Ricoh Company, Ltd. and Consolidated Subsidiaries FLASH REPORT (Consolidated. Year ended March 31, 2000) –Translation– Date of approval for the financial results for the year ended March 31, 2000, at the Board of Directors' meeting: May 11, 2000 1. Results for the period from April 1, 1999 to March 31, 2000 (1)Operating Results (Millions of yen) 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 (%) ...................................... Note: Year ended March 31, 2000 Year ended March 31, '99 1,447,157 1.5 88,921 20.9 70,393 32.7 41,928 36.8 60.61 56.06 8.1 4.4 4.9 1,425,999 1.6 73,547 -18.0 53,054 -22.5 30,655 1.7 44.33 40.94 6.4 3.2 3.7 i. Equity in income (loss) of affiliates: ¥2,497 million (¥4,095 million in previous period) ii. Difference between fair value of available-for-sale securities and cost amount: ¥15,643 million iii. The difference between derivative transaction estimated fair value and carrying amount: ¥2,520 million. iv. Changes in accounting method, etc.: no change (2)Financial Position (Millions of yen) Total assets......................................................................................... Shareholders’ equity........................................................................... Equity ratio (%).................................................................................. Equity per share (yen) ........................................................................ Year ended March 31, 2000 Year ended March 31, '99 1,543,320 541,506 35.1 782.43 1,628,017 487,459 29.9 704.83 (3)Cash Flows (Millions of yen) Year ended March 31, 2000 Cash flows from operating activities ................................................... Cash flows from investing activities ................................................... Cash flows from financing activities................................................... Cash and cash equivalents at End of Year .......................................... 135,640 -28,490 -121,249 111,838 Year ended March 31, '99 106,708 -89,235 -25,437 130,655 (4) Items relating to the scale of consolidation and the application of the equity method: Number of consolidated subsidiaries: 258; nonconsolidated subsidiaries: 45; affiliated companies: 24 (5) Changes in accounting method, etc.: Consolidated subsidiaries: 18 additions; 6 removals Companies accounted for by the equity method: 3 additions; 16 removals Notes: 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. 2. Forecast of operating results from April 1, 2000 to March 31, 2001 (Millions of yen) Half year ended September 30, 2000 Net sales............................................................................................. Operating income............................................................................... Income before income taxes................................................................ Net income......................................................................................... 730,000 48,000 41,000 23,500 Year ended March 31, 2001 1,500,000 100,000 85,000 48,000 Notes: Net income per share (Consolidated) 69.36 yen Ricoh Co., Ltd. Flash Report Year ended March 31 ,2000 Group Position The Ricoh Group comprises 327 companies. Their development, manufacturing, sales, and service activities center on office equipment (copiers and related supplies and communications and information systems), optical equipment, and other devices. The parent company heads development. The parent company and subsidiaries and affiliates maintain an integrated domestic and international manufacturing structure. Below, we have listed our main product areas and the positions of key subsidiaries and affiliates. <Office Equipment> In this business category, the Company provides products and systems that help enhance the office productivity of customers. Major products include: Digital/analog copiers, laser printers, facsimile machines, stencil duplicators, optical disks. Ricoh also provides solution systems including personal computers and servers, utilizing its information technology. The Company also provides support, service, and related supplies, as well as use ware including IT environment setup, network administration, and user support. [Main Subsidiaries and Affiliates] Production Japan...Tohoku Ricoh Co., Ltd.; Ricoh Elemex Corporation, Ricoh Unitechno Co., Ltd., Hasama Ricoh Inc., Ricoh Microelectronics Co., Ltd., Ricoh Keiki Co., Ltd. The Americas...Ricoh Electronics, Inc. Europe...Ricoh UK Products Ltd. and Ricoh Industrie France S.A. Other regions...Ricoh Asia Industry (Shenzhen) Ltd., Sindo Ricoh Co., Ltd., Shanghai Ricoh Facsimile Co., Ltd. Sales and Service Japan ...Tokyo Ricoh Co., Ltd. Osaka Ricoh Co., Ltd. and 44 other sales companies nationwide, Ricoh Technosystems Co., Ltd.; NBS Ricoh Co., Ltd. The Americas...Ricoh Corporation Savin Corporation Europe...Ricoh