through efficient technology investment. Second, we will increase our business scale and profitability in lens units and camera units for digital cameras and mobile phones. Third, Konica Minolta will work to accelerate the business development of high-value-added...

  • Page 16
    Business Technologies 800 (Billions of yen) Net sales (Billions of yen) Operating income and Operating income ratio 150 (Billions of yen) (%) 16 12 8 600 400 200 0 '03 '04 '07 Mar '03 Mar '04 Mar '07 Target 100 Net sales...income ratio Photo Imaging 300 (Billions of yen) Net sales (Billions ...

  • Page 17
    ... digital X-ray image input/output systems help expand demand for dry film. The Company is working to develop its solutions business and to expand activities in contrast media and medical supplies. In graphic imaging, Konica Minolta strives to expand sales of its color proofing systems in Japan and...

  • Page 18
    ...• New HR system for managers • New HR system for general staff HR management • HR career database • HR development Employee Visions Konica Minolta values people who...are committed to sharing corporate goals of becoming a global company with market leadership in the imaging business domain...

  • Page 19
    Company President Interviews 1 K o n i c a M i n o l t a B u s i n e s s Te c h n o l o g i e s , I n c . Yoshikatsu Ota President Our goal is to strategically develop a leading position in target regions and business segments such as color MFPs, high-speed MFPs, and color LBPs. Furthermore, we ...

  • Page 20
    ... by which to achieve our medium-term management integration plan, which was designed to maximize the benefits of integration. Our goal is to strategically develop a leading position in target regions and business segments such as color MFPs, high-speed MFPs, and color LBPs. Furthermore, we look to...

  • Page 21
    ... utilizing office equipment, and graphic printing sales channels. duce minute lines, characters, photos, illustrations, and half-tones with greater precision and richness and at a lower cost. For these reasons, this product is held in high regard by the market and we are seeing an increasing number...

  • Page 22
    ...03 '04 Plan '05 Plan '06 Plan Note: Calendar years With the rationalization of sales bases and elimination of duplication, we have also experienced cost savings and increased efficiency. On an even more positive note, we are excited by the launch of Konica Minolta's new brand for MFPs, bizhub, and...

  • Page 23
    Company President Interviews 2 Konica Minolta Opto, Inc. Takashi Matsumaru President Our goal is to become the world's leading optics manufacturer, backed by our superior technology to garner the unwavering trust of customers. 21

  • Page 24
    ... as demand for mobile phones equipped with cameras continues to surge. As the shift toward digital cameras takes hold, sales of lens units in the component business also climb. Backed by the technological and competitive advantage we enjoy in each of our four business fields, essential in an era of...

  • Page 25
    ... in line with trends and market demand for blue-lasers. At the same time, we will pursue additional cost reductions and increased productivity. year ended March 31, 2004, the Optics business recorded significant increases in sales of lens units for mobile phones, lens units for digital cameras, and...

  • Page 26
    ...employees Main products: Digital cameras, film cameras, film scanners, film, inkjet media, on-line lab, ID photo system, planetarium equipment, etc. 24.8 % 6,878 Medical and Graphic Imaging Share of Group total sales Number of employees Main products: X-ray image processing systems, X-ray film...

  • Page 27
    ... best-of-breed technologies and expertise. In the graphic imaging field, Konica Minolta supports higher work efficiency through full-color proofing systems compatible with digital technology for high-quality, high-speed processing. Business activities: The Sensing business offers optimal measuring...

  • Page 28
    ... B magicolor 2300DL bizhub C350 8050 In the fiscal year under review, Konica Minolta accelerated efforts to implement its genre top strategies to secure a leading position in specific regions and business fields such as color MFPs, high-speed MFPs, and color LBPs. At the same time, we continued...

  • Page 29
    ...world-class optical technologies, we supply aspherical plastic lenses that are used in optical pickup mechanisms for a variety of optical disk drives and players. Lens Units for Digital Cameras and Camcorders Konica Minolta continued to maintain a strong performance in its core optical pickup lens...

  • Page 30
    ... Imaging P Dynax 7 Inkjet Photo Paper DiMAGE A2 CENTURIA Super 400 DiMAGE X50 R2 Super Digital Minilab System In photographic materials, Konica Minolta worked diligently to capitalize on strong sales in overseas markets of its R1 SUPER minilab system, to maintain and expand sales and profit...

  • Page 31
    ... graphic imaging, Konica Minolta worked to expand film sales in overseas markets with a focus on Asia. In Japan, to respond to the ongoing market transition to filmless solutions, the Company is endeavoring to expand sales in the high-end market with its Digital Konsensus Pro digital color proofing...

