Ricoh 2002 Annual Report Download - page 26

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Net Income
Net incom e increased 15.8%, to ¥61.6 billion ( $463 million) — the 10th consecu-
tive rise. Total taxes were up 17.5%, to ¥51.1 billion ( $384 m illion) . The effective
tax rate for the term was 44.9%, up 0.4 percentage point. The basic and diluted
earnings per share of comm on stock were ¥88.27 ( $0.66) and ¥82.46 ( $0.62) , re-
spectively. These figures were up 14.9% and 16.1%, respectively.
Subject to approval at the ordinary general meeting of shareholders on June
27, 2002, managem ent plans to increase cash dividends per share of comm on
stock ¥1.00 ( $0.01) , to ¥13.00 ( $0.10) . This is in keeping with m anagem ent’s
comm itment to ensuring solid shareholder returns.
Segment Information
SALES BY PRODUCT LINE
1 . Office Equipment
Copiers and Related Supplies
Segm ent sales advanced 13.5%, to ¥1,038.4 billion ( $7,808 million) . This growth
stem med largely from the launch in the core digital PPC and MFP categories of
fast models and high-value-added m achines whose features im prove efficiency,
from docum ent input/output through information sharing and m anagement.
Overseas, key factors were the first full-year contribution of Lanier Worldwide,
Inc., which Ricoh acquired in the previous term, as well as the lower yen.
Communications and Infor mation Systems
In this segment, sales advanced 5.6%, to ¥446.8 billion ( $3,360 million) . The
main contributors here were fast, high-resolution color laser printers and low-end
color laser printers.
Solutions-Based Business Segmentation
Ricoh has summarized results under the following business segm ents that reflect
its strategic direction as a docum ent solutions provider.
Im a ging Solutio ns
In this segment, sales gained 7.7%, to ¥934.1 billion ( $7,023 million) . This was
mainly because of a stronger lineup that included both low-end and fast digital
PPCs. Dom estic sales dropped in other product areas am id the Japanese recession
and declining demand. On the positive side, overseas sales soared for digital PPCs,
with color models also enjoying gains.
Netwo rk Input/Output Syste m s
Segm ent sales surged 31.5%, to ¥344.2 billion ( $2,588 million) , reflecting a far
broader range of MFPs and color laser printers, complem ented by printing solutions.
In Japan and overseas, the focus of customer demand continued to shift toward
speed, networking, lower total costs of ownership, and better productivity. Ricoh re-
sponded to those trends by releasing new m odels and stepping up m arketing.
Netwo rk System So lutions
Sales in this segm ent were off 1.2%, to ¥206.9 billion ( $1,556 million) . Ricoh fo-
cused on useware, docum ent m anagem ent, and other solutions businesses in re-
sponse to a shift in custom er dem and away from standalone m odels toward
systems for networked offices. The sales decline in this segment was due to lower
demand for personal com puters and servers owing to constrained corporate
spending on inform ation technology in Japan.
2 . Other Businesses
Category sales decreased 6.5%, to ¥186.9 billion ( $1,405 million) . This was pri-
marily because of poor sem iconductor and measurement equipment m arkets.
SALES BY GEOGRAPHIC AREA
Japan accounted for 54.0% of net sales. The Americas and Europe accounted for
20.4% and 18.6%, respectively, and other areas 7.0%.
1 . Japan
Domestic sales decreased 3.0%, to ¥902.6 billion ( $6,786 million) . This was large-
ly because the Japanese econom y rem ained in recession, causing companies to
constrain information technology spending and restructure. On the positive side,
Ricoh increased sales of printing system s 28.6%, with MFPs performing particu-
larly well on the strength of launches of new offerings and expanded marketing in
response to customer needs.
2 . The Americas
Here, sales surged 35.2%, to ¥341.7 billion ( $2,569 million) . After factoring out
exchange rate changes, sales would have increased 19.7%. This im provem ent was
largely because Ricoh expanded and reinforced its sales networks, particularly in
North Am erica, thus increasing sales of core digital PPCs and MFPs. Lanier World-
wide, Inc., which Ricoh acquired in the previous fiscal year, contributed signifi-
cantly to results through a successful strategy of expanding digital equipment and
strengthening sales to m aj or accounts.
3 . Europe
Sales in this region surged 25.8%, to ¥311.3 billion ( $2,340 m illion) , and gained
15.2% in local currency term s. This result reflected the strength of Ricoh’s m ulti-
brand strategy, with the Company maintaining strong sales and top market shares
in both digital PPCs and MFPs.
4 . Other Areas
Sales in other areas im proved 8.3%, to ¥116.6 billion ( $876 m illion) , am id the
shift to digital and networked m odels. Ricoh aim s to take advantage of China’s
admission to the World Trade Organization and that nation’s deregulation and
initiatives to open its market by strengthening its local sales network.
Financial Position
At the close of fiscal 2002, total assets were ¥1,832.9 billion ( $13,781 million) , up
7.5% from a year earlier. Changes in interest-bearing debt reflected a ¥60 billion
issue of straight bonds and Ricoh’s sixth and eighth issues of convertible bonds,
which most investors converted on m aturity. The equity ratio was up 1.8 percent-
age point from a year earlier, at 34.5%.
Cash Flows
One of Ricoh’s key m anagem ent policies is to expand free cash flow and continu-
ally bolster its financial position.