Konica Minolta 2005 Annual Report Download

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ANNUAL REPORT 2005
KONICA MINOLTA HOLDINGS, INC.

Table of contents

  • Page 1
    KONICA MINOLTA HOLDINGS, INC. A NNUAL R EPORT 2005

  • Page 2
    ... a comprehensive imaging business-from input to output. Moreover, the new Group is pursuing a portfolio-oriented management strategy based on five business domains-business technologies, optics, photo imaging, medical and graphic imaging and sensing. The Konica Minolta Group has annual sales of over...

  • Page 3
    ... Corporate Social Responsibility (CSR) Corporate Governance Financial Section Net Sales (Billions of Yen) 1,200 80 2 5 14 16 19 22 24 25 26 28 29 34 53 54 56 56 57 Operating Income (Billions of Yen) Intellectual Property Update Independent Auditors' Report 900 60 The Konica Minolta Group Board...

  • Page 4
    ... IT and personnel systems as well as operating locations proceeding largely as outlined in the Konica Minolta Group's original medium-term integration plan. Unfortunately, however, it will be difficult to achieve the business performance goals previously set for fiscal 2005, ending March 2006, which...

  • Page 5
    ... in the operating environment. REVIEW OF THE PAST YEAR Fiscal 2004, ended March 31, 2005 was a difficult year. While the Group worked to implement business portfolio management policies in keeping with Konica Minolta's basic group management strategy, consolidated sales for the Group were ¥1,067...

  • Page 6
    ...-2009) (Billions of Yen) 600 450 300 150 0 in Wuxi, China to expand equipment manufacturing capacity and new facilities for increased polymerized toner production capacity in Japan in response to the ongoing shift to color products. In addition, we are investing to increase direct sales capacity...

  • Page 7
    ... V-5 PLAN ,410 billion and roup sales of ¥1 G e ev hi ac to s 2009, aim , ending March Konica Minolta 08 20 l ca fis by Minolta e of ¥145 billion to make Konica operating incom n" io at tr en nc co g "selection and through ongoin corporate group. an even stronger ROUP FUNDAMENTAL G MANAGEMENT...

  • Page 8
    ...of the V-5 Plan Share of Total Sales (Fiscal year ended March 2005) 1% 12% 1% 53% 25% ¥1,067 Billion 8% Business Technologies Optics Photo Imaging Medical and Graphic Imaging Sensing Other Breakthrough Growth Means...Konica Minolta aims to become an even stronger corporate group through further...

  • Page 9
    ... work to apply its optical and other core technologies in other profit generating areas. In the Medical and Graphic Imaging business, the Group will pursue growth in digital input/output equipment and dry film sales, leveraging the growing trend toward digital and networked equipment in the medical...

  • Page 10
    ... (Billions of Yen) 1,000 750 500 250 0 2003 2004 2005 2009 (Plan) Color MFP / Monochrome MFP Unit Sales (Thousands units) 800 600 400 200 0 COMPETITIVENESS IN BUSINESS TECHNOLOGIES PRODUCES RESULTS Since the integration of Konica and Minolta, the Group has worked to meld the strengths of both...

  • Page 11
    ... strategic bizhub C450. In the LBP market, as competition has intensified further in mainly the low-speed color LBP market segment in Europe and the U.S., the Group aims to strengthen its product lineup in the high speed product segment. In terms of marketing, the key is manufacturer direct selling...

  • Page 12
    ...-Dataquest (May 2005) GJ05203 Source: Gartner-Dataquest (May 2005) GJ05203 Group aims to focus on the segment 2 and above color MFPs and to strengthen its direct sales workforce in the major markets of Europe, the U.S. and Japan, while at the same time expanding its dealer network. ENHANCING COST...

  • Page 13
    ...patents on products for next generation DVDs in order to raise the barriers to market entry, the products' compatibility with peripheral devices is being strengthened. High performance products such as micro lens units for camera-equipped mobile phones and microcamera modules enjoy a good reputation...

  • Page 14
    ...high value-added products, and intends to thoroughly implement other policies to stem the flow of red ink. In the camera business, the Group is developing new businesses leveraging its technological strengths, such as Konica Minolta's proprietary anti-shake, auto-focus and zoom technologies. Camera...

