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KONICA MINOLTA HOLDINGS, INC.
ANNUAL REPORT 2008

Table of contents

  • Page 1
    KONICA MINOLTA HOLDINGS, INC. ANNUAL R E P O RT 2 0 0 8

  • Page 2
    ...integration between Konica Corporation and Minolta Co., Ltd., creating a comprehensive imaging company. The Konica Minolta Group is pursuing growth by leveraging collective Group resources in the two major business domains of equipment and services, and components. The Group has annual sales of more...

  • Page 3

  • Page 4
    ... Business Strategies Pursuing Brand Leadership in Production Printing One goal of Konica Minolta's genre-top strategy is to become the dominant brand in the promising production printing field. We will reach that goal by cultivating advanced proprietary imaging technologies and taking advantage...

  • Page 5
    ... from years in the production printing business to create numerous post-processing pos st-processing technologies, notably for saddle and side stitching, folding, hole punching, and booklet finishing. We are an industry-leading industr ry- leading supplier of online post-processing systems. 3

  • Page 6
    ...in the color market because of our highly competitive design and materials technologies, as well as our product development and marketing foundations. 0 10 11 (Calendar years) (Cut-sheet / Based on manufacturer shipments) Source: Konica Minolta estimate 06 07 08 09 Corporate/in-house printing...

  • Page 7
    ... Business Growth (Billions of Yen) 100 75 50 25 0 Konica Minolta's Production Printing Unit Sales Growth (Units 20,000 +10% +15% 10,000 0 07 Projection 08 09 (Fiscal years ended March) (Fiscal years ended March) 04 New product introductions 05 06 bizhub PRO C500 07 Expansion of toner plant...

  • Page 8
    ...I O N II Advantages of Konica Minolta Polymerized Toner - Color Reproduction Range - Polymerized toner Yellow Offset printing Red Green Magenta Cyan Blue Another advantage of polymerized toner is that it results in 40% lower carbon dioxide emissions than pulverized toner and such emissions are...

  • Page 9
    ... market share to dominate the local production printing sector. Two Key Alliances In April 2008, we concluded a strategic business alliance with Océ N.V., which is headquartered in Venlo, the Netherlands. This company has an array of high-speed printing technologies, and has built strong direct...

  • Page 10
    ... Highlights Konica Minolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended March 31, 2008 and 2007 Millions of yen 2008 2007 Thousands of U.S. dollars (Note 1) 2008 For the Year: Net sales Operating income * Net income Capital expenditure R&D costs At Year-End: Total...

  • Page 11
    ...At a Glance 17 Business Technologies 18 Optics 20 Medical and Graphic Imaging 22 Sensing 24 Industrial Inkjet 25 Corporate Social Responsibility (CSR) 26 Corporate Governance 28 Financial Section 29 The Konica Minolta Group 56 Board of Directors and Executive Officers 58 Corporate Data 58...

  • Page 12

  • Page 13
    Yoshikatsu Ota President and CEO 10

  • Page 14
    ...up local procurement to hone our cost-competitiveness. Image quality is a key differentiator, and we were accordingly swift to employ polymerized toner across our color and production printing lineups. We are constantly refining our polymerized toner technologies as we pursue world-class performance...

  • Page 15
    ... (Loss) (Billions of Yen) 72.5 68.8 Total Assets, Equity and Equity Ratio (Billions of Yen) 944.1 951.1 970.5 43.0 38.6 31.1 293.8 367.5 417.2 (54.3) 2006 2007 2008 2006 2007 2008 Total assets Equity* Equity ratio (%) * Equity = Total net assets - minority interests - share subscription...

  • Page 16
    ... color and high-speed MFPs. The genre-top strategy drives progress in the Optics business. We have drawn on our advanced thin-film technologies to commercialize second- and third-generation triacetyl cellulose (TAC) film for vertical allignment (VA) mode LCDs and boost our market share in TAC films...

  • Page 17
    ... 2008, we completed the acquisition of Danka Office Imaging Company (DOIC) in the United States to enhance sales and market share as part of efforts to accelerate our ongoing expansion. In Optics business, we began operating a fifth TAC film plant in Kobe, Japan in November 2007 to take advantage...

  • Page 18
    ...equipment sales solutions. In Optics business, we will optimize production capacity in TAC films, glass hard disk substrates, and next-generation optical pickup lenses in a timely manner. We will strengthen our digital X-ray image input/output systems in the Medical and Graphic Imaging business. In...