  • Page 32
    Sensing S CR-400 Lightweight colorimeter VIVID 9 i Non-contact 3-D digitizer Capturing images in a camera-like way, the VIVID 9i is capable of processing image data from 3-D objects. CA-210 Display color analyzer Solid sales of the CA-210 display color analyzer, which is used to control PC ...

  • Page 33
    ... Philosophy and leadership Objectives of CSR Environmental Social Management system Compliance Disclosure Assessment and feedback Establishment of a pure holding company; adoption of a board-withcommittees system; organization of various other Group committees Annual report; corporate profile...

  • Page 34
    ... manner. By increasing corporate value derived from superior results, we will reward our fellow shareholders in keeping with their expectations. To achieve these objectives as a Group and to establish the most suitable structure, Konica Minolta shifted to a holding company system, and chose a board...

  • Page 35
    Board of Directors Konica Minolta Holdings, Inc. As of June 25, 2004 KONICA MINOLTA HOLDINGS, INC. 2004 Chairman of the Board of Directors Tomiji Uematsu Directors Fumio Iwai Yoshikatsu Ota Kikuo Fujiwara Senior Corporate Advisor, Shimadzu Corporation President & CEO, Representative Executive ...

  • Page 36
    ... companies. Based on the management philosophy of "The Creation of New Value," the Konica Minolta Group aims to engage in thorough business portfolio management; implement highly transparent corporate governance; promote its technology strategies and instill the Konica Minolta brand in the imaging...

  • Page 37
    ... business, the Konica Minolta Group is aggressively acquiring and using patents related to high resolution and high reliability in the core technological fields of color MFP, color LBP, high-speed MFP, light production printing, polymerized toner and other chemical products, and network solutions...

  • Page 38
    ..., enhance competitiveness, and secure earnings. From the viewpoint of ensuring business continuity and freedom in R&D, the Konica Minolta Group promotes cross-licensing strategies when it is necessary to use intellectual property rights owned by other companies in fields where technology is...

  • Page 39
    ... affect the management of the Konica Minolta Group. 3. Photo Imaging 27% 4. Medical & Graphic Imaging 7% 5. Sensing 2% 6. Basic and new technologies 10% 3 2 Accordingly, as of March 31, 2004, the number of U.S. patents held by the Business Technologies business and the Optics business were more...

  • Page 40
    ... Konica Minolta Group are organized and segmented by the similarity of the products and the markets in which the products are sold. The six business segments in which the Group operates include: Business Technologies; Optics; Photo Imaging; Medical and Graphic Imaging; Sensing, and Other Businesses...

  • Page 41
    ... of basic research totaled ¥8.2 billion. Business Technologies Optics Photo Imaging Medical & Graphic Imaging Sensing Other Businesses Cash Flows +8.5 -0.8 +1.8 -0.6 -0.1 0.0 -4.1 -0.2 -0.5 -0.2 -0.1 -3.7 In the fiscal year ended March 31, 2004, net cash provided by operating activities...

  • Page 42
    ... 178,721 5,069,250 Property, Plant and Equipment: Land Buildings and structures Machinery, equipment and other Tools and furniture Construction-in-progress Rental business-use assets Total property, plant and equipment Less: Accumulated depreciation Property, plant and equipment, net 38,514 171,117...

  • Page 43
    KONICA MINOLTA HOLDINGS, INC. 2004 Millions of yen Thousands of U.S. dollars (Note 3) Liabilities and Shareholders' Equity 2004 2003 2004 Current Liabilities: Short-term debt (Note 6) Current portion of long-term debt (Note 6) Notes and accounts payable-trade Accrued expenses Accrued income ...

  • Page 44
    Consolidated Statements of Income Konica Minolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended March 31, 2004 and 2003 Millions of yen Thousands of U.S. dollars (Note 3) 2004 2003 2004 Net Sales Cost of Sales Gross profit Selling, General and Administrative Expenses ...

  • Page 45
    ...' Equity Konica Minolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended March 31, 2004 and 2003 KONICA MINOLTA HOLDINGS, INC. 2004 Millions of yen Shares of issued common stock Common stock Additional paid-in capital Retained earnings Unrealized gains on securities Foreign...

  • Page 46
    ... used in investing activities Cash Flows from Financing Activities: Net short-term debt Proceeds from long-term debt Redemption of long-term debt Redemption of bonds Proceeds from capital increase from minority interest Payment for repurchase of treasury stocks Proceeds from sale of treasury stocks...

  • Page 47
    ... consolidated financial statements of Konica Minolta Holdings, Inc. (the "Company") and its subsidiaries (together, referred to as the "Companies") are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects to the application and...