  • Page 15
    ... and production speed has become a major management issue, particularly in color MFP, given the rapid expansion of the market. In the Optics business, the sharing of the pre-merger companies' technologies and sales channels has resulted in increased sales opportunities. Manufacturers that were...

  • Page 16
    .... Business Technologies Main Products: MFPs, LBPs, facsimile machines, consumables, software, system solutions, service. 800 600 400 200 0 Net Sales 594.5 625.8 (Billions of Yen) 564.8 2003 2004 2005 Optics Main Products: Optical pickup lenses, lens units, microcamera units, TAC film for...

  • Page 17
    ... digital cameras, Konica Minolta markets products with unique features made possible with proprietary innovative technologies such as anti-shake and folded optical zoom lens unit technologies. In the digital photo field, Konica Minolta provides online photo processing services and inkjet paper that...

  • Page 18
    ..., the Group aims to establish the Business Technologies business as a major creator of earnings and cash flow in keeping with its status as a core business of the Group. Total MFP Unit Sales By Region (Fiscal year ended March 2005) Asia Others 26.2% Japan 9.7% North America 25.4% Europe 38.7% 16

  • Page 19
    ...Technologies Sales Trend (Billions of Yen) 1,000 800 600 400 200 0 In fiscal 2004, ended March 2005, the emphasis in the MFP business was on expanding sales of high value-added products such as color models and high-speed monochrome models, where the Group worked to maintain and expand market share...

  • Page 20
    .... The current driver of the Group's genre-top strategy is the bizhub C450, which was marketed in the spring of 2005. Featuring bizhub open API platform firmware and compatibility with various office network environments, it is Konica Minolta's strategic color MFP product. As sales in Japan have been...

  • Page 21
    ... products continues to expand, Konica Minolta intends to leverage its industry leading design and production technology capabilities in this area to capture leading market shares in next generation products, with the aim of establishing itself as the world's most formidable optical device company...

  • Page 22
    ... actively promoted sales of products with highly functional features in the domestic market based on Konica Minolta's proprietary technology in micro lens units and microcamera modules for camera-equipped mobile phones, including mega pixel class high image quality auto-focus and optical zoom lenses...

  • Page 23
    ...growth for next generation optical pickup lenses. As the barriers to market entry in this segment are high, Konica Minolta intends to establish the leading market share in this segment based on its technological strengths. In the LCD-use TAC film market, the Group foresees continued growth in demand...

  • Page 24
    ... the diffusion of digital cameras, the silver halide film and camera related market continues to shrink. The Group thus plans to scale back the size of its photo sensitive materials business, while shifting emphasis in digital cameras to higher value-added products. In addition, the Group will work...

  • Page 25
    ... film market and unit price declines in digital cameras. As a result, consolidated sales for the Photo Imaging business in fiscal year ended March 2005 were ¥268.5 billion, while the operating loss was ¥8.7 billion. * The DYNAX 7D is marketed as Maxxum 7D in North America and α-7 DIGITAL in Japan...

  • Page 26
    ... Minolta's medical imaging products meet such digital and networking needs, the medical imaging business saw strong sales growth centering on the digital X-ray film reader series and the recorded image output series, in addition to the dry film used in this equipment. In January 2005, Konica Minolta...

  • Page 27
    ...) March 2009 (Projected) Net Sales Operating Income ¥5.3 1.6 ¥12.0 4.0 Hiroshi Furukawa President, Konica Minolta Sensing, Inc. REVIEW OF FISCAL 2004 Sensing Sales Trend (Billions of Yen) 12 9 6 3 0 The emphasis for fiscal 2004, ended March 2005, in the main color measurement business was on...

  • Page 28
    ... in imaging business domains. As a result, the Group has created a Charter of Corporate Behavior standard upon which individual employees base their daily activities and work to continuously improve each activity. This continuous improvement is what generates trust in the Konica Minolta Group by...

  • Page 29
    ...of the Economy, Society and the Environment Corporate Value Enhancement Stakeholder Communications Reviewing Operational and Non-Operational Policies V-5 Plan Execution SOCIAL RESPONSIBILITY PROMOTION FRAMEWORK The Konica Minolta Group has established a CSR Promotion Committee that is chaired by...

  • Page 30
    ... Assign Group Executive Officers' Meetings Report Corporate Audit Division Konica Minolta Holdings' Executive Committee Executive Officers Committees by Function Investment and business assessment, technology and brand strategies, crisis control, compliance, etc. Board of Directors President...