  • Page 19
    ... 2009 Performance Targets by Business Segment (Fiscal Years Ended/Ending March) 2007 Plan Actual Plan 2008 Actual (Billions of Yen) 2009 Plan Projection Business Technologies Optics Medical and Graphic Imaging Other Segment Total Holdings, Others, Eliminations and Corporate Group Total Net sales...

  • Page 20
    ... Yen) Optics Main Products: Optical pickup lenses, lens units, microcamera units, TAC film for LCD, glass substrates for hard disks 85.8 91.7 129.9 5.3 110.4 5.8 146.6 04 05 06 07 08 Net Sales (Billions of Yen) Medical and Graphic Imaging Main Products: X-ray image processing systems, X-ray film...

  • Page 21
    ... fiscal year ended March 2008, concerted efforts enabled us to significantly increase sales in the expanding domestic and international markets for color MFPs for general offices. We consequently posted record segment operating income. Akio Kitani President Konica Minolta Business Technologies, Inc...

  • Page 22
    ... laser printer segment, we merged printer and MFP sales companies in Europe and United States, and worked to strengthen our sales organization for general office-use products as we emphasized sales in the general office segment where print volume growth is expected. Business Technologies net sales...

  • Page 23
    ... solid sales of viewing angle expansion films for large-screen LCD televisions and optical pickup lenses for next-generation DVDs and strove to bolster production capacity. Segment sales and earnings outstripped projections to reach new highs. Takashi Matsumaru President Konica Minolta Opto, Inc...

  • Page 24
    ... compatibility with perpendicular magnetic recording systems. We expanded production capacity in December 2007 by starting operations at a Malaysian factory. In our digital camera lens unit business, we increased shipments of high-zoom lenses, which harness our superior optical technologies. Sales...

  • Page 25
    ... medical equipment in fiscal year ended March 2008, offsetting sluggish demand for X-ray film in the trend of digitization. Operating profit declined, however, because of higher spending on digital equipment R&D and surging silver costs. Kiyofumi Tanida President Konica Minolta Medical & Graphic...

  • Page 26
    ... field, we strove to expand sales of digital diagnostic imaging business in response to digitization and networking at medical facilities. In June 2007, we marketed the REGIUS MODEL 110 for clinics and other small sites. Key advantages of this computed radiography system are that it is compact and...

  • Page 27
    ..., at ¥9.9 billion. Operating income declined 26.2%, to ¥1.2 billion. World's top level capability to detect extremely low luminance Spectroradiometer CS-2000 Compact and portable color measuring instrument Spectrophotometer CM-700d/600d 24 1.2 Non-contact 3D digitizer KONICA MINOLTA RANGE7

  • Page 28
    ...definition printer heads and textile printers. Net sales for the Industrial Inkjet business increased 15.4%, to ¥6.9 billion, although operating income fell 31.8%, to ¥0.9 billion. A high-resolution monochrome inkjet print unit SP-M0320HR 0.9 The digital ink jet textile printer system Nassenger...

  • Page 29
    ... for the Fiscal Year Ended March 2008 FTSE4Good Global Index Konica Minolta Holdings has been a consecutive constituent of the FTSE4Good Global index as of June 2008, an index used by CSR and sustainability-conscious investors as well as SRI (Socially Responsible Investment) funds, since being first...

  • Page 30
    ... Japan established it in 1987. Charity photo contest 2007 Excellence Award Establishing Colorful Tomorrow Foundation Konica Minolta Business Solutions U.S.A., Inc. established the nonprofit Konica Minolta Colorful Tomorrow Foundation in February 2007 to raise funds for community groups and projects...

  • Page 31
    ... and the third chairs the Board. The other six Board members have executive positions, including the President and CEO, executive officers in charge of corporate strategy, accounting and finance, technology strategy, and compliance, and the Group's largest operating company. All committee chairs are...

  • Page 32
    ... ed Financial Review 30 Int ellect ual Propert y Updat e 34 Consolidat ed Balance Sheet s 38 Consolidat ed St at ement s of Income 40 Consolidat ed St at ement s of Changes in Net Asset s 41 Consolidat ed St at ement s of Cash Flow s 42 Not es t o t he Consolidat ed Financial St at ement...

  • Page 33
    ... the nature of its products, markets, businesses, 900 600 and administration. These segments are Business Technologies, Optics, M edical and Graphic Imaging, Sensing, and Other Businesses. The Group exited its Photo Imaging business in the fiscal year ended M arch 31, 2008. 300 0 06 07 08...

