QUARTERLY REPORT 1st Quarter ended June 30, 2002 (Results for the Period from April 1, 2002 to June 30, 2002) Index - Financial Highlights - Performance Page 1 2 - Consolidated Performance 1. 2. 3. 4. 5. 6. Consolidated Statements of Income Consolidated Sales by Category Consolidated Balance Sheets Consolidated Statements of Cash Flow Segment Information Significant Accounting Policies (Consolidated) - Appendix Consolidated Performance Forecast 9 10 11 12 13 15 17 Ricoh Company, Ltd. * The Company bases the estimates above on information currently available to management, which involves risks and uncertainties that would cause actual results to differ materially from those projected. Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 Ricoh Company, Ltd. and Consolidated Subsidiaries Financial Highlights (1st Quarter ended June 30, 2002) 1. Results for the period from April 1, 2002 to June 30, 2002 (1) Operating Results Net sales ..................................................................................... (% change from previous period)........................................... Operating income ....................................................................... (% change from previous period)........................................... Income before income taxes....................................................... (% change from previous period)........................................... Net income ................................................................................. (% change from previous period)........................................... Net income per share-basic (yen) ............................................... Net income per share-diluted (yen) ............................................ Return on equity (%) .................................................................. Income before income taxes on total assets (%)......................... Income before income taxes on net sales (%)............................. Notes: i. ii. iii. (Millions of yen) Three months ended Three months ended June 30, 2002 428,271 4.0 35,927 13.6 32,270 18.7 19,521 31.2 26.85 26.01 3.0 1.8 7.5 June 30, 2001 411,963 12.2 31,612 20.6 27,181 17.3 14,879 17.9 21.47 19.84 2.6 1.6 6.6 Equity in earnings of affiliates: ¥831 million (¥382 million in previous period) Some changes have been made in accounting method Average number of shares outstanding: 727,067,931 shares (693,073,668 shares in previous period) (2) Financial Position Total assets................................................................................. Shareholders’ equity................................................................... Equity ratio (%).......................................................................... Equity per share (yen) ................................................................ Note: (Millions of yen) March 31, 2002 1,832,928 633,020 34.5 870.63 June 30, 2002 1,821,949 648,343 35.6 891.78 Number of shares outstanding as of June 30, 2002: 727,024,532 shares (727,086,738 shares as of March 31, 2002) (3) Cash Flows (Millions of yen) Cash flows from operating activities .......................................... Cash flows from investing activities........................................... Cash flows from financing activities .......................................... Cash and cash equivalents at end of period ............................... Three months ended Three months ended June 30, 2002 54,359 -15,417 -3,791 203,062 June 30, 2001 16,548 -21,865 -3,123 99,668 (4) Items relating to the scale of consolidation and the application of the equity method: Number of consolidated subsidiaries: 328; non-consolidated subsidiaries: 46; affiliated companies: 27 (5) Changes in accounting method, etc.: Notes: i. ii. iii Consolidated subsidiaries: 2 additions; 5 removals Companies accounted for by the equity method: no change Consolidated financial statements of the Company and its consolidated subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America. Net income per share is calculated based on Statement of Financial Accounting Standards (SFAS) No.128. Ricoh’s first quarter financial statements are unaudited. 2. Forecast of operating results from April 1, 2002 to March 31, 2003 Net sales ..................................................................................... Operating income ....................................................................... Income before income taxes....................................................... Net income ................................................................................. Half year ended September 30, 2002 855,000 66,000 59,500 35,000 (Millions of yen) Year ended March 31, 2003 1,748,000 140,000 126,500 72,500 Note: Net income per share (Consolidated) 99.72 yen In accordance with Japanese regulations, Ricoh has issued forecast for its financial results for the half year ended September 30, 2002 and year ended March 31, 2003. These forecast are forward-looking statements based on a number of assumptions and beliefs in light of information currently available to management and subject risks and uncertainties. -1Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 Performance (1) Overview (Three months ended June 30, 2002 and 2001) Domestic sales....................................................... Overseas sales ....................................................... Net sales .................................................................... Gross profit................................................................ Operating income ...................................................... Income before income taxes ...................................... Net income ................................................................ Net income per share-basic (yen) .............................. Net income per share-diluted (yen) ........................... Return on equity (%) ................................................. Income before income taxes on total assets (%)........ Income before income taxes on net sales (%)............ Exchange rate (Yen/US$).......................................... Exchange rate (Yen/EURO) ...................................... Expenditure for plant and equipment ........................ Depreciation for tangible fixed assets ....................... R&D Expenditure...................................................... (Billions of yen) Three months ended Change June 30, 2001 228.7 -1.7% 183.2 11.0% 411.9 4.0% 174.0 7.2% 31.6 13.6% 27.1 18.7% 14.8 31.2% 21.47 +5.38 19.84 +6.17 2.6 +0.4% point 1.6 +0.2% point 6.6 +0.9% point 122.60 +4.41 107.25 +9.31 17.9 -0.3 15.1 +1.8 17.8 +0.6 Three months ended June 30, 2002 224.8 203.4 428.2 186.4 35.9 32.2 19.5 26.85 26.01 3.0 1.8 7.5 127.01 116.56 17.6 16.9 18.4 Consolidated Performance Net sales Billions of yen） （ 500.0 Net sales (left axis) Net income (right axis) 428.2 411.9 Net income (Billions of yen) 40.0 35.0 367.2 400.0 30.0 25.0 300.0 20.0 19.5 200.0 12.6 100.0 14.8 15.0 10.0 5.0 0.0 0.0 3months ended Jun. 30, '00 (1Q) 3months ended Jun. 30, '01 (1Q) 3months ended Jun. 30, '02 (1Q) Yen） （ （%） Net income per share (left axis) Return on equity (right axis) Return on assets (right axis) 40 3.0 2.6 3.0 2.3 2.0 20 1.5 18.23 1.6 1.8 1.0 21.47 26.85 0 0.0 3months ended Jun. 30, '00 (1Q) 3months ended Jun. 30, '01 (1Q) 3months ended Jun. 30, '02 (1Q) -2Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 *Overview - In the first quarter of fiscal 2003, ended June 30, 2002, Ricoh increased consolidated net sales 4.0%, to ¥428.2 billion. The rise would have been 1.4% without the foreign exchange impact. - Domestic sales declined 1.7%. This was despite a 27.4% increase in sales of printing systems and reflected sluggish economic conditions in Japan and constrained investment in information technology, which hampered other categories. In contrast, overseas sales increased 11.0%, as demand for core digital imaging and printing systems remained solid, and contribution from the lower yen. Overseas sales would have been up 5.2% excluding the foreign exchange effect. - Operating income increased 13.6%. The prime factors here were increased sales of high-value-added core products, notably digital plain-paper copiers (PPCs), multifunctional printers (MFPs), and color printers. Also contributing to this gain were new offerings, the benefits of ongoing cost-cutting efforts, and a weaker yen. On the other income and expenses, the Company suffered a drop in interest and dividend income owing to adverse financial markets, but endeavored to reduce interest expenses. As a result of these factors, income before income taxes, minority interests and equity in earnings of affiliates increased 18.7%. - Net income therefore increased 31.2%. *Financial Position - Management places top priority on ongoing efforts to increase free cash flow and strengthen the Company’s financial position. - At the end of the first quarter, net cash provided by operating activities was ¥54.3 billion, up ¥37.8 billion from the previous corresponding period. This was due mainly to the net income rise and trade receivables’ collection. - Net cash used in investing activities was ¥15.4 billion, reflecting expenditures to upgrade production lines for new models and step up product development. - As a result of the above factors, free cash flow totaled ¥38.9 billion. - During the period under review, Ricoh endeavored to replace short-term loans with long-term indebtedness while reducing interest-bearing debt. Net cash used in financing activities, including cash dividends paid, was ¥3.7 billion. - Cash and cash equivalents at term-end were therefore ¥32.8 billion higher than at the close of the previous year-end, at ¥203.0 billion. - From the first quarter of the year, short-term investment securities, which are available-for-sale at any time, such as Money Management Funds, are included in cash equivalents. The effect of this change was as follows: Cash and cash equivalents at term-end Under previous accounting policy Under new accounting policy Change 1Q fiscal 2003 112,949 203,062 90,113 1Q fiscal 2002 72,886 99,668 26,782 ( Millions of yen ) Fiscal 2002 142,508 170,172 27,664 -3Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 *Consolidated Sales by Category Imaging Solutions (sales down 5.1%, to ¥219.9 billion) *Digital Imaging Solutions (sales up 0.7%, to ¥156.2 billion) In core digital PPCs, the Company reinforced in its lineup from low-end models to high-speed machines. Domestic sales were down owing to lackluster economic conditions, but overseas sales increased on the popularity of digital PPCs. *Other Imaging Solutions (sales down 16.8%, to ¥63.6 billion) Lower sales reflected the ongoing trend away from analog PPCs to digital models and MFPs. Network Input/Output Systems (sales up 26.1%, to ¥110.5 billion) *Printing Systems (sales up 22.2%, to ¥94.6 billion) In Japan and abroad, Ricoh kept introducing new products, strengthening sales of printing equipment and printing solutions in response to customer demand for fast, networkable, and color systems. The Company greatly increased sales of MFPs and color printers during the term. *Other Input/Output Systems (sales up 56.0%, to ¥15.8 billion) This business benefited from strong shipments in Japan and internationally of new standards DVD drives and media. Network System Solutions (sales down 3.8%, to ¥46.9 billion) Ricoh continued to strengthen its useware, document management, and other solutions businesses in response to shifting customer demand away from standalone machines toward networked hardware, software, and services. The sales decline stemmed from reduced purchases of personal computers and servers owing to corporate constraints on information technology spending. Other Businesses (sales up 15.9%, to ¥50.9 billion) The higher sales in this category reflected recoveries in the semiconductor and metering equipment businesses, as well as expansion in leasing and other operations. Consolidated Sales by Category （Billions of yen） 500.0 43.9 50.9 Other Businesses Network system solutions Networking I/O systems Imaging solutions 50.4 400.0 48.7 46.9 46.8 300.0 87.6 110.5 107.2 231.6 219.9 212.9 3months ended Jun. 30, '01 (1Q) 3months ended Jun. 30, '02 (1Q) 3months ended Jun. 30, '02 (1Q) * 200.0 100.0 0.0 *Sales amount excluding exchange impact -4Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 *Consolidated Sales by Geographic Area Japan (sales down 1.7%, to ¥224.8 billion) The domestic economy remained stagnant throughout the term. Nonetheless, Ricoh introduced more products and strengthened marketing to maintain solid sales of MFPs, printers, and other printing solutions, and improved solution business like useware. In contrast, adverse economic conditions dampened sales of analog PPCs, fax machines, personal computers and servers. The Americas (sales up 5.4%, to ¥84.1 billion) In increasingly uncertain