Konica Minolta 2006 Annual Report Download

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ANNUAL REPORT 2006
KONICA MINOLTA HOLDINGS, INC.

Table of contents

  • Page 1
    KONICA MINOLTA HOLDINGS, INC. A NNUAL R EPORT 2006

  • Page 2
    ... 16 Business Technologies 18 Optics 20 Medical and Graphic Imaging 22 Sensing Photo Imaging 23 Inkjet Business 24 Corporate Social Responsibility (CSR) 26 Corporate Governance 27 Financial Section 32 Intellectual Property Update 51 Independent Auditors' Report 52 The Konica Minolta Group 54 Board of...

  • Page 3
    1

  • Page 4
    TO OUR SHAREHOLDERS 2

  • Page 5
    ... shrinkage in demand for color film amid intensifying competition in digital cameras. We therefore decided to exit the camera business as of March 2006 and to gradually shrink photo-related businesses with the aim of discontinuing all operations in the Photo Imaging business by the end of...

  • Page 6
    ... and services businesses group" and the "components business group" • Concentrate on growth fields and thoroughly implement the "genre-top" strategy • Create new business models by strengthening network and solution implementation capabilities for customers 2. Build a new corporate image...

  • Page 7
    ... two drive wheels What sort of initiatives do you plan to build a new corporate image and to promote corporate social responsibility (CSR) management? In terms of a new corporate image, we aim to be a business partner that leads the way to business success for customers. The Konica Minolta Group...

  • Page 8
    ... was seen in the European and U.S. markets. By the fiscal year ending March 2009, the Konica Minolta Group plans to ensure a worldwide market share of 25%, and market shares of over 30% in Europe and the U.S. in sales of segment 2 and above color MFP. MFP Unit Shipments (2005 MFP Shipments as an...

  • Page 9
    ...competitiveness. Our toner, which is superior in terms of image quality, cost and durability, is compatible with monochrome or color, and low speed or high speed applications. In addition, as we have disclosed over 700 related patents in Japan alone, we believe this is a significant barrier to entry...

  • Page 10
    ... the total of the high speed MFP segment reported under Business Technologies business and the graphic imaging segment excluding film. Production Printing Sales Plan (excluding film) (Billions of Yen) 1,200 +275% 900 600 +60% 300 0 2006 2009 CTP-related products Production printing units 8

  • Page 11
    ... Ended March 31 2006 Actual 2007 Plan 2008 Plan (Billions of Yen) 2009 Plan Business Technologies Optics Medical and Graphic Imaging Others Segment Total Photo Imaging HD Others, Elimination and Corporate Group Total Net sales Operating income Net sales Operating income Net sales Operating income...

  • Page 12
    ... lens business, products for DVD recorders are growing, while we do not believe the DVD-related market as a whole will see much growth. Instead, high growth is expected in next-generation pickup lenses. Konica Minolta has already completed technology development for the Blu-ray Disk (BD) format...

  • Page 13
    ... collective Group resources to evolve the business model • Build businesses that provide value-added services Toner cartridges, Printers/MFP, Light production, Maintenance, (Solutions) Services Production printing Toner/ink/plates/paper, Proofers, Light production, Maintenance Printing Medical...

  • Page 14
    .... In addition, a 100%owned investment company (umbrella company) was established in China in an effort to strengthen the Konica Minolta Group's marketing network for further business development. Japan (Other than Japan) Asia 2004 2005 Unit Shipments Color MFP Unit Shipments (Fiscal Year ended...

  • Page 15
    ... America North American Market: In addition to color MFP where Konica Minolta has already established a position in the top group in terms of market share, the Group plans to establish a solid market position in the commercial printing area through emphasis on expanding sales of mediumand high-speed...

  • Page 16
    ... carefully monitor the activities of the Board of Directors. The system also functioned in our decision to exit the Photo Imaging business. As both Konica and Minolta have been continually involved in the camera and photo businesses from their establishment, the decision to exit was not an easy one...

  • Page 17
    ...2006) 18.7% 29.3% Business Technologies Optics Medical and Graphic Imaging Photo Imaging Others Japan North America Europe Asia, Other 26.3% 25.7% BUSINESS TECHNOLOGIES Main Products: MFPs, LBPs, facsimile machines, consumables, software, system solutions, service. 800 600 400 200 0 Net Sales...

  • Page 18
    ...high speed digital MFP bizhub PRO 920 is leading the on-demand age in the light production printing market. Polymerized toner The high performance magicolor 5450 color laser printer combines high speed polymerized toner and proprietary image processing technology to achieve a superior level of high...

  • Page 19
    ... was added to the Group's lineup in the medium- to high-speed segment of the monochrome MFP market where competition is intensifying. Further, concerning the light production printing segment where growth is expected from in-house printing divisions of large corporations, data centers and major...

  • Page 20
    ... TAC film Glass substrates for hard disks Optical pickup lenses A product of Konica Minolta's ultra precise technology, optical pickup lenses used in products such as CD, DVD, and MO drives command leading global market shares. 18 Microcamera units for mobile phones Containing proprietary...

