Ricoh 2010 Annual Report Download - page 36

35 ANNUAL REPORT 2010
Imaging and Solutions:
Net sales in the Imaging and Solutions segment for fiscal year 2010
decreased by 2.3% (or ¥42.8 billion) to ¥1,790.2 billion from
¥1,833.0 billion for fiscal year 2009. This decrease was due
primarily to lower sales generated in the Imaging Solutions product
category.
More specifically, sales in the Imaging Solutions product category
for fiscal year 2010 decreased by 5.2% (or ¥82.4 billion) to
¥1,516.1 billion from ¥1,598.6 billion for fiscal year 2009. This
decrease was due primarily to the decrease in net sales of PPCs/
MFPs and laser printers and the net effect of the depreciation of the
U.S. Dollar and the Euro in relation to the Japanese Yen. The
decrease in net sales of PPCs/MFPs and laser printers was due
primarily to the decrease in customer demand for Ricoh products
resulting from the global economic downturn as well as customers’
decisions to decrease printing costs by reducing the volume of
color printing, which decreased sales of value-added supplies for
color products. While net sales generated by IKON, which became a
consolidated subsidiary in fiscal year 2009 and whose financial
figures were reflected for the full fiscal year for the first time in
fiscal year 2010, contributed to overall net sales in the Imaging
Solutions product category for fiscal year 2010, the contribution
made by IKON to net sales was not sufficient to fully offset the
decrease in net sales of PPCs/MFPs and laser printers resulting
from the global economic downturn and the decrease in customer
demand for PPCs/MFPs and laser printers. In addition, Ricoh
lowered the sales price of certain products to stimulate sales in the
sluggish and competitive market, which contributed to the decrease
in net sales.
Sales in the Network System Solutions product category for fiscal
year 2010 increased by 16.9% (or ¥39.5 billion) to ¥274.0 billion
from ¥234.4 billion for fiscal year 2009. Sales in the solutions
business, such as support services that assist customers establish
networked environments using Ricoh’s imaging solutions products
and software solutions to optimize total printing costs, continued to
increase in the overseas markets in fiscal year 2010. Sales in the
solutions business increased because customers sought products
that streamlined the process of document scanning, indexing and
distribution by integrating hardware and software. In addition, net
sales generated by IKON, which became a consolidated subsidiary
in fiscal year 2009 and whose financial figures were reflected for
the full fiscal year for the first time in fiscal year 2010, contributed
to the increase in sales in this product category.
Excluding the net effect of the foreign currency exchange rate
fluctuations, sales in the Imaging and Solutions segment would
have increased by 2.8% (or ¥51.2 billion) for fiscal year 2010 as
compared to fiscal year 2009.
Other, net:
Consolidated other, net included in other (income) expenses
changed to an income of ¥1.1 billion for fiscal year 2010 from a
loss of ¥0.5 billion for fiscal year 2009.
Provision for income taxes:
Total consolidated provision for income taxes for fiscal year 2010
increased by ¥5.5 billion to ¥27.6 billion from ¥22.1 billion for fiscal
year 2009. The effective tax rate was 48.1% for fiscal year 2010
compared to 71.6% for fiscal year 2009. The effective tax rate was
higher than the Japanese statutory tax rate of approximately 40%
due primarily to the fact that a recognition of valuation allowance
for deferred tax assets resulted from uncertainty about certain
consolidated subsidiaries’ ability to earn taxable income in future
fiscal years. The effective tax rate of 48.1% in fiscal year 2010 was
approximately 24 percentage points lower than the effective tax rate
of 71.6% in fiscal year 2009. This decrease in the effective tax rate
was due mainly to the decrease in tax benefit not recognized on
operating losses of certain consolidated subsidiaries.
Equity in earnings of affiliates:
Consolidated equity in earnings of affiliates for fiscal year 2010
decreased by ¥65 million to ¥6 million from ¥71 million for fiscal
year 2009.
Net income attributable to noncontrolling
interests:
Consolidated net income attributable to noncontrolling interests for
fiscal year 2010 decreased by ¥0.3 billion to ¥1.9 billion from ¥2.3
billion for fiscal year 2009. This decrease was due primarily to the
lower performance of Ricoh Leasing Co., Ltd. for fiscal year 2010.
Operating Segments
Consolidated net sales of Ricoh for fiscal year 2010 decreased by
3.6% (or ¥75.3 billion) to ¥2,016.3 billion from ¥2,091.6 billion for
fiscal year 2009.
This 3.6% percent decrease was due primarily to the 2.3% decrease
in sales in the Imaging and Solutions segment, which accounted for
88.8% of consolidated net sales. The 2.3% decrease in sales in the
Imaging and Solutions segment was in turn due primarily to the
5.2% decrease in sales in the Imaging Solutions product category,
which accounted for 75.2% of consolidated net sales. The 5.2%
decrease in sales in the Imaging Solutions product category was
partially offset by the 16.9% increase in net sales in the Network
System Solutions product category.