economic conditions in the United States, the Company improved its sales network, particularly in North America, while endeavoring to increase sales of core digital PPCs, MFPs, and printers. Europe (sales up 9.3%, to ¥83.2 billion) With regional economies remaining stable, Ricoh continued to do well with core digital PPCs and MFPs, in which it maintains top market shares of PPCs. Printer sales were also up. Others (sales up 32.5%, to ¥35.9 billion) Sales improved significantly on the strength of the trend toward digitally networked offices. Sales by Geographic Area （Billions of yen） 500.0 35.9 27.1 Japan The Americas Europe Others 34.4 400.0 76.1 83.2 76.9 79.8 84.1 81.3 228.7 224.8 224.8 3months ended Jun. 30, '01 (1Q) 3months ended Jun. 30, '02 (1Q) 300.0 200.0 100.0 0.0 3months ended Jun. 30, '02 (1Q) * *Sales amount excluding exchange impact -5Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 *Segment Information Business Segments Office Equipment Ricoh continued to deliver solid sales of core, high-value-added digital PPCs, MFPs, and printers, with demand soaring overseas. Both sales and operating income increased, partly because of the foreign exchange impact. Other Businesses These businesses performed well, reflecting recoveries in demand for semiconductors and metering equipment and growth in such areas as leasing and other operations. Business Segment (Office Equipment) （Billions of yen） Net Sales Operating income Operating income on net sales 400.0 300.0 %） （ 13.0 377.3 368.0 12.3 12.0 200.0 11.4 11.0 100.0 46.6 42.0 0.0 10.0 3months ended Jun. 30, '01 (1Q) 3months ended Jun. 30, '02 (1Q) Business Segment (Other Businesses) Net Sales Operating income Operating income on net sales （Billions of yen） （%） 3.0 50.0 2.5 51.6 40.0 45.0 30.0 2.0 1.4 1.5 20.0 1.0 0.7 10.0 0.5 0.6 0.3 0.0 0.0 3months ended Jun. 30, '01 (1Q) 3months ended Jun. 30, '02 (1Q) -6Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 Geographic Segments Japan Overall sales were up, owing to increased exports in the office equipment business, which offset another decline in domestic office equipment sales. The Americas With the U.S. economic situation unclear and competition intensifying, Ricoh expanded sales of digital systems and strategically reinforced major account sales. These efforts increased overall regional sales. Europe The Company continued to do well, particularly in digital PPCs and MFPs, leading to a rise in regional sales. Others Sales were solid in China and elsewhere in Asia and in Oceania. Ricoh maintained high productivity at its Chinese manufacturing bases. These factors increased regional sales. Japan （Billio n s of yen ） 400.0 Net sales, includin g intersegm e n t 300.0 200.0 Operating incom e Operating incom e o n n e t sales 10.5 318.2 314.0 8.1 25.7 33.0 100.0 0.0 3 m o n t h s en ded Jun. 30, '01 (1Q) （Billio n s of yen ） %） （ 15.0 13.0 11.0 9.0 7.0 5.0 3 m o n t h s en ded Jun. 30, '02 (1Q) The Americas Net sales, includin g intersegm e n t Operating incom e Operating incom e o n n e t sales %） （ 90.0 1.6 70.0 50.0 81.0 30.0 0.5 83.4 -1.0 1.3 10.0 -10.0 -0.8 3 m o n t h s en ded Jun. 30, '01 (1Q) （Billio n s of yen ） 3 m o n t h s en ded Jun. 30, '02 (1Q) Operating incom e Operating incom e o n n e t sales 84.5 77.1 3.3 -1.5 %） （ 7.5 5.0 3.9 3.2 2.5 2.5 3 m o n t h s en ded Jun. 30, '01 (1Q) （Billio n s of yen ） 3 m o n t h s en ded Jun. 30, '02 (1Q) O thers Net sales, includin g intersegm e n t 50.0 40.0 30.0 20.0 10.0 0.0 -0.5 Europe Net sales, includin g intersegm e n t 100.0 80.0 60.0 40.0 20.0 0.0 1.5 Operating incom e Operating incom e o n n e t sales %） （ 7.5 6.0 35.6 3.4 5.0 37.8 2.2 1.2 2.5 3 m o n t h s en ded Jun. 30, '01 (1Q) 3 m o n t h s en ded Jun. 30, '02 (1Q) -7Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 (2) Outlook A sluggish domestic economy and the yen’s recent appreciation has prompted management to lower the fiscal 2003 net sales projections it announced in May 2002, from ¥1,773.0 billion, to ¥1,748.0 billion. That said, first-quarter earnings were beyond management’s forecasts. Profitability should continue to improve throughout the year. Consequently, management has raised its operating income estimate for fiscal 2003 from ¥136.0 billion, to ¥140.0 billion. It has increased its projection for income before income taxes, minority interests and equity in earnings of affiliates from ¥122.0 billion, to ¥126.5 billion, while raising the net income forecast from ¥67.5 billion, to ¥72.5 billion. Exchange Rate Assumptions for fiscal 2003 US$1 = ¥118.00 (¥125.10 in previous fiscal year) Euro1 = ¥115.39 (¥110.60 in previous fiscal year) (Billions of yen) Domestic sales....................................................... Overseas sales ....................................................... Net sales .................................................................... Gross profit................................................................ Operating income ...................................................... Income before income taxes ...................................... Net income ................................................................ Year ended March 31, 2003 (Forecast) 917.0 831.0 1,748.0 741.8 140.0 126.5 72.5 Year ended March 31, 2002 902.6 769.6 1,672.3 699.9 129.6 113.9 61.6 Change 1.6% 8.0% 4.5% (*1) 6.0% 7.9% 11.0% 17.7% (*2) Notes: *1…Net sales would be ninth consecutive year of growth. *2…Net income would be eleventh consecutive year of growth and ninth consecutive year of record high. * Ricoh bases the estimates above on information currently available to management, which involves risks and uncertainties that would cause actual results to differ materially from those projected. -8Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 1.Consolidated Statements of Income (Three months ended June 30, 2002 and 2001) Three months ended June 30, 2002 Three months ended June 30, 2001 (Millions of yen) Change (%) Net sales ...................................................................... Cost of sales ................................................................ Percentage of net sales (%).................................... 428,271 241,774 56.5 411,963 237,946 57.8 +16,308 +3,828 (4.0) (1.6) Gross profit ................................................................. Percentage of net sales (%).................................... Selling, general and administrative expenses .............. Percentage of net sales (%).................................... Operating income ........................................................ Percentage of net sales (%).................................... 186,497 43.5 150,570 35.1 35,927 8.4 174,017 42.2 142,405 34.5 31,612 7.7 +12,480 (7.2) +8,165 (5.7) +4,315 (13.6) Other (income) expenses: Interest and dividend income.................................. Percentage of net sales (%)............................... Interest expense ...................................................... Percentage of net sales (%)............................... Other, net................................................................ Percentage of net sales (%)............................... Income before income taxes, minority interests and equity in earnings of affiliates ..................................... Percentage of net sales (%).................................... 963 0.2 1,739 0.4 2,881 0.7 1,138 0.3 2,415 0.6 3,154 0.8 -175 (-15.4) -676 (-28.0) -273 (-8.7) 32,270 7.5 27,181 6.6 +5,089 (18.7) Provision for income taxes .......................................... Percentage of net sales (%).................................... Minority interests in earnings of subsidiaries .............. Percentage of net sales (%).................................... Equity in earnings of affiliates..................................... Percentage of net sales (%).................................... 13,001 3.0 579 0.1 831 0.2 12,109 2.9 575 0.1 382 0.0 +892 (7.4) +4 (0.7) +449 (117.5) Net income .................................................................. Percentage of net sales (%).................................... 19,521 4.6 14,879 3.6 +4,642 (31.2) Reference: Exchange rate (average rate for the corresponding periods) US$ 1 ................................ EURO 1 ............................ Three months ended June 30, 2002 ¥127.01 ¥116.56 Three months ended June 30, 2001 ¥122.60 ¥107.25 -9Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 2.Consolidated Sales by Category (Three months ended June 30, 2002 and 2001) Three months ended Three months ended Imaging Solutions: Digital Imaging Systems......................... Percentage of net sales (%) ........... Domestic............................................ Overseas ............................................ Other Imaging Systems........................... Percentage of net sales (%) ........... Domestic............................................ Overseas ............................................ Total Imaging Solutions ......................... Percentage of net sales (%) ........... Domestic............................................ Overseas ............................................ Networking input/output systems: Printing Systems...................................... Percentage of net sales (%) ............ Domestic............................................ Overseas ............................................ Other Input/Output Systems ................... Percentage of net sales (%) ............ Domestic............................................ Overseas ............................................ Total Networking input/output systems.. Percentage of net sales (%) ........... Domestic............................................ Overseas ............................................ Network system solutions....................... Percentage of net sales (%) ........... Domestic............................................ Overseas ............................................ <Office Equipment Total> ..................... Percentage of net sales (%) ............ Domestic............................................ Overseas ............................................ < Other Businesses >.............................. Percentage of net sales (%) ........... Domestic............................................ Overseas ............................................ Grand Total ............................................ Percentage of net sales (%) ............ Domestic............................................ Percentage of net sales (%) ........... Overseas ............................................ Percentage of net sales (%) ........... The Americas................................ Percentage of net sales (%) ...... Europe........................................... Percentage of net sales (%) ...... Other ............................................. Percentage of net sales (%) ...... June 30, 2002 June 30, 2001 156,289 36.5 70,950 85,339 63,632 14.8 22,406 41,226 219,921 51.3 93,356 126,565 155,181 37.7 81,244 73,937 76,483 18.5 27,937 48,546 231,664 56.2 109,181 122,483 94,653 22.1 40,108 54,545 15,863 3.7 3,463 12,400 110,516 25.8 43,571 66,945 46,930 11.0 46,285 645 377,367 88.1 183,212 194,155 50,904 11.9 41,632 9,272 428,271 100.0 224,844 52.5 203,427 47.5 84,171 19.7 83,260 19.4 35,996 8.4 77,451 18.8 31,483 45,968 10,167 2.5 3,989 6,178 87,618 21.3 35,472 52,146 48,766 11.8 48,365 401 368,048 89.3 193,018 175,030 43,915 10.7 35,723 8,192 411,963 100.0 228,741 55.5 183,222 44.5 79,890 19.4 76,169 18.5 27,163 6.6 Change (%) +1,108 (0.7) (Millions of yen) Excluding foreign exchange impact(%) -3,541 (-2.3) -10,294 (-12.7) -10,294 (-12.7) +11,402 (15.4) +6,753 (9.1) -12,851 (-16.8) -15,146 (-19.8) -5,531 (-19.8) -5,531 (-19.8) -7,320 (-15.1) -9,615 (-19.8) -11,743 (-5.1) -18,687 (-8.1) -15,825 (-14.5) -15,825 (-14.5) +4,082 (3.3) -2,862 (-2.3) +17,202 (22.2) +14,037 (18.1) +8,625 (27.4) +8,577 (18.7) +5,696 (56.0) +8,625 (27.4) +5,412 (11.8) +5,615 (55.2) -526 (-13.2) -526 (-13.2) +6,222 (100.7) +6,141 (99.4) +22,898 (26.1) +19,652 (22.4) +8,099 (22.8) +8,099 (22.8) +14,799 (28.4) +11,553 (22.2) -1,836 (-3.8) -1,881 (-3.9) -2,080 (-4.3) +244 (60.8) +9,319 (2.5) -2,080 (-4.3) +199 (49.6) -916 (-0.2) -9,806 (-5.1) +19,125 (10.9) +6,989 (15.9) -9,806 (-5.1) +8,890 (5.1) +6,534 (14.9) +5,909 (16.5) +1,080 (13.2) +16,308 (4.0) +5,909 (16.5) +625 (7.6) +5,618 (1.4) -3,897 (-1.7) -3,897 (-1.7) +20,205 (11.0) +9,515 (5.2) +4,281 (5.4) +1,426 (1.8) +7,091 (9.3) +754 (1.0) +8,833 (32.5) +7,335 (27.0) Each category includes the following products: Digital Imaging Systems ....... Digital PPCs, color PPCs, digital duplicators, facsimile machines, related supplies and services Other Imaging Systems ......... Analog PPCs, diazo copiers, and related supplies including thermal paper, and services Printing Systems ................... Multifunctional printers (MFPs), laser printers, related supplies, services and software Other Input/Output Systems.. Optical discs, systems and scanners Network System Solutions .... Personal computers, PC servers, network systems, network related software, and service/support Other Businesses ................... Digital cameras, analog cameras, semiconductors Reference: Exchange rate (average rate for the corresponding periods) US$ 1 ................................ EURO 1 ............................ Three months ended June 30, 2002 ¥127.01 ¥116.56 Three months ended June 30, 2001 ¥122.60 ¥107.25 -10Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 3.Consolidated Balance Sheets June 30, 2002 and March 31, 2002 Assets (Millions of yen) June 30, 2002 March 31, 2002 Change Current Assets ................................................................. Cash and cash equivalents (*) ..................................... Trade receivables ......................................................... Marketable securities.................................................... Inventories.................................................................... Other current assets ...................................................... 848,055 207,666 423,299 7,662 157,146 52,282 863,668 182,650 442,399 22,935 162,176 53,508 -15,613 +25,016 -19,100 -15,273 -5,030 -1,226 Fixed Assets ..................................................................... Tangible fixed assets .................................................... Finance receivable ....................................................... Other Investments and other assets............................... Total Assets...................................................................... 973,894 250,122 451,974 271,798 1,821,949 969,260 259,380 447,829 262,051 1,832,928 +4,634 -9,258 +4,145 +9,747 -10,979 Notes: Contents of cash and deposits Cash and cash equivalents (*) .................................................... Time deposits ............................................................................. June 30, 2002 203,062 4,604 March 31, 2002 170,172 12,478 *…Effective from April 1, 2002, Ricoh changed its policy for definition of cash and cash equivalents on its consolidated balance sheets and consolidated statements of cash flow. Results for prior years are restated. (See 6. Significant Accounting Policies (Consolidated) (6)) Liabilities and Minority Interest (Millions of yen) June 30, 2002 March 31, 2002 Change Current Liabilities ............................................................ Trade payable............................................................... Short-term borrowings.................................................. Other current liabilities................................................. 627,297 264,296 199,831 163,170 665,701 277,753 228,408 159,540 -38,404 -13,457 -28,577 +3,630 Fixed Liabilities................................................................ Long-term indebtedness ............................................... Retirement benefit obligation ....................................... Other fixed liabilities.................................................... Total Liabilities ................................................................ Minority Interest............................................................... 495,040 355,005 113,491 26,544 1,122,337 51,269 483,159 332,995 119,572 30,592 1,148,860 51,048 +11,881 +22,010 -6,081 -4,048 -26,523 +221 June 30, 2002 March 31, 2002 Shareholders’ Investment ................................................. Common stock.............................................................. Additional paid-in capital............................................. Retained earnings ......................................................... Accumulated other comprehensive income .................. Treasury stock at cost .................................................. Total Liabilities and Shareholders’ Investment ................ 648,343 120,465 171,632 400,172 -43,333 -593 1,821,949 633,020 120,461 171,628 385,741 -44,376 -434 1,832,928 +15,323 +4 +4 +14,431 +1,043 -159 -10,979 Notes: Accumulated other comprehensive income (losses); Net unrealized holding gains on available-for-sale securities .... Minimum pension liability adjustments ..................................... Net unrealized gains (losses) on derivative instruments............. Cumulative translation adjustments ........................................... June 30, 2002 9,991 -35,287 -172 -17,865 March 31, 2002 10,566 -39,710 -207 -15,025 Change -575 +4,423 +35 -2,840 Shareholders’ Investment (Millions of yen) Change Exchange rate (end of term) June 30, 2002 US$ 1.......................................... EURO 1...................................... ¥119.50 ¥118.13 March 31, 2002 ¥133.25 ¥116.14 -11Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 4.Consolidated Statements of Cash Flow For three months ended June 30, 2002 and 2001 (Millions of yen) Three months ended Three months ended June 30, 2002 June 30, 2001 I. Cash Flows from Operating Activities: 1. Net income ...................................................................................... 2. Adjustments to reconcile net income to net cash provided by operating activities; Depreciation and amortization .................................................... Equity in earnings of affiliates, net of dividends received........... Deferred income taxes................................................................. Loss on disposal and sales of plant and equipment ..................... Changes in assets and liabilities; Decrease (increase) in trade receivables ................................ Decrease in inventories ........................................................... Increase in finance receivables................................................ Decrease in trade payables ...................................................... (Decrease) increase in accrued income taxes and accrued expenses and other................................................................... Retirement benefit obligation, net ........................................... Other, net..................................................................................... Net cash provided by operating activities............................................ II. Cash Flows from Investing Activities: 1. Proceeds from sales of plant and equipment ................................... 2. Expenditures for plant and equipment............................................. 