  • Page 21
    ... compatible with high vision and hard disk drive-equipped VCR products. Given the above, consolidated sales for the Optics business in the fiscal year ended March 2006 were ¥110.4 billion, while operating income was ¥17.6 billion. Takashi Matsumaru President Konica Minolta Opto, Inc. Net Sales...

  • Page 22
    ... Digital Color Printer LD-5100 The report integration-type picture archiving communication system (PACS) and radiology information system (RIS) realize the integration of image information and medical charts. 20 A high performance, low cost solution for on-demand high-speed digital color printing

  • Page 23
    ... in high-end digital color proofing systems, while favorable sales were recorded in Japan and overseas for light digital printing equipment. In addition, the Group acquired American Litho Inc., a major printing plate manufacturer in the U.S., in October 2005, and worked to expand the plate business...

  • Page 24
    ... has decided to exit the Photo Imaging business in phases by the end of September 2007. At the end of March 2006, a portion of the camera production assets related to the development, design and production of digital single lens reflex (SLR) cameras was transferred to Sony Corporation. As a result...

  • Page 25
    ...makes print heads and ink the two pillars of inkjet technology. The Group therefore intends to develop the market for inkjet applications in addition to building a high revenue base for the component's business. "Nassenger V" Digital Inkjet Textile Print System Utilizes Konica Minolta's proprietary...

  • Page 26
    ... the two cornerstones of Konica Minolta's CSR. In the Group's "FORWARD08" medium-term management plan which was created to pave the way for a new growth phase, one basic philosophy is the "promotion of world-class CSR management". Within this philosophy, particular emphasis is on the slogan "to be...

  • Page 27
    ... is seldom visible in big cities. Since we completed the first planetarium in 1958, the Group has provided "a dream world of starry skies and outer space" to many people throughout the world for approximately half a century. In addition, by using Konica Minolta's mobile planetariums, events can be...

  • Page 28
    ... ensuring that legal, corporate code of ethics and company regulations are observed, and an executive officer designated by the Board of Directors is responsible for maintaining the Group's compliance system. The Group has already established the "Konica Minolta Group Charter of Corporate Behavior...

  • Page 29
    ... 39 Consolidated Statements of Shareholders' Equity 40 Consolidated Statements of Cash Flows 41 Notes to the Consolidated Financial Statements 51 Report of Independent Auditors 52 The Konica Minolta Group 54 Board of Directors and Executive Officers 54 Corporate Data 55 Investor Information 27

  • Page 30
    ...are organized and segmented by type of product and the markets in which these products are sold. These five segments are: Business Technologies, Optics, Photo Imaging, Medical and Graphic Imaging and Other Businesses. In addition, the Group decided to exit the Photo Imaging business in stages by the...

  • Page 31
    ...less processes. Sales limited to a slight decline from the previous fiscal year and operating income increased year-on-year particularly as the result of a special emphasis on film sales in the Asian region. Photo Imaging sales reflected the Group's decision in January 2006 to exit the business and...

  • Page 32
    ...A loss of ¥2.5 billion was also recorded related to the equity in investment losses arising from the decision to exit the Photo Imaging business. Moreover...for income before taxes, while the net loss for the period was ¥54.3 billion. The net loss per share of common stock was ¥102.29, while ROE was...

  • Page 33
    ... manufacturing line for the Group's third TAC film plant. Medical and Graphic Imaging-related expenditure was ¥6.7 billion and included the acquisition of American Litho Inc., a major U.S. plate manufacturer, as part of efforts for an early expansion in the plate business. In Photo Imaging, capital...

  • Page 34
    ... Medical and Graphic Imaging Inkjet-Related Businesses Shared Fundamental and Advanced Technology Area In Business Technologies, the Group has industry-leading product competitiveness in color MFP and color LBP where market expansion is accelerating based on the strength of polymerized toners...

  • Page 35
    ... of Licensing-Related Activities The Group is effectively utilizing the large number of intellectual property rights it holds to ensure product differentiation and competitive advantage, and thereby ensure business profitability in each related business. On the other hand, in business domains where...

  • Page 36
    ... Group is also emphasizing the accumulation of patent applications for next-generation blue laser pickup lenses where future expectations are high. 900 600 300 0 02 03 04 05 06 Firmware Color Image Processing Technology Polymerized Toner High Speed Printing Technology Network Solutions Technology...

  • Page 37
    ... of the market, the Group is working to ensure that a specific number of patent applications in China are made in key business domains and is promoting the acquisition of effective patent rights. 8. Risk Response As of the date of this report, the Group was not involved in any intellectual property...

  • Page 38
    ... SHEETS Konica Minolta Holdings, Inc. and Consolidated Subsidiaries March 31, 2006 and 2005 Thousands of U.S. dollars (Note 3) March 31 2005 2006 Millions of yen March 31 2006 Assets Current Assets: Cash on hand and in banks (Note 4) Notes and accounts receivable -trade Marketable securities...