Europe B.V., Ricoh Deutschland GmbH, Ricoh UK Ltd., Ricoh France S.A., Ricoh Espana S.A., Ricoh Italia S.p.A., Gestetner Holdings PLC Other regions...Ricoh Hong Kong Ltd., Ricoh Asia Pacific Pte. Ltd., Ricoh Australia Pty, Ltd., Ricoh New Zealand Ltd. <Other Businesses> Manufacturing and marketing analog cameras and optical lenses, semiconductor devices, and measuring equipment, and providing leasing and logistics services [Main Subsidiaries and Affiliates] Production Japan...Ricoh Optical Industries Co., Ltd., Ricoh Elemex Corporation Overseas...Taiwan Ricoh Co., Ltd., Dong Guan Tailien Optical Co., Ltd. Sales Ricoh Corporation, Ricoh Photo Products (Asia) Ltd. Other areas Ricoh Leasing Company, Ltd., Ricoh Logistics System Co., Ltd. <Business System Chart> This group potion can be shown by the following chart. Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 Customer Customer 【Overseas Sales Subsidiaries 】 (The Americas) RICOH CORPORATION ※ (Europe) RICOH EUROPE B.V. RICOH DEUTSCHLAND GmbH. RICOH UK LTD. RICOH FRANCE S.A. RICOH ITALIA S.p.A. GESTETNER HOLDINGS PLC.※ (Other regions) RICOH HONG KONG, LTD. RICOH ASIA PACIFIC PTE,LTD RICOH AUSTRALIA PTY, LTD. RICOH NEW ZEALAND LTD. and so on. 【Domestic Sales Subsidiaries 】 Hokkaido Ricoh Co., Ltd. Miyagi Ricoh Co., Ltd. Saitama Ricoh Co., Ltd.. Tokyo Ricoh Co., Ltd.. Kanagawa Ricoh Co., Ltd.. Aichi Ricoh Co., Ltd.. Osaka Ricoh Co., Ltd.. Hyogo Ricoh Co., Ltd.. Fukuoka Ricoh Co., Ltd.. NBS Ricoh Co., Ltd.. Ricoh Technosystems Co., Ltd. and so on. 【Overseas Sales Subsidiaries】 (The Americas) RICOH CORPORATION ※ (Europe) GESTETNER HOLDINGS PLC. ※ (Other regions) RICOH PHOTO PRODUCTS (ASIA) LTD. and so on. 【Parent company】 【Parentcompany】 Ricoh Ricoh Company, Company, Ltd. Ltd. 【Domestic Production Subsidiaries】 Tohoku Ricoh Co., Ltd., Hasama Ricoh Inc., Ricoh Optical Industries Co., Ltd., Ricoh Unitechno Co., Ltd., Ricoh Elemex Corporation, Ricoh Keiki Co., Ltd., Ricoh Microelectronics, Co., Ltd. 【Overseas Production Subsidiaries】 【Overseas Production Affiliates】 (The Americas) (Other regions) RICOH ELECTRONICS,INC. SINDO RICOH CO., LTD. (Europe) SHANGHAI RICOH FACSIMILE RICOH UK PRODUCTS LTD. CO., LTD. RICOH INDUSTRIE FRANCE S.A. and so on GR ADVANCED MATERIALS LTD. (Other regions) RICOH ASIA INDUSTRY (SHENZHEN) LTD. and so on 【Overseas Production Subsidiaries】 (Other regions) TAIWAN RICOH CO., LTD. DONG GUAN TAILIEN OPTICAL CO., LTD. and so on 【Other Subsidiaries】 Ricoh Leasing Co., Ltd. Ricoh Logistics Systems Co., Ltd. Ricoh San-Ai Service Co., Ltd. 【Other Affiliates】 Coca-Cola West Japan Co., Ltd. Office Office Equipment Equipment Supply of products and service Supply of parts and equipment Other OtherBusinesses Businesses * RICOH CORPORATION and GESTETNER HOLDINDS PLC.conduct both Office Equipment and Other Businesses. Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 Sales by Product Line (Consolidated) For the years ended March 31, 2000 and 1999. (Millions of yen) Year ended Year ended March 31, 2000 March 31, '99 Change(%) Copiers and Related Supplies: Domestic .................................................................. Overseas .................................................................. Total................................................................................ Percentage of net sales (%) ...................................... 453,600 416,691 870,291 60.1 450,797 456,111 906,908 63.6 +2,803 (0.6) -39,420 (-8.6) -36,617 (-4.0) Communications and Information Systems: Domestic .................................................................. Overseas ...................................................................... Total................................................................................. Percentage of net sales (%) ...................................... 262,186 120,593 382,779 26.5 237,389 106,641 344,030 24.1 +24,797 (10.4) +13,952 (13.1) +38,749 (11.3) Other Businesses: Domestic .................................................................. Overseas ..................................................................... Total................................................................................ Percentage of net sales (%) ...................................... 157,384 36,703 194,087 13.4 132,789 42,272 175,061 12.3 +24,595 (18.5) -5,569(-13.2) +19,026 (10.9) Total: Domestic .................................................................. 873,170 820,975 +52,195 (6.4) Percentage of net sales (%) ...................................... 60.3 57.6 Overseas ...................................................................... 573,987 605,024 -31,037 (-5.1) Percentage of net sales (%)........................................ 39.7 42.4 The Americas ...................................................... 231,181 239,623 -8,442 (-3.5) Percentage of net sales (%)…………………........ 