3. Payments for purchases of available-for-sale securities .................. 4. Proceeds from sales of available-for-sale securities ........................ 5. Decrease (increase) in investments in and advances to affiliates .... 6. Decrease (increase) in time deposits ............................................... 7. Other, net......................................................................................... Net cash used in investing activities .................................................... III. Cash Flows from Financing Activities: 1. Proceeds from long-term indebtedness............................................ 2. Repayment of long-term indebtedness ............................................ 3. Decrease in short-term borrowings, net........................................... 4. Proceeds from issuance of long-term debt securities....................... 5. Repayment of long-term debt securities .......................................... 6. Cash dividends paid ........................................................................ 7. Other, net......................................................................................... Net cash provided by (used in) financing activities............................. IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents ... V. Net Increase (Decrease) in Cash and Cash Equivalents..................... VI. Cash and Cash Equivalents at Beginning of Year ........................... VII. Cash and Cash Equivalents at End of Period ................................. Year ended March 31,2002 19,521 14,879 61,614 19,148 -191 -1,679 83 15,149 143 -3,586 114 73,782 -1,260 -1,218 1,665 12,259 295 -9,743 -9,830 -7,017 941 -11,379 -4,111 -20,006 21,194 -13,620 -19,535 7,839 2,515 14,142 54,359 6,364 2,625 2,426 16,548 -13,592 8,374 7,740 105,138 34 -17,609 -20,002 16,960 -516 7,370 -1,654 -15,417 273 -17,954 -5,890 2,831 -144 -981 -21,865 756 -75,231 -10,025 24,568 5 -477 -21,017 -81,421 29,551 -5,601 -32,249 10,000 -5,087 -405 -3,791 -2,261 32,890 170,172 203,062 7,805 -8,758 -7,789 10,000 -4,154 -227 -3,123 362 -8,078 107,746 99,668 71,075 -79,640 -39,414 103,500 -10,000 -8,322 -964 36,235 2,474 62,426 107,746 170,172 Note: Effective from April 1, 2002, Ricoh changed its policy for definition of cash and cash equivalents on its consolidated balance sheets and consolidated statements of cash flow. Results for prior years are restated. (See 6. Significant Accounting Policies (Consolidated) (6)) -12Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 5.Segment Information (1) Business Segment Information (Three months ended June 30, 2002 and 2001) (Millions of yen) Three months ended June 30, 2002 Net sales: Office Equipment ....................................................... Other Businesses ........................................................ Intersegment ............................................................... Total .............................................................................. Operating expenses: Office Equipment ....................................................... Other Businesses ........................................................ Intersegment ............................................................... Corporate.................................................................... Total .............................................................................. Operating income: Office Equipment ....................................................... Operating income on office equipment sales (%) Other Businesses ........................................................ Operating income on other business sales (%) ...... Intersegment ............................................................... Corporate.................................................................... Consolidated operating income ...................................... Other income (expenses) ................................................ Income before income taxes ........................................... Three months ended June 30, 2001 Change (%) 377,367 51,642 -738 428,271 368,048 45,066 -1,151 411,963 +9,319 (2.5) +6,576 (14.6) +413 (-35.9) +16,308 (4.0) 330,766 51,281 -751 11,048 392,344 326,030 44,445 -1,151 11,027 380,351 +4,736 (1.5) +6,836 (15.4) +400 (-34.8) +21 (0.2) +11,993 (3.2) 46,601 12.3 361 0.7 13 -11,048 35,927 -3,657 32,270 42,018 11.4 621 1.4 0 -11,027 31,612 -4,431 27,181 +4,583 0.9 -260 -0.7 +13 -21 +4,315 +774 +5,089 (10.9) (-41.9) (-) (0.2) (13.6) (-17.5) (18.7) -13Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 (2) Geographic Segment Information (Three months ended June 30, 2002 and 2001) (Millions of yen) Three months ended June 30, 2002 Net sales: Japan Unaffiliated Customers............................................ Intersegment ............................................................ Total ....................................................................... The Americas Unaffiliated Customers............................................ Intersegment ............................................................ Total ....................................................................... Europe Unaffiliated Customers............................................ Intersegment ............................................................ Total ....................................................................... Other Unaffiliated Customers............................................ Intersegment ............................................................ Total ....................................................................... Intersegment ............................................................ Total ........................................................................... Operating expenses: Japan........................................................................ The Americas .......................................................... Europe ..................................................................... Other........................................................................ Corporate and eliminations...................................... Total Operating income: Japan........................................................................ Operating income on sales in Japan (%) ............ The Americas .......................................................... Operating income on sales in the Americas (%) Europe ..................................................................... Operating income on sales in Europe (%) .......... Other........................................................................ Operating income on sales in other regions (%) Corporate and eliminations...................................... Consolidated operating income ................................... Other income (expenses) ............................................. Income before income taxes ........................................ Three months ended June 30, 2001 Change (%) 240,204 78,012 318,216 235,115 78,923 314,038 +5,089 -911 +4,178 (2.2) (-1.2) (1.3) 82,206 1,259 83,465 79,527 1,492 81,019 +2,679 -233 +2,446 (3.4) (-15.6) (3.0) 83,622 897 84,519 76,206 936 77,142 +7,416 -39 +7,377 (9.7) (-4.2) (9.6) 22,239 15,576 37,815 -95,744 428,271 21,115 14,513 35,628 -95,864 411,963 +1,124 +1,063 +2,187 +120 +16,308 (5.3) (7.3) (6.1) (-0.1) (4.0) 292,493 82,091 81,226 35,557 -99,023 392,344 280,952 81,869 74,602 34,419 -91,491 380,351 +11,541 +222 +6,624 +1,138 -7,532 +11,993 (4.1) (0.3) (8.9) (3.3) (8.2) (3.2) 25,723 8.1 1,374 1.6 3,293 3.9 2,258 6.0 3,279 35,927 -3,657 32,270 33,086 10.5 -850 -1.0 2,540 3.3 1,209 3.4 -4,373 31,612 -4,431 27,181 -7,363 -2.4 +2,224 2.6 +753 0.6 +1,049 2.6 +7,652 +4,315 +774 +5,089 (-22.3) (-) (29.6) (86.8) (-) (13.6) (-17.5) (18.7) -14Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 6.Significant Accounting Policies (Consolidated) 1. Items relating to the scale of consolidation and the application of the equity method Consolidated subsidiaries: 2 additions including Ricoh Software Technology (Shanghai) Co., Ltd. 5 removals including INRG Hong Kong Ltd. Companies accounted for by the equity method: (No change) 2. Consolidated Accounting Policies (Summary) (1) Principles of Consolidation The consolidated financial statements include the accounts of Ricoh. Investments in 20% to 50% owned companies are accounted for on the equity basis. All significant inter-company balances and transactions have been eliminated in consolidation. The accounts of certain consolidated subsidiaries have been included on the basis of fiscal periods ended three months or less prior to March 31, and significant transactions after then are appropriately adjusted in consolidation. (2) Securities Ricoh conforms with SFAS No.115, "Accounting for Certain Investments in Debt and Equity Securities," which requires certain investments in debt and equity securities to be classified as either held-to-maturity, trading, or available-for-sale securities. Available-for-sale are reported at fair value with unrealized gains and losses, net of related taxes, excluded from earnings and reported in accumulated other comprehensive income (loss). The cost of the securities sold was computed based on the average cost of each security held at the time of sale. (3) Inventories Inventories are mainly stated at the lower of average cost or market. Inventory costs include raw materials, labor and manufacturing overheads. (4) Plant and Equipment Depreciation of plant and equipment is computed principally by using the declining-balance method over the estimated useful lives. Most of the foreign subsidiaries have adopted the straight-line method for computing depreciation. Certain leased buildings, machinery and equipment are accounted for as capital leases in conformity with SFAS No. 13, "Accounting for Leases." (5) Goodwill and Other Intangible Assets In conformity with SFAS No.142, "Goodwill and Other Intangible Assets." goodwill and certain other intangible assets that are determined to have indefinite life are not amortized. SFAS No. 142 requires to test for impairment at least annually. (6) Cash and Cash Equivalents Effective from April 1, 2002, Ricoh changed its policy for definition of cash and cash equivalents on its consolidated balance sheets and consolidated statements of cash flow. Cash and cash equivalents formerly included cash, negotiable certificates of deposit, time deposits with a maturity of three months or less at the date of purchase and so on. In addition to the above, Ricoh decided to include short-term investment securities into cash equivalents which are available-for-sale at any time and present insignificant risk of changes in value, such as Money Management Funds, Free Financial Funds and Medium-term Government Securities Funds. Ricoh believes this change to disclose a financial status more preferable, since such short-term investment securities increase in fund operation of Ricoh. Accompanied by this change, Ricoh restated consolidated balance sheet and consolidated statements of cash flow for prior years. The effect of this change was to increase cash and cash equivalents increased by ¥26,782 million and ¥27,664 million and to decrease equivalently Marketable securities on balance sheet as of June 30, 2001 and March 31, 2002, respectively, and net cash used in investing activities by ¥16,507 million and ¥15,629 million in consolidated statements of cash flow for the three months ended June 30, 2001 and year ended March 31, 2002. (7) Use of Estimates Management of the Company has made a number of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including impairment losses of long-lived assets and the disclosures of fair value of financial instruments and contingent assets and liabilities, to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. -15Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 3. Note New Accounting Standards From fiscal 2003, Ricoh has adopted SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.”SFAS No. 141 requires the use of only the purchase method of accounting for business combinations and prohibits the use of the pooling of interests method. SFAS No. 142 eliminates the amortization of goodwill, requires annual impairment testing of goodwill. Ricoh is currently in the process of completing the first step of the transitional impairment test for goodwill and will complete this assessment before the second quarter ending September 30, 2002 as required by SFAS No. 142. Until this assessment is completed, Ricoh has not determined whether there is any impairment of its existing goodwill. -16Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 Appendix Consolidated Performance Forecast (1) Forecast of Performance Outline (Consolidated) (billions of yen) Half year ended September 30, ‘02 (Forecast) Net sales .......................................................... Gross profit ..................................................... Operating income ........................................... Income before income taxes ........................... Net income ..................................................... Net income per share (yen) ............................. Capital expenditure ................................ Depreciation for tangible fixed assets ............ R&D expenditure ........................................... Interest income (expenses) net ....................... Exchange rate (Yen/US$) ............................... Exchange rate (Yen/EURO) ........................... 855.0 365.8 66.0 59.5 35.0 48.14 40.0 34.0 41.0 -1.4 121.01 115.78 Change (%) Year ended March 31, ‘03 (Forecast) 4.3 7.0 10.2 13.3 23.2 +7.17 +0.2 +0.9 +1.0 +0.3 -1.15 +7.99 1,748.0 741.8 140.0 126.5 72.5 99.72 82.0 75.0 83.0 -3.3 118.00 115.39 Change (%) 4.5 6.0 7.9 11.0 17.7 +11.45 +6.3 +1.2 +2.2 +0.2 -7.10 +4.79 Year ended March 31, ‘02 1,672.3 699.9 129.6 113.9 61.6 88.27 75.6 73.7 80.7 -3.4 125.10 110.60 Exchange rate US$ 1 EURO 1 Half year ended Sept. 30, ‘01 (Actual) Year ended Mar. 31, ‘02 (Actual) 3 months ended Sept. 30, ‘02 (Forecast) Half year ended Sept. 30, ‘02 (Forecast) 2nd half year ended Mar. 31, ‘03 (Forecast) Year ended Mar. 31, ‘03 (Forecast) ¥122.16 ¥107.79 ¥125.10 ¥110.60 ¥115.00 ¥115.00 ¥121.01 ¥115.78 ¥115.00 ¥115.00 ¥118.00 ¥115.39 -17Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002 (2) Forecast of Sales by Product Category (Consolidated) (billions of yen) Half year ended September 30, 2002 Forecast Imaging Solutions: Digital Imaging Systems........................... 313.2 Domestic............................................ 137.0 Overseas ............................................ 176.2 Other Imaging Systems ............................ 117.0 Domestic............................................ 39.5 Overseas ............................................ 77.5 Total Imaging Solutions ........................... 430.2 Domestic............................................ 176.5 Overseas ............................................ 253.7 Networking input/output systems: Printing Systems..................................... 190.5 Domestic............................................ 84.5 Overseas ............................................ 106.0 Other Input/Output Systems ..................... 30.0 Domestic............................................ 6.0 Overseas ............................................ 24.0 Total Networking input/output systems. 220.5 Domestic............................................ 90.5 Overseas ............................................ 130.0 Network system solutions......................... 100.3 Domestic............................................ 99.0 Overseas ............................................ 1.3 <Office Equipment Total> ....................... 751.0 Domestic............................................ 366.0 Overseas ............................................ 385.0 < Other Businesses >................................ 104.0 Domestic............................................ 85.0 Overseas ............................................ 19.0 Grand Total .............................................. 855.0 Domestic............................................ 451.0 Overseas ............................................ 404.0 The Americas................................ 167.0 Europe........................................... 168.0 Other ............................................. 69.0 * … Excluding foreign exchange impact Year ended Mar. 31, 2002 Change Forecast(*) Change Actual (%) (%) Year ended March 31, 2003 Change Forecast(*) Change (%) (%) Forecast (0.4) (-10.2) (10.5) (-20.1) (-23.4) (-18.2) (-6.1) (-13.5) (-0.2) 308.8 137.0 171.8 114.8 39.5 75.3 423.7 176.5 247.2 (-1.0) (-10.2) (7.8) (-21.5) (-23.4) (-20.5) (-7.6) (-13.5) (-2.8) 657.0 272.5 384.5 219.5 75.0 144.5 876.5 347.5 529.0 (0.4) (-7.6) (6.9) (-21.5) (-23.0) (-20.8) (-6.2) (-11.4) (-2.4) 660.6 272.5 388.1 221.2 75.0 146.2 881.8 347.5 534.3 (0.9) (-7.6) (7.9) (-20.9) (-23.0) (-19.8) (-5.6) (-11.4) (-1.4) 654.4 294.8 359.5 297.7 97.3 182.3 934.1 392.1 541.9 (28.4) (28.2) (28.5) (50.8) (-18.8) (91.9) (31.0) (23.5) (36.8) (-2.6) (-2.9) (37.4) (2.9) (-3.5) (9.9) (14.9) (15.9) (10.5) (4.3) (-0.4) (10.0) (2.7) (13.4) (22.0) 187.5 84.5 103.0 29.9 6.0 23.9 217.4 90.5 126.9 100.2 99.0 1.2 741.4 366.0 375.4 103.5 85.0 18.5 845.0 451.0 394.0 168.6 156.0 69.4 (26.4) 389.5 (30.2) 391.9 (31.0) (28.2) 182.5 (29.2) 182.5 (29.2) (24.9) 207.0 (31.0) 209.4 (32.6) (50.4) 66.0 (46.6) 66.0 (46.8) (-18.8) 12.0 (-19.8) 12.0 (-19.8) (91.3) 54.0 (79.7) 54.0 (79.9) (29.2) 455.5 (32.3) 458.0 (33.1) (23.5) 194.5 (24.5) 194.5 (24.5) (33.6) 261.0 (38.8) 263.5 (40.2) (-2.6) 207.0 (0.0) 207.0 (0.0) (-2.9) 204.0 (-0.3) 204.0 (-0.3) (33.0) 3.0 (28.7) 3.0 (30.2) (1.6) 1,539.0 (3.6) 1,546.9 (4.1) (-3.5) 746.0 (-0.9) 746.0 (-0.9) (7.2) 793.0 (8.3) 800.9 (9.4) (14.4) 209.0 (11.8) 209.3 (12.0) (15.9) 171.0 (14.3) 171.0 (14.3) (8.1) 38.0 (1.7) 38.3 (2.7) (3.0) 1,748.0 (4.5) 1,756.3 (5.0) (-0.4) 917.0 (1.6) 917.0 (1.6) (7.3) 831.0 (8.0) 839.3 (9.0) (3.6) 338.0 (-1.1) 357.7 (4.7) (5.3) 351.0 (12.7) 336.0 (7.9) (22.7) 142.0 (21.8) 145.6 (24.8) 299.2 141.2 157.9 45.0 14.9 30.0 344.2 156.2 188.0 206.9 204.6 2.3 1,485.3 753.0 732.3 186.9 149.6 37.3 1,672.3 902.6 769.6 341.7 311.3 116.6 Each category includes the following products: Digital Imaging Systems .......... Digital PPCs, color PPCs, digital duplicators, facsimile machines, related supplies and services Other Imaging Systems ............ Analog PPCs, diazo copiers, and related supplies including thermal paper, and services Printing Systems ...................... Multifunctional printers (MFPs), laser printers, related supplies, services and software Other Input/Output Systems..... Optical discs, systems and scanners Network System Solutions ....... Personal computers, PC servers, network systems, network related software, and service/support Other Businesses ...................... Digital cameras, analog cameras, semiconductors Exchange rate Half year ended Sept. 30, ‘01 (Actual) Year ended Mar. 31, ‘02 (Actual) 3 months ended Sept. 30, ‘02 (Forecast) Half year ended Sept. 30, ‘02 (Forecast) 2nd half year ended Mar. 31, ‘03 (Forecast) Year ended Mar. 31, ‘03 (Forecast) US$ 1 ¥122.16 ¥125.10 ¥115.00 ¥121.01 ¥115.00 ¥118.00 EURO 1 ¥107.79 ¥110.60 ¥115.00 ¥115.78 ¥115.00 ¥115.39 -18Ricoh Co., Ltd. Quarterly Report Three months ended June 30, 2002