  • Page 48
    ... a portion of its lump-sum payment plan to a defined contribution pension plan, pursuant to Financial Accounting Standards Implementation Guidance No.1 "Accounting for Transfers between Retirement Benefit Plans" issued by the Accounting Standards Board of Japan, and "Report of Practical Issues No...

  • Page 49
    KONICA MINOLTA HOLDINGS, INC. 2004 directors and corporate auditors as a result of the business integration with Minolta and its subsidiaries and the adoption of a new corporate governance structure including the Companies' compensation, nomination and audit committee during the current fiscal year...

  • Page 50
    ... ¥38,492 2003 ¥32,246 2004 $364,197 The annual maturities of long-term debt as of March 31, 2004 are as follows: Years ending March 31 Millions of yen Thousands of U.S. dollars 2004 2003 2004 Gross deferred tax assets: Excess of reserve for retirement benefits over deductible limit ¥ 33,194...

  • Page 51
    ... defined benefit retirement plans that include corporate defined benefit pensions plans (CDBPs), which are governed by the Japanese Welfare Pension Insurance Law, tax-qualified pension plans, and lump-sum payment plans. In addition, the Company may pay additional retirement benefits to employees at...

  • Page 52
    ... liabilities at March 31, 2004. The assets to be transferred from the Konica lump-sum payment plan to a defined contribution plan was recorded as other long-term liabilities at March 31, 2003. Net pension expenses related to the retirement benefits for the year ended March 31, 2004 and 2003 are as...

  • Page 53
    KONICA MINOLTA HOLDINGS, INC. 2004 13. Derivatives The Companies enter into derivative transactions including forward foreign currency exchange contracts, interest rate swaps and commodity swaps to hedge against the adverse effects of fluctuations in foreign currency exchange rates, interest rates ...

  • Page 54
    ... business segments. Business segment information of the Companies for the years ended March 31, 2004 and 2003 is presented as follows: Business segment Business Technologies: Optics: Photo Imaging: Medical and Graphic Imaging: Sensing: Other: Related business segment products Copy machines, printers...

  • Page 55
    ... ¥515,956 - - 28,497 21,625 Thousands of U.S. dollars (Note 3) Business Technologies Photo Imaging Medical and Graphic Imaging Elimination and Corporate Optics Sensing Other Total Consolidation 2004: Net sales Outside Intersegment Total Operating expenses Operating income Assets Depreciation...

  • Page 56
    ...(Note 3) Japan North America Europe Asia and Other Total Eliminations and Corporate Consolidation 2004: Net sales Outside Intersegment...Europe ...Germany, France and U.K. Asia and Other ...Australia, China and Singapore 2. "Overseas sales" represents sales recognized outside of Japan by the Companies...

  • Page 57
    ... the consolidated financial position of Konica Minolta Holdings, Inc. and its subsidiaries as of March 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan. As described...

  • Page 58
    ... Taiwan Sanseiki* Sales Companies Konica Minolta Business Solutions Japan Co., Ltd. F&M Imaging Technology Co., Ltd. Konica Minolta Business Solutions (UK) Ltd. Konica Minolta Business Solutions Australia Pty. Ltd. Konica Minolta Business Solutions Italia S.p.A. Konica Manufacturing (HK) Ltd. Konica...

  • Page 59
    ... HOLDINGS, INC. 2004 Konica Minolta Optical Technologies (SHANGHAI) Co., Ltd. Konica Minolta Optical Products (SHANGHAI) Co., Ltd. Guang Dong Konica Minolta Camera Co., Ltd.* (Plus 3 others) Sales Companies Konica Minolta Marketing Corporation Konica Minolta ID System Co., Ltd. Konica Minolta ID...

  • Page 60
    ... 31, 2004 Konica Minolta Holdings, Inc. 1- 6-1 Marunouchi, Chiyoda-ku, Tokyo 100 - 0005, Japan Tel: Fax: URL: Established (81) 3-6250-2100 (81) 3- 3218-1368 http://konicaminolta.com August, 2003 Paid-in Capital ¥37,519 million (US$354 million) Number of Employees Parent company: 134, Group...

  • Page 61
    ... the terms and conditions of the trust, it retains the right to dictate the exercise of voting rights. 3. Although significant shareholder reports from the following companies claim that they hold substantial numbers of shares in Konica Minolta Holdings, Inc. as of the fiscal year-end the Company is...

  • Page 62
    1-6-1 Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan Tel. (81) 3-6250-2100 Fax (81) 3-3218-1368 http://konicaminolta.com This report is printed on recycled paper. Printed with ink made from aroma-free soy bean oil. Printed in Japan