Ricoh 2004 Annual Report Download - page 19

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Income before Income Taxes
In terms of other (income) expenses, interest and dividend income
decreased primarily due to sluggish financial markets, and in addition,
foreign exchange losses also increased. Meanwhile, the company reduced
interest-bearing debt and interest costs by reinforcing cash management
systems in Japan, the United States, and Europe. In accordance with an
amendment of the pension system, furthermore, certain marketable
securities were contributed to the employee retirement benefit trust, and this
generated net realized gains of the securities. As the result, income before
income taxes, minority interests, equity in earnings of affiliates and
cumulative effect of accounting change increased 15.9%, to ¥143.0 billion
($1,376 million).
Net Income
With regard to taxes, the amount of tax exemption on research and
development expenses and information technology investments increased,
thereby leading to a decline in the effective tax rate. The effect of
improvement in business performance of our affiliates is reflected in
minority interests in earnings of subsidiaries. In addition, the cumulative
effects of accounting change in accounting for marketable securities
transferred to pension trust in a previous year were also reflected in the
income statement in connection with gain recognition for additional
contribution to the employee pension trust made in March, 2004. As a result
of the above, net income increased 26.6% to ¥91.7 billion ($882 million),
and this represents the 12th consecutive increase and the 10th consecutive
record high. We raised cash dividends paid per share of common stock to
¥15.00 ($0.14), an increase for the fourth consecutive year.
Segment Information
CONSOLIDATED SALES BY PRODUCT LINE
1. Office Equipment
Demand placed on customers for productivity overhaul and enhancement
has risen sharply. At the Ricoh group, we continue to propose solutions that
optimize our customers’ total printing costs, thus supporting the efficient
and effective management of TDV (total document volume) through the
further expansion of digital networking in combination with increased
digitization, colorization and high speeding, we are advancing the level of
digitization and networking in standalone analog equipments and the level
of support for increased color usage and speed.
As a result, we have significantly increased sales, particularly in MFPs,
laser printers, and other printing solutions. Furthermore, sales generated by
solution business dealing with support services, software, and the like
continue to grow. In Japan, sales of personal computers and servers
decreased and there is currently stagnation in the retail of optical-disc
products. Furthermore, overseas operations are suffering under the effect of
turmoil in the Middle East, the yen’s appreciation against to the dollar,
sluggish demand in the Asian region, and other factors. Nevertheless, the
deployment and expansion of strategies for our core products proved
effective, and sales increased in both the domestic and overseas markets.
Accordingly, sales of Office Equipment increased 2.4% from the previous
corresponding period to ¥1,557.6 billion ($14,977 million).
Imaging Solutions
In terms of Digital Imaging Systems, the Company has strengthened its
lineup of digital PPC products from standard models to high-speed digital
models, in addition, we also offered new color PPC products to our range.
Digital PPC products are now performing well in overseas markets, and
sales of color PPC products have increased both in Japan and overseas.
Nevertheless, the shift towards Printing Systems has led to a 3.3% reduction
in overall sales of Digital Imaging Systems from the previous corresponding
period.
In terms of Other Imaging Systems, sales decreased 15.2% as a result of
the trend to move away from analog type equipment in favor of digital
equipments and MFPs.
Accordingly, the effect of Ricoh group strategies on the entire Imaging
Solutions field has lead to sales dropping by 6.5% to ¥803.5 billion ($7,727
million). Sales in this category accounted for 45.1% of consolidated net
sales, down 4.4 percentage points.
Network Input/Output Systems
In the field of Printing Systems, Ricoh introduced new products with higher
levels of speed, networkability, and color support to expand the sale of printing
equipment to meet customer needs. In terms of MFPs, Imagio Neo 352/452 and
Imagio Neo C385/C325 was well received here in Japan, and the same is true for
Aficio 2035/2045 and Aficio 1224C/1232C in overseas markets. Sales of laser
printers are also on the increase, with the IPSiO NX85S and IPSiO CX7200
performing favorably in the domestic market, and the AP400/400N and Aficio
CL3000 moving well overseas. In accordance with these factors, overall sales of
Printing Systems increased 24.6%.
In Other Input/Output Systems, although optical discs performed favorably
in overseas markets in the previous period, there has been a downturn in the
retail of drives, and overall sales for Other Input/Output Systems decreased 10.1%.
As a result, sales in Network Input/Output Systems, our key field for the
implementation of strategies, increased 20.5% to ¥558.2 billion ($5,368 million).
Sales in this category accounted for 31.4% of consolidated net sales, up 4.7
percentage points.