  • Page 34
    ...Income (Loss) and Basic Net Income per Share (Billions of Yen, Yen) 80 150 at medical facilities, the Group expanded sales by broadening its market focus, releasing new systems for clinics and other small facilities. In Graphic Imaging, the Group focused on strengthening sales of digit al print ing...

  • Page 35
    ...keeping w ith revised consolidated financial reporting guidelines. Net property, plant and equipment increased ¥15.9 billion, reflecting Optics business initiatives that included building a fifth plant, in Kobe, Japan, for TAC films and constructing a glass hard disk substrate facility in M alaysia...

  • Page 36
    ... the Photo Imaging business and higher inflow s from a decrease in trade notes and accounts receivable. 500 0 250 -15 Net cash used in invest ing act ivit ies w as ¥76.8 billion, up ¥20.4 billion. This st emmed f rom a significant fall in inflow s from proceeds from sales of property, plant...

  • Page 37
    ... Photo Imaging 2. R&D, Intellectual Property Organization, and Alliances and Collaboration (1) R&D and Int ellect ual Propert y Organizat ion The Group's R&D organization covers development operations w ithin each business company and the Konica M inolta Technology Center, Inc., w hich explores...

  • Page 38
    (2) R&D Alliances and Collaborat ion The Group actively promotes R&D alliances. In Business Technologies, w e concluded a strategic office and production printing alliance w ith Océ N.V. of the Netherlands in April 2008. The tw o companies are taking advantage of their respective strengths to help ...

  • Page 39
    ...of M arch 31, 2008. The Business Technologies and Optics segments accounted for around 60% of our patents in both countries, w here our patent numbers have surged since the fiscal year ended M arch 2006. In the Japan Patent Annual Report 2008 , Konica M inolta Holdings ranked 30th in 2007, w ith 662...

  • Page 40
    ...7. Risk Response Information Trend of U.S. Pat ent s in Business Technologies and Opt ics 2,800 600 At the date of this report, the Konica M inolta Group w as not involved in any intellectual property disputes or litigation that w ould materially affect operations. 2,100 450 1,400 300 700 150...

  • Page 41
    ... Konica M inolta Holdings, Inc. and Consolidated Subsidiaries M arch 31, 2008 and 2007 M illions of yen M arch 31 Thousands of U.S. dollars (Note 3) M arch 31 2007 2008 2008 Assets Current Asset s: Cash on hand and in banks (Note 4) Notes and accounts receivable - trade Short-term investment...

  • Page 42
    ...-1,200,000,000 shares in 2008 and 2007 Issued-531,664,337 shares in 2008 and 2007 Capital surplus Retained earnings Less: Treasury stock, at cost; Common stock, 1,055,317 shares in 2008 and 939,214 shares in 2007 Unrealized gains on securities, net of taxes Unrealized losses on hedging derivatives...

  • Page 43
    ... Statements of Income Konica M inolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended M arch 31, 2008 and 2007 M illions of yen M arch 31 Thousands of U.S. dollars (Note 3) M arch 31 2007 2008 2008 Net Sales Cost of Sales (Note 8) Gross profit ¥1,071,568 540...

  • Page 44
    ... Statements of Changes in Net Assets Konica M inolta Holdings, Inc. and Consolidated Subsidiaries For the fiscal years ended M arch 31, 2008 and 2007 M illions of yen Shares of issued common stock Unrealized gains on securities, net of taxes Unrealized losses on hedging derivatives, net of taxes...

  • Page 45
    ...ance for doubtful accounts Interest and dividend income Interest expense Loss (gain) on sales and disposals of property, plant and equipment Loss (gain) on sale and w rite-dow n of investment securities Loss (gain) on sale and w rite-dow n of investments in affiliated companies Patent-related income...

  • Page 46
    ... method. Changes in Account ing Policy Effective from the year ended M arch 31, 2008, the Company and its domestic consolidated subsidiaries changed their depreciation method for tangible fixed assets acquired on or after April 1, 2007 in accordance w ith the revision of Japanese Corporate Tax Law...

  • Page 47
    ...w hich w ould have been report ed if t he previous st andard had been applied consistently. (m) Accounting Standard for Retirement Benefits in the United States Ef f ect ive f rom t he year ended M arch 31, 2007, consolidat ed subsidiary Konica M inolta Business Solutions U.S.A., Inc., adopted a new...

  • Page 48
    ... 5. Investment Securities As of M arch 31, 2008 (1) Other Securities w ith Quoted M arket Values M illions of yen M arket value at the consolidated balance sheet date (2) Other Securities Sold during the Year Ended M arch 31, 2007 M illions of yen Unrealized gains (losses) Sale value Total profit...

