Ricoh 2005 Annual Report Download - page 19

corresponding period for purposes of developing more advanced
products with new capabilities to maintain its high market share
position in the competitive marketplace. Despite this increase in
research and development investments, such increase was completely
offset by ( i) the depreciation of the U.S. dollar in relation to the
Japanese Yen which resulted in a decrease in selling, general and
administrative expenses, ( ii) the divestiture of its subsidiaries in the
optical-related analog business, and ( iii) the decrease in pension costs
due to pension systems restructuring, such as the transfer to the
Japanese government of the substitutional portion of the domestic
employees’ pension fund ( “EPF”) plan.
Ricoh completed its transfer to the Japanese government of the
substitutional portion of the EPF. Ricoh recognized a one-time gain of
¥56.9 billion from a Japanese government subsidy and a one-time
settlement loss of ¥48.6 billion for the transfer of such substitutional
portion of the EPF during fiscal year 2004.
As a result of these activities, operating income decreased 9.7% from the
previous corresponding period to ¥135.5 billion ( $1,266 million) .
Income befor e Income Taxes:
In terms of other ( income) expenses, interest and dividend income
increased. On the other hand, the company reduced interest-bearing
liabilities and interest costs by effective management of financing
between group companies. Furthermore, although the company
recorded a loss from foreign exchange in the previous fiscal year, it
enjoyed a gain from foreign exchange during the term under review. As
a result, income before income taxes decreased 5.4% to ¥135.3 billion
( $1,265 million) .
Net Income
The effective tax rate decreased as a result of greater tax deductions for
research and development and IT investment and improved overall
profitability of consolidated subsidiaries. The effect of improved
profitability of consolidated companies is reflected in the minority
interests in earnings. In the previous corresponding period, the
cumulative effect ( ¥7.3 billion gain) of change in accounting for
marketable securities transferred to a pension trust was reflected in the
income statement in connection with gain recognition for additional
contribution to the employee pension trust.
As a result of these activities, net income decreased 9.4% from the
previous corresponding period to ¥83.1 billion ( $777 million) .
We raised cash dividends paid per share of common stock to ¥20.00
( $0.19), an increase for the fifth consecutive year.
Segment Information
CONSOLIDATED SALES BY PRODUCT LINE
1 . Office Equipment
Seeing further advancements in digital networks and increasing volume
of information that is processed electronically and in color, customers
more than ever desire to improve and reform their operations. In an
effort to help these customers manage TDV ( total document volume)
more efficiently and effectively, the Ricoh Group has continued to offer
solutions to optimize total printing costs of customers. As a strategy to
help the customers, we have advanced the compatibility of standalone
analog equipment to digitalization, networking, color technology, and
higher output speed. As a result, sales, particularly those of such
printing systems as MFPs and laser printers, have soared. Continuing
sales gains were also seen in solutions business, including customer
support and service. Severe market competition, decrease sales of
optical discs, and the yen’s appreciation against the U.S. dollar proved
to be a challenge for the Ricoh Group. Nevertheless, the development
and expansion of strategies for our core products proved effective, and
sales increased in both domestic and overseas markets. Accordingly,
sales of Office Equipment increased 2.2% from the previous
corresponding period to ¥1,591.8 billion ( $14,877 million) .
Im aging So lutions
In terms of Digital Imaging Systems, the company strengthened its
lineup from standard models to high-speed digital models. The
company offered a series of new color PPCs products that increased its
sales particularly overseas. Due to the demand shift to printing systems,
however, sales of digital imaging as a whole decreased 7.8% from the
previous corresponding period.
In terms of Other Imaging Systems, a transition is being advanced from
analog to digital or MFPs models. Sales of Other Imaging Systems, as a
result, decreased 20.9%.
The performance of Imaging Solutions reflects the Ricoh Group's
strategy as overall sales decreased 11.0% from the previous
corresponding period to ¥715.0 billion ( $6,683 million). Sales of this
category accounted for 39.4%, down 5.7 percentage points, of net
consolidated sales.
Network Input/Output System s
In terms of Printing Systems, the company offered new products that
present higher speed, networking, and color technology to increase sales
of printing equipment that matches to customer needs. Such domestic
MFPs models as imagio Neo 752/602 series and color MFPs models as
imagio C245 and imagio NEO C385 and such overseas MFPs models as
To Our Shareholders
and Customers
Review of Operations
(General Information by Business Area)
Technology Corporate Social
Responsibility Environment Financial Section
18
ANNUAL REPORT 2005