  • Page 31
    ... Review Intellectual Property Update Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements Report of Independent Auditors The Konica Minolta Group Board...

  • Page 32
    ... of the Konica Minolta Group are organized and segmented by type of product and the markets in which these products are sold, and consist of six segments: Business Technologies, Optics, Photo Imaging, Medical and Graphic Imaging, Sensing, and Other Businesses. YEAR-ON-YEAR COMPARISONS The financial...

  • Page 33
    ... in the digital camera market. As profitability in the film business, which is the major source of earnings for the segment, deteriorated further, the operating loss in the segment increased as compared to previous fiscal year. Medical and Graphic Imaging segment sales in actual terms were slightly...

  • Page 34
    ...Optics Photo Imaging Medical and Graphic Imaging 10.0 7.5 5.0 2.5 0 1,000 750 500 250 0 Sensing Other Total 2003 2004 2005 Interest Coverage Ratio (times) 16 12 8 4 0 2003 2004 2005 LIQUIDITY AND FINANCIAL POSITION Total Assets, Liabilities and Shareholders' Equity Total assets at the end...

  • Page 35
    ... Plan, the Group's medium-term business plan, are to further reduce interest-bearing debt to ¥145.0 billion by the fiscal year ending March 31, 2009 and to improve the debt/equity ratio to 0.25 times. In the interest of enhancing the Company's credit rating, Konica Minolta will continue working to...

  • Page 36
    ...the Photo Imaging business from film and other photosensitive materials to new dry printing systems, and is actively acquiring patents related to digital imaging input/output and image optimization. Konica Minolta already holds numerous valuable patents for unique materials and manufacturing methods...

  • Page 37
    ... Anti-Shake technology, and folded optics technologies that allow flat and compact product design. (4) Medical & Graphic Imaging In the Medical imaging field, the Group is positioning for film-less business development by actively acquiring patents related to digital imaging input/output equipment...

  • Page 38
    .... In the Photo Imaging business, moreover, the Group is promoting the PASS standard in conjunction with Fuji Photo Film Co., Ltd. and Eastman Kodak Company for easier digital storage, printing, viewing and sharing of images. 3. ACQUISITION AND MANAGEMENT OF INTELLECTUAL PROPERTY, TRADE SECRET...

  • Page 39
    ... the Group continues to promote stronger patent application policies for polymerized toner, a core technology essential to the business strategy. As shown in the chart at the left, the Group has steadily accumulated patent rights in Japan and in the extensive U.S. market, providing a strong support...

  • Page 40
    ...,611 186,656 5,053,804 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 36,374 175...

  • Page 41
    ...term liabilities Total long-term liabilities 1,189 3,926 21,196 154,044 922 3,925 25,397 148,076 11,072 36,558 197,374 1,434,435 64,688 63,044 52,916 64,915 602,365 587,057 Minority Interests 1,720 1,242 16,016 Shareholders' Equity (Note 9): Common stock: Authorized-1,200,000,000 shares in 2005...

  • Page 42
    CONSOLIDATED STATEMENTS OF INCOME Konica Minolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended March 31, 2005 and 2004 Thousands of U.S. dollars (note 3) 2005 Millions of yen 2005 2004 Net Sales Cost of Sales (Note 8) Gross profit Selling, General and Administrative ...

  • Page 43
    ... Konica Minolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended March 31, 2005 and 2004 Millions of yen Unrealized Foreign currency Retained gains (losses) translation Treasury earnings on securities adjustments stock Shares of issued common stock Common stock Additional...

  • Page 44
    ... of property, plant and equipment, net (Gain) loss on sales or write-down of investment securities, net Amortization of unrecognized transition benefit obligation Prior periods' expenses of accrued retirement benefits for directors and corporate auditors Additional contribution on withdrawals from...

  • Page 45
    ... For the fiscal years ended March 31, 2005 and 2004 1. BASIS OF PRESENTING FINANCIAL STATEMENTS On April 1, 2003, the former Konica Corporation spun off its operating activities and shifted to a holding company structure. Shortly thereafter, Konica Minolta Holdings, Inc. was established on...

  • Page 46
    ... be required to pay on condition that all eligible directors and corporate auditors had retired at the year-end date. The Companies amended their internal rules on retirement benefits of directors and corporate auditors as a result of the business integration between former Konica, Minolta and their...

