Ricoh 2003 Annual Report Download - page 24

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Trade payables rose from a year earlier. Interest-bearing debt was down
because of redemptions and conversions of convertible bonds and efforts to reduce
borrowings. Other current liabilities and retirement benefit obligations expanded.
Total liabilities thus rose ¥25.2 billion, to ¥1,174.1 billion ( $9,950 million) .
Common stock and additional paid-in capital rose owing to convertible bond
conversions. Accum ulated other com prehensive loss declined, reflecting pension
liability adjustments.
Total shareholders’ investm ent thus expanded ¥24.4 billion, to ¥657.5 billion
( $5,572 million) .
Cash Flows
Net cash provided by operating activities was up ¥80.6 billion, to ¥185.7 billion
( $1,574 million) . This owed to higher net incom e and depreciation and am orti-
zation and decreases in trade receivable and in inventories as a result of strong
supply chain management.
Net cash used in investing activities increased ¥16.7 billion, to ¥98.1 billion
( $832 million) . This stemmed from higher capital expenditures for new produc-
tion lines and additions to bond investm ents.
Free cash flow generated by operating and investing activities thus totaled
¥87.5 billion ( $742 m illion) , up ¥63.8 billion.
Net cash used in financing activities was ¥67.1 billion ( $569 m illion) , com-
pared with ¥36.2 billion provided by such activities in fiscal 2002. This reflected
reductions in interest-bearing debt to harness Group funds m ore efficiently. Out-
lays included dividend payments of ¥10.1 billion ( $86 m illion) and expenses of
¥17.2 billion ( $146 m illion) to secure treasury stock.
As a result of these factors, cash and cash equivalents at the close of the
term were ¥19.0 billion higher than a year earlier, at ¥189.2 billion ( $1,604
million) .
Capital Expenditures
Capital expenditures for fiscal 2001, 2002 and 2003 were ¥73.3 billion, ¥75.6 bil-
lion and ¥73.9 billion ( $627 million) , respectively. Ricoh allocates significant
portions of capital expenditures to digital and networking equipment, such as
digital PPCs, MFPs, and laser printers, and manufacturing facilities to m aintain
and enhance com petitiveness.
Ricoh also invests in information systems to support such back office opera-
tions as procurem ent, accounting, and intellectual property m anagement.
In the year under review, Ricoh began to construct new accounting and intel-
lectual property management systems. Managem ent expects capital expenditures
to reach about ¥75.0 billion in fiscal 2004.
Key Financial Ratios
We have provided the following ratios to facilitate analysis of Ricoh’s operations
for fiscal 2001, 2002, and 2003.
Market Risk
MARKET RISK EXPOSURE
Ricoh is exposed to m arket risks primarily from changes in foreign currency
exchange rates and interest rates, which affect outstanding debt and certain assets
and liabilities denominated in foreign currencies.
To a lesser extent, Ricoh is also exposed to equity price risk. To manage these
risks that arise in the norm al course of business, Ricoh enters into various hedg-
ing transactions pursuant to its policies and procedures covering such areas as
counterparty exposure and hedging practices. Ricoh does not hold or issue deriva-
tive financial instruments for trading purposes or to generate incom e.
Ricoh regularly assesses these market risks based on the policies and procedures
established to protect against adverse effects of these risks and other potential expo-
sures, prim arily by reference to the m arket value of the financial instrum ents. As a
result of the latest assessment, Ricoh does not anticipate any m aterial losses in these
Fiscal 2001 Fiscal 2002 Fiscal 2 0 0 3
Return on sales 3.5% 3.7% 4 .2 %
Return on shareholders’
investm ent 9.7% 10.4% 11.2%
Current ratio 1.00 1.30 1 .4 0
Debt-to-equity ratio
( interest-bearing debt to
shareholders’ investm ent) 0.97 0.89 0 .7 4
Interest coverage 14.5 16.3 2 0 .1