  • Page 39
    ...Shareholders' Equity (Note 9, 17): Common stock: Authorized-1,200,000,000 shares in 2006 and 2005 Issued-531,664,337 shares in 2006 and 2005 Additional paid-in capital Less: Treasury stock, at cost; Common stock, 825,124 shares in 2006 and 719,416 shares in 2005 Retained earnings Unrealized gains on...

  • Page 40
    ... million (US$ 33,783 thousand) related to the Photo Imaging business and accelerated depreciation charges of ¥1,223 million (US$ 11,388 thousand) for the digital camera business. The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 38

  • Page 41
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Konica Minolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended March 31, 2006 and 2005 Shares of issued common stock Additional paid-in capital Millions of yen Unrealized Foreign currency Retained gains on translation Treasury ...

  • Page 42
    ... Cash Flows from Investing Activities: Payment for acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Payment for acquisition of intangible fixed assets Proceeds from sale of business Payment for acquisition of new consolidated subsidiaries Payment...

  • Page 43
    ... the property and related accumulated depreciation accounts are relieved of the applicable amounts and any differences are charged or credited to income. (g) Accounting Standard for Impairment of Fixed Assets On August 9, 2002, the Business Accounting Council of Japan issued new accounting standards...

  • Page 44
    .... This system was replaced with a stock option compensation scheme. (m) Accounting standards regarding accrued retirement benefits in the United Kingdom Effective the year ended March 31, 2006, consolidated subsidiaries Konica Minolta Business Solutions (UK) Ltd. and Konica Minolta Photo Imaging (UK...

  • Page 45
    ...March 31, 2006 (1) Other Securities with Quoted Market Values Millions of yen Market value at the Original consolidated Unrealized purchase balance gains value sheet date (losses) (2) Other Securities Sold during the Fiscal Year under Review Millions of yen Sale value Total profit Total loss Other...

  • Page 46
    ... ($278,812 thousand), for the following group of assets as of March 31, 2006. Loss on impairment of fixed assets ¥28,609 million ($243,543 thousand) concerning manufacturing and sales of photographic paper, film, etc was included in "Loss on discontinued operations". (7,689) (4,299) (65,455...

  • Page 47
    ...-generating unit respectively. (2) The events and circumstances that led to the recognition of the impairment loss Due to market circumstance deterioration and by decision of exiting the Photo Imaging business operation, operating profitability of manufacturing and sales base of photographic paper...

  • Page 48
    ...permitted that the substitutional portion of the Minolta Welfare Pension Fund be returned to the government, and the remaining...345 $144,897 Millions of yen March 31 2006 2005 Thousands of U.S. dollars March 31 2006 Leased rental business-use assets: Purchase cost Less: Accumulated depreciation Net...

  • Page 49
    ... institutions based upon their credit ratings and other factors. Such credit-related risks are not anticipated to have a significant 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...

  • Page 50
    ... Business Technologies: 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...

  • Page 51
    ...operating income for the Photo Imaging business (up ¥2,997 million) and other business (up ¥20 million). (2) Geographic Segment Information Millions of yen Japan North America Europe Asia and Other Total Elimination and Corporate Consolidation 2006: Net sales Outside Intersegment Total Operating...

  • Page 52
    ...North America ...U.S.A. and Canada 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. 17. Net Income per share Caluculations of net income per share for the years ended March 31, 2006...

  • Page 53
    ... accounting principles generally accepted in Japan. As described in Note 2(g), effective for the year ended March 31, 2006 Konica Minolta Holdings, Inc. and its consolidated subsidiaries adopted new accounting standards for impairment of fixed assets. The amounts expressed in U.S. dollars, which are...

  • Page 54
    ... (HK) Ltd. Konica Minolta Business Solutions (M) Sdn. Bhd. Konica Minolta Business Solutions (S) Pte. Ltd. Lithuania Netherlands Norway Norway Norway Poland Portugal Portugal Romania Russia Slovakia Slovenia Spain Sweden U.K. U.K. U.K. Ukraine Australia Australia China China China China China (Hong...

  • Page 55
    ... Konica Minolta Konica Minolta Japan Japan Japan U.S.A. China Camera Service Co., Ltd. Photo Solutions Co., Ltd. Photo Imaging U.S.A., Inc. Photo Imaging France S.A.S. Photo Imaging Europe GmbH Photo Imaging (SHANGHAI) Co., Ltd. Photo Imaging Asia H.Q. Pte. Ltd. Japan Japan U.S.A. France Germany...

  • Page 56
    ...: 90 Group: 31,685 Investor Relations Contact: Shoei Yamana In charge of Corporate Strategy Chairman of Risk Management Committee Tomohisa Saito Director, Konica Minolta Business Technologies, Inc. Tel: (81) 3-6250-2011 Fax: (81) 3-3218-1362 E-mail: [email protected] Hiroshi Ishiko...

  • Page 57
    ... Stock Financial Institutions 43.4% Mitsubishi UFJ Trust and Banking Corporation 1- 4-5, Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan Principal Shareholders Investment in Konica Minolta Holdings, Inc. Name Number of shares held (Thousand shares) Investment ratio (%) Japan Trustee Services Bank...

  • Page 58
    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