  • Page 47
    ... of March 31, 2005 (1) Other Securities with Quoted Market Values Millons of yen Market value at the consolidated Unrealized balance gains or sheet date losses Securities for which the amounts in the consolidated balance sheets do not exceed the original purchase value (1) Shares (2) Other Subtotal...

  • Page 48
    ... as collateral for short-term debt, longterm debt and guarantees as of March 31, 2005 and 2004 are as follows: Millions of yen 2005 2004 Thousands of U.S. dollars 2005 Property, plant and equipment ¥887 ¥3,092 $8,260 Deferred tax assets relating to net losses carried forward are recorded...

  • Page 49
    ...and 2004 are as follows: Millions of yen 2005 2004 Thousands of U.S. dollars 2005 Buildings and structures ¥ 6,098 ¥ 7,346 $ 56,784 Machinery, equipment and other 9,725 4,401 90,558 Tools and furniture 19,111 20,463 177,959 Rental business-use assets 6,913 9,045 64,373 Intangible assets 813 1,187...

  • Page 50
    ... were generated. 2. Certain subsidiaries use a simplified method for the calculation of benefit obligation. 3. The transition from a portion of the Minolta lump-sum payment plan to a defined contribution pension plan resulted in the following changes for the year ended March 31, 2005: Millons of yen...

  • Page 51
    ... impact on the Companies results. Risk control system on derivative instruments In order to manage the market and credit risks, the Finance Division of the Company is responsible for setting or managing the position limits and credit limits under the Company's internal policies for derivative...

  • Page 52
    ...) value Contract value (notional principal amount) Thousands of U.S. dollars 2005 Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) Interest-rate swaps: Receive fixed, pay floating Pay fixed, receive floating Total ¥ - 6,943 ¥ - (36) ¥(36) ¥ - (36) ¥(36) ¥1,056...

  • Page 53
    ...Optics: Photo Imaging: Medical and Graphic Imaging: Sensing: Other: Related business segment products Copy machines, printers and others Optical devices, electronic materials and others Photographic film and materials, ink-jet products, cameras and others X-ray or graphic film, equipment for medical...

  • Page 54
    ... than Japan are as follows: North America ...U.S.A. and Canada Europe ...Germany, France and U.K. Asia and Other ...Australia, China and Singapore (3) Overseas Sales Millions of yen Thousands of U.S. dollars Percentage of net sales 2005: Sales to North America Europe Asia and Other 2004: Sales to...

  • Page 55
    ..., the consolidated financial position of Konica Minolta Holdings, Inc. and its subsidiaries as of March 31, 2005 and 2004, 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. The amounts...

  • Page 56
    ...in Japan) Lithuania Netherlands Norway Norway Norway Poland Portugal Romania Slovakia Slovenia Spain Sweden U.K. U.K. U.K. Ukraine Australia Australia Australia Australia Australia Australia China China China China (Hong Kong) Malaysia Singapore Optics COUNTRY BUSINESS COMPANY Konica Minolta Opto...

  • Page 57
    ... Japan Japan Japan Japan Japan Japan Brazil Canada U.S.A. U.S.A. Czech France Germay Netherlands Poland Russia Sweden Switzerland U.K. Australia Canada China (Hong Kong) Malaysia Singapore Thailand SALES COMPANIES Konica Minolta Graphic Imaging Japan Co., Ltd. Konica Minolta Medical & Graphic...

  • Page 58
    ...Hideki Okamura Director, Konica Minolta Business Technologies, Inc. President, Konica Minolta Business Solutions Europe GmbH Tel: (81) 3-6250-2011 Fax: (81) 3-3218-1362 E-mail: [email protected] Kaoru Onodera Masanori Hondo In charge of Corporate Accounting, Corporate Finance, and IT...

  • Page 59
    ... shares held Fidelity Investments Japan Limited Capital Research and Management Company (Joint holding) Morgan Stanley Japan Limited (Joint holding) February 28, 2005 March 31, 2005 November 30, 2004 20,866 18,607 11,832 3.9% 3.5% 2.2% Stock Price Chart (yen) 2.000 1,600 1,200 (thousand shares...

  • Page 60
    KONICA MINOLTA HOLDINGS, INC. 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