Ricoh 1999 Annual Report Download - page 23

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20
MANAGEMENT’SDISCUSSION AND ANALYSIS OF FISCAL 1999 RESULTS
The average yen-dollar exchange rate for the term was down around ¥5,
to ¥128. The yen-deutschemark average was ¥73, down around ¥4.
Operating Income
Operating income fell 18.0%, to ¥73.5 billion ($608 million). The gross prof-
it ratio slipped 0.4 percentage point, to 39.9%. This was mainly because of
the domestic sales decline and stricter inventory controls, which increased
manufacturing overheads.
Selling, general and administrative expenses increased 4.2%, to ¥495.0
billion ($4,091 million). This was due primarily to the yen’s depreciation,
which boosted the costs of foreign subsidiaries when translated into yen, and
restructurings at some subsidiaries.
Research and development costs dipped 4.6%, to ¥66.8 billion ($552
million), and represented 4.7% of net sales, down 0.3 percentage point.
Income before Income Taxes
Income before income taxes, minority interests and equity in earnings of
affiliates dropped 22.5%, to ¥53.1 billion ($438 million). Net interest
expense and interest and dividend income decreased 9.6%, to ¥5.7 billion
($47 million). Foreign exchange losses were ¥3.5 billion ($29 million). Other
expenses included losses of ¥5.3 billion ($43 million) from bankruptcies of
companies in which Ricoh had investments or accounts receivable.
In fiscal 1999, ended March 31, 1999, Ricoh Company, Ltd., completed its
12th medium-term management plan. This initiative focused on reinforcing
management’s emphasis on customer satisfaction while making Ricoh a more
valuable business. Ricoh strove companywide to develop products that match
user needs, aggressively market, and bolster its production and supplies struc-
ture.
As a result of these endeavors, Ricoh achieved record net sales for the
fourth consecutive year and record net income for the fifth year running.
Revenues
Net sales were up 1.6% from fiscal 1998, to ¥1,426.0 billion ($11,785
million).
In the office equipment category, sales of copiers and related supplies rose
1.8%. This business benefited from a stronger sales structure overseas and fa-
vorable conditions in the European and U.S. markets, which offset stagnant
conditions in Japan. Communications and information systems sales
advanced 1.6%. New networkable offerings contributed to sales, especially in
the domestic market.
Office equipment sales thus gained 1.7%, to ¥1,234.5 billion ($10,202
million). Office equipment represented 86.6% of net sales.
Domestic sales were down 1.2%, to ¥821.0 billion ($6,785 million). This
figure constituted 57.6% of net sales, from 59.2%. Overseas sales climbed
5.8%, to ¥605.0 billion ($5,000 million). This accounted for 42.4% of net
sales, from 40.8% in fiscal 1998.
CAPITAL EXPENDITURESR&D EXPENDITURE AND
PERCENT OF NET SALES TOTAL ASSETS
70.0
64.3
59.0
55.0
66.8
94.1
78.7
48.8
45.4
70.5
4.7
5.4 5.3 4.9 5.0
1,628.0
1,320.6
1,508.5
1,644.9
1,660.5
(Billions of Yen, %) (Billions of Yen) (Billions of Yen)