16.0 16.8 Europe ................................................................. 258,515 283,373 -24,858 (-8.8) Percentage of net sales (%)…………………........ 17.9 19.9 Other ................................................................... 84,291 82,028 +2,263 (2.8) Percentage of net sales (%)…………………........ 5.8 5.8 Total................................................................................ 1,447,157 1,425,999 +21,158 (1.5) Percentage of net sales (%)......................................... 100.0 100.0 Note: From the period under review, Ricoh moved optical disc products from Other Businesses to the Communications and Information Systems category. In accordance with it, optical disc products business in the fiscal year 1999, ended March 31, is included in the Communications and Information Systems category. Fiscal year ended March 31, 1999: Domestic ¥3,316 million; Overseas ¥13,171 million; Total ¥16,487 million Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 (Reference) Consolidated Sales by Category (Office equipment; other businesses) For the years ended March 31, 2000 and 1999. (Millions of yen) Year ended Year ended March 31, 2000 March 31, '99 Change(%) <Office Equipment> Imaging Solutions: Digital Imaging Systems .............................................. Percentage of net sales (%) ....................................... Domestic .................................................................. Overseas .................................................................. 546,206 37.7 299,709 246,497 486,310 34.1 266,640 219,670 Other Imaging Systems................................................ Percentage of net sales (%) ....................................... Domestic .................................................................. Overseas .................................................................. 351,817 24.3 149,221 202,596 467,996 32.8 191,432 276,564 -116,179(-24.8) Total Imaging Solutions .................................................... Percentage of net sales (%) ...................................... Domestic .................................................................. Overseas .................................................................. 898,023 62.1 448,930 449,093 954,306 66.9 458,072 496,234 -56,283 (-5.9) Networking input/output systems: Printing Systems .......................................................... Percentage of net sales (%) ....................................... Domestic .................................................................. Overseas .................................................................. 141,098 9.8 77,649 63,449 108,902 7.6 58,744 50,158 +32,196 (29.6) Other Input/Output Systems .............................................. Percentage of net sales (%) ....................................... Domestic .................................................................. Overseas .................................................................. 32,010 2.2 9,521 22,489 19,454 1.4 3,610 15,844 +12,556 (64.5) Total Networking input/output systems.............................. Percentage of net sales (%) ...................................... Domestic...................................................................... Overseas ...................................................................... 173,108 12.0 87,170 85,938 128,356 9.0 62,354 66,002 +44,752 (34.9) Network system solutions .................................................. Percentage of net sales (%) ...................................... Domestic .................................................................. Overseas ...................................................................... Office Equipment Total ..................................................... Percentage of net sales (%) ....................................... Domestic .................................................................. Overseas ...................................................................... 181,939 12.6 179,686 2,253 1,253,070 86.6 715,786 537,284 168,276 11.8 167,760 516 1,250,938 87.7 688,186 562,752 +13,663 (8.1) +59,896 (12.3) +33,069 (12.4) +26,827 (12.2) -42,211(-22.1) -73,968(-26.7) -9,142 (-2.0) -47,141 (-9.5) +18,905 (32.2) +13,291 (26.5) +5,911(163.7) +6,645 (41.9) +24,816 (39.8) +19,936 (30.2) +11,926 (7.1) +1,737(336.6) +2,132 (0.2) +27,600 (4.0) +25,468 (-4.5) Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 (Reference) Consolidated Sales by Category (Office equipment; other businesses)(Continued) For the years ended March 31, 2000 and 1999. Year ended Year ended March 31, 2000 March 31, '99 (Millions of yen) Change(%) < Other Businesses > Other Businesses............................................................. .. 194,087 175,061 +19,026 (10.9) Percentage of net sales (%) ...................................... 