  • Page 49
    ... of the Japanese statutory income tax rate to the effective income tax rate for the years ended M arch 31, 2008 and 2007 is as follow s: 2008 2007 2008 2007 2008 2.3% bonds due in 2007 2.5% bonds due in 2007 2.4% bonds due in 2007 2.825% unsecured bonds due in 2008 Zero coupon convertible...

  • Page 50
    ... new shares is required to be designated as common stock. How ever, a company may, by a resolut ion of t he Board of Direct ors, designat e an amount not exceeding one half of the price of the new shares as additional paid-in capital, w hich is included in capital surplus. The Japanese Corporate Law...

  • Page 51
    ... he consolidat ed st at ement s of changes in net asset s result s f rom t he account ing t reat ment of ret irement benef it s t hat af f ect ed certain consolidated subsidiaries in the United Kingdom and the United States. 16. Lease Transactions Proforma information on the Company and its domestic...

  • Page 52
    ... M arch 31 2008 2007 2008 Leased rental business-use assets: Purchase cost Less: Accumulated depreciation Net book value On M arch 1 , 2 0 0 4 , t h e M in ist ry o f Healt h , Lab o u r an d Welfare permitted that the substitutional portion of the M inolta Welfare Pension Fund be returned...

  • Page 53
    Assumptions used in the calculation of the above information for the main schemes of the Company and its domestic consolidated subsidiaries are as follow s: 2008 2007 M ethod of attributing retirement benefits to periods of service Periodic allocat ion met hod f or project ed benef it obligat ions...

  • Page 54
    ... follow ing table summarizes price information of stock options exercised during th period and outstanding stock options as of M arch 31, 2008. Per unit inf ormat ion Exercised Out st anding at M arch 31, 2008 Exercise price of stock options Average market price of the stock at the time of exercise...

  • Page 55
    ...Business Technologies: Optics: Photo Imaging: M edical and Graphic Imaging: Sensing: Other: Relat ed business segment product s Copy machines, printers and others Optical devices, electronic materials and others Photographic film and materials, ink-jet products, cameras and others X-ray and graphic...

  • Page 56
    Thousands of U.S. dollars Business Technologies Optics M edical and Graphic Imaging Sensing Other Total Eliminations and Corporate Consolidated 2008: Net sales Ext ernal Int ersegment Tot al Operat ing expenses Operat ing income Asset s Depreciat ion Impairment losses Capit al expendit ure $6,996,...

  • Page 57
    ... 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. 21. Net Income per Share Calculations of net income per share for the years ended M arch 31, 2008 and 2007, are as...

  • Page 58
    ... financial position of Konica M inolta Holdings, Inc. and subsidiaries as of M arch 31, 2008 and 2007, and the consolidated results of their operations and their cash flow s for the years then ended, in conformity w ith accounting principles generally accepted in Japan. The U.S. dollar amounts...

  • Page 59
    ...Albin Industries, Inc. Frontier Business Systems, Inc. Hughes-Calihan Corporation Konica M inolta Business Solutions U.S.A., Inc. Konica M inolta Danka Imaging Company Konica M inolta Systems Laboratory, Inc. Konica M inolta Business Solutions Austria GmbH Konica M inolta Business Solutions (BELGIUM...

  • Page 60
    ... & Graphic Imaging Europe B.V. Konica M inolta M edical Systems Russia Konica M inolta M edical & Graphic (SHANGHAI) Co., Ltd. Japan Japan Japan Japan Japan Japan U.S.A. U.S.A. Germany Net her lands Russia China Konica M inolta Holdings U.S.A., Inc. Konica M inolta Technology U.S.A., Inc. Konica...

  • Page 61
    ...Executive Officers As of June 19, 2008 Number of Employees Parent company: 160 Group: 31,717 Invest or Relat ions Cont act Tel: (81) 3-6250-2011 Fax: (81) 3-3218-1362 E-mail: [email protected] Yoshikatsu Ota President and CEO Senior Execut ive Of f icers Shoei Yamana In charge of Corporate...

  • Page 62
    ... UFJ Financial Group, claim that they hold shares of Konica Minolta as set forth below, the Company is unable to confirm the exact number of shares held at period end. For this reason only the top 10 shareholders as per the shareholders' register have been listed. Companies submitting significant...

  • Page 63
    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 Printed with ink made from aroma-free soy bean oil. Printed in Japan