13.4 12.3 Domestic .................................................................. 157,384 132,789 +24,595 (18.5) Overseas ...................................................................... 36,703 42,272 -5,569(-13.2) Grand Total........................................................................... 1,447,157 1,425,999 +21,158 (1.5) Percentage of net sales (%)......................................... 100.0 100.0 Domestic .................................................................. 873,170 820,975 +52,195 (6.4) Percentage of net sales (%) ...................................... 60.3 57.6 Overseas ...................................................................... 573,987 605,024 -31,037 (-5.1) Percentage of net sales (%)........................................ 39.7 42.4 The Americas ...................................................... 231,181 239,623 -8,442 (-3.5) Percentage of net sales (%)…………………........ 16.0 16.8 Europe ................................................................. 258,515 283,373 -24,858 (-8.8) Percentage of net sales (%)…………………........ 17.9 19.9 Other ................................................................... 84,291 82,028 +2,263 (2.8) Percentage of net sales (%)…………………........ 5.8 5.8 Each category includes the following products: Digital Imaging Systems ............. Digital PPCs, color PPCs, stencil 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 and system scanners Network System Solutions........... Personal computers, PC servers, network systems, network related software, And service/support Other Businesses ......................... Digital cameras, analog cameras, semiconductors Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 II. Statements of Income (Consolidated) For the years ended March 31, 2000 and 1999 (Millions of yen) Year ended Year ended March 31, 2000 March 31, '99 Net sales ......................................................................... 1,447,157 Cost of sales .................................................................. 867,148 Percentage of net sales (%) .......................................... 59.9 Gross profit ...................................................................... 580,009 Percentage of net sales (%) .......................................... 40.1 Selling, general and administrative expenses........................ 491,088 Percentage of net sales (%) .......................................... 33.9 Operating income.............................................................. 88,921 Percentage of net sales (%) .......................................... 6.1 Other (income) expenses Interest and dividend income ....................................... 5,997 Percentage of net sales (%) ..................................... 0.4 Interest expense ........................................................... 10,181 Percentage of net sales (%) ..................................... 0.7 Other, net..................................................................... 14,344 Percentage of net sales (%) ..................................... 1.0 Income before income taxes, minority interests and equity in earnings of affiliates.............................................. 70,393 Percentage of net sales (%) .......................................... 4.9 Provision for income taxes................................................... 28,363 Percentage of net sales (%) .......................................... 2.0 Minority interests…………………. .................................. 2,599 Percentage of net sales (%)............................................. 0.2 Equity in earnings of affiliates.............................................. 2,497 Percentage of net sales (%)............................................. 0.2 Net income............................................................................ 41,928 Percentage of net sales (%)............................................. 2.9 1,425,999 857,423 60.1 568,576 39.9 495,029 34.7 73,547 5.2 5,933 0.4 11,661 0.8 14,765 1.0 53,054 3.7 24,555 1.7 1,939 0.1 4,095 0.3 30,655 2.1 Change (%) +21,158 (1.5) +9,725 (1.1) +11,433 (2.0) -3,941 (-0.8) +15,374 (20.9) +64 (1.1) -1,480(-12.7) -421 (-2.9) +17,339 (32.7) +3,808 (15.5) +660 (34.0) -1,598(-39.0) +11,273 (36.8) III. Net Income Per Share (Consolidated) For the years ended March 31, 2000 and 1999 (Yen) Year ended Year ended March 31, 2000 March 31, '99 Net income per share-basic (yen) ................................... Net income per share- diluted (yen)................................... 60.61 56.06 44.33 40.94 Change +16.28 +15.12 Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 IV. Balance Sheets (Consolidated) March 31, 2000 and 1999 (1) Assets (Millions of yen) March 31, 2000 March 31, '99 Current Assets Cash and cash equivalents.............................................. Trade receivables ........................................................... Marketable securities ..................................................... Inventories ..................................................................... Other current assets ....................................................... Total Current Assets............................................................ Fixed Assets Tangible fixed assets........................................................ Finance receivable ........................................................... Other Investments and other assets.................................... Total Fixed Assets............................................................... Total Assets......................................................................... Change 128,914 341,246 128,768 143,161 37,658 779,747 147,132 347,134 98,246 162,298 82,557 837,367 -18,218 -5,888 +30,522 -19,137 -44,899 -57,620 243,514 372,861 147,198 763,573 1,543,320 264,917 350,384 175,349 790,650 1,628,017 -21,403 +22,477 -28,151 -27,077 -84,697 (2)Liabilities and Minority Interest (Millions of yen) March 31, 2000 March 31, '99 Change Current Liabilities Trade payable................................................................. Short-term borrowings ................................................... Other current liabilities .................................................. Total Current Liabilities ...................................................... 261,100 207,162 123,932 592,194 249,159 308,716 103,331 661,206 +11,941 -101,554 +20,601 -69,012 Fixed Liabilities Long-term indebtedness.................................................... Estimated retirement allowances...................................... Other fixed liabilities........................................................ Total Fixed Liabilities....................................................... .. Total Liabilities ................................................................... Minority Interest……………………………………………. 307,962 37,837 17,463 363,262 955,456 46,358 344,580 82,283 14,831 441,694 1,102,900 37,658 -36,618 -44,446 +2,632 -78,432 -147,444 +8,700 (3) Shareholders’ Investment (Millions of yen) March 31, 2000 March 31, '99 Shareholders’ Investment Common stock ............................................................... Additional paid-in capital .............................................. Retained earnings .......................................................... Accumulated other comprehensive income..................... Total Shareholders’ Investment.............................................. Change 103,112 154,314 287,182 -3,102 541,506 102,849 154,055 252,863 -22,308 487,459 +263 +259 +34,319 +19,206 +54,047 Total Liabilities and Shareholders’ Investment ................... 1,543,320 1,628,017 -84,697 Note: Accumulated other comprehensive income; Net unrealized holding gains on available-for-sale securities ............................................ Minimum pension liability adjustments.......................... Cumulative translation adjustments................................ 18,299 -1,600 -19,801 8,944 -18,845 -12,407 +9,355 +17,245 -7,394 V. Retained Earnings For the years ended March 31, 2000 and 1999 (Millions of yen) Year ended March 31, 2000 Retained earnings (beginning balance) ............................................... Net income......................................................................................... Cash dividends ................................................................................... Retained earnings (ending balance) .................................................... 252,863 41,928 7,609 287,182 Year ended March 31, ‘99 229,817 30,655 7,609 252,863 Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 VI. Statements of Cash Flow (Consolidated) For the years ended March 31, 2000 and 1999 (Millions of yen) Year ended March 31, 2000 Year ended March 31, ‘99 I. Cash Flows from Operating Activities: 1. Net income ................................................................................ 41,928 30,655 2. Adjustments to reconcile net income to net cash provided by operating activities— Depreciation and amortization ................................................ 61,946 67,456 Equity in earnings of affiliates, net of dividends received ........ (846) (2,936) Estimated retirement allowances, net ...................................... 8,618 7,198 Deferred income taxes............................................................. (18,053) (3,497) Loss on disposal and sales of plant and equipment .................. 207 2,285 Changes in assets and liabilities, net of effects from acquisition— Decrease (increase) in trade receivables............................ (7,794) 5,818 Decrease in inventories .................................................... 8,502 22,038 Decrease (increase) in finance receivables ........................ (22,914) 16,921 (Decrease) increase in trade payables................................ 23,852 (29,961) (Decrease) increase in accrued income taxes and accrued expenses and other .............................................. 27,620 (14,433) Other, net......................................................................... 12,574 5,164 Net cash provided by operating activities ......................................... 135,640 106,708 II. Cash Flows from Investing Activities: 1. Proceeds from sales of plant and equipment ............................... 2,989 486 2. Expenditures for plant and equipment........................................ (56,930) (68,990) 3. Payments for purchases of available-for-sale securities ............... (54,194) (60,883) 4. Proceeds from sales of available-for-sale securities..................... 24,534 54,777 5. (Increase) decrease in investments in and advances to affiliates.. 4,254 (2,258) 6. Decrease (increase) in time deposits........................................... (1,571) 3,794 7. Decrease (Increase) in cash deposits for assignment of debt securities 50,000 (25,376) 8. Other, net................................................................................... 2,428 9,215 Net cash used in investing activities ................................................ (28,490) (89,235) III. Cash Flows from Financing Activities: 1. Proceeds from long-term indebtedness ....................................... 8,362 129,816 2. Repayment of long-term indebtedness ........................................ (36,699) (128,917) 3. (Decrease) increase in short-term borrowings, net ...................... (56,529) (58,727) 4. Proceeds from issuance of long-term debt securities ................... 35,000 40,000 5. Repayment of long-term debt securities...................................... (66,620) 6. Cash dividends paid................................................................... (7,595) (7,609) 7. Other, net................................................................................... 2,832 Net cash provided by (used in) financing activities .......................... (121,249) (25,437) IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents . (4,718) (2,715) V. Net Increase (Decrease) in Cash and Cash Equivalents.................. (18,817) (10,679) VI. Cash and Cash Equivalents at Beginning of Year ......................... 130,655 141,334 VII. Cash and Cash Equivalents at End of Year.................................. 111,838 130,655 Supplemental Disclosures of Cash Flow Information: Cash Paid during the Year for— Interest ........................................................................................ 17,305 17,970 Income taxes ...................................................................................... 26,546 34,618 Note: Our cash flow for the year included additional deposits of ¥50.0 billion based on corporate bond underwriting contracts. Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 Significant Accounting Policies (Consolidated) 1. Items relating to the scale of consolidation and the application of the equity method Consolidated subsidiaries: 18 additions including INRG Hog Kong Ltd.(from equity method) 6 removals including Ricoh Parts and Components Ltd.(liquidation) Companies accounted for by the equity method: 3 additions including Foto Island (NSW) Pty, Ltd.(from consolidated subsidiaries) 16 removals including Rios Systems Co., Ltd..(liquidation) 2. Consolidated Accounting Policies (1) Principles of Consolidation The consolidated financial statements include the accounts of Ricoh. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in affiliated companies are accounted for on the equity basis. (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 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 Ricoh has classified as goodwill the cost in excess of fair value of the net assets of major companies acquired in purchase transactions. Goodwill is being amortized on a straight-line method over the estimated periods benefited, not to exceed 20 years. (6) 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, and the disclosure of contingent assets and liabilities, to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 VII. Segment Information 1. Industry Segment Information For the years ended March 31, 2000 and 1999 (Millions of yen) Year ended Year ended March 31, 2000 March 31, '99 Change (%) Net sales: Office Equipment......................................................... 1,253,070 1,250,938 +2,132 (0.2) Other Businesses.......................................................... 197,490 179,084 +18,406 (10.3) Intersegment ................................................................ -3,403 -4,023 +620(-15.4) Total ................................................................................ 1,447,157 1,425,999 +21,158 (1.5) Operating expenses: Office Equipment......................................................... 1,124,675 1,139,690 -15,015 (-1.3) Other Businesses.......................................................... 191,447 175,239 +16,208 (9.2) Intersegment ................................................................ -3,410 -4,049 +639(-15.8) Corporate and eliminations .......................................... 45,524 41,572 +3,952 (9.5) Total ................................................................................ 1,358,236 1,352,452 +5,784 (0.4) Operating income: Office Equipment......................................................... 128,395 111,248 +17,147 (15.4) Other Businesses.......................................................... 6,043 3,845 +2,198 (57.2) Intersegment ................................................................ 7 26 -19(-73.1) Corporate and eliminations .......................................... -45,524 -41,572 -3,952 (9.5) Consolidated operating income.......................................... 88,921 73,547 +15,374 (20.9) Other income(expenses) .................................................... -18,528 -20,493 +1,965 (-9.6) Consolidated pretax profit ................................................. 70,393 53,054 +17,339 (32.7) Identifiable assets: Office Equipment......................................................... 965,316 1,023,556 -58,240 (-5.7) Other Businesses.......................................................... 161,017 187,757 -26,740(-14.2) Intersegment ................................................................ -7,509 -7,690 +181 (-2.4) Corporate and eliminations .......................................... 424,496 424,394 +102 (0.0) Total ................................................................................ 1,543,320 1,628,017 -84,697 (-5.2) Capital expenditure: Office Equipment......................................................... 51,817 61,626 -9,809(-15.9) Other Businesses.......................................................... 5,561 7,370 -1,809(-24.5) Corporate..................................................................... 978 1,473 -495(-33.6) Total ................................................................................ 58,356 70,469 -12,113(-17.2) Depreciation and Amortization: Office Equipment......................................................... 54,046 57,033 -2,987 (-5.2) Other Businesses.......................................................... 6,838 8,887 -2,049(-23.1) Corporate..................................................................... 1,062 1,536 -474(-30.9) Total ................................................................................ 61,946 67,456 -5,510 (-8.2) Note: From the period under review, Ricoh moved optical disc products from Other Businesses to the Office Equipment category. This change increased sales in the latter category by ¥16,487 million, while decreasing sales in the former category by the same amount. In operating income, Office Equipment category decreased by ¥2,649 million, while Other Businesses increased by the same amount. And in the Office Equipment category, identifiable assets increased by ¥22,337 million, capital expenditure increased by ¥2,157 million, depreciation and amortization increased by ¥2,482 million, while in the Other Business Category, the corresponding items decreased by the same amount respectively. Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 2. Geographic Segment Information For the years ended March 31, 2000 and 1999 (Millions of yen) Year ended Year ended March 31, 2000 March 31, '99 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............................................................... Euro ......................................................................... Other ........................................................................... Corporate and eliminations .......................................... Total ................................................................................ Operating income: Japan ......................................................................... The Americas............................................................... Euro ......................................................................... Other ........................................................................... Corporate and eliminations .......................................... Consolidated operating income.......................................... Other income(expenses) .................................................... Consolidated pretax profit ................................................. Identifiable assets: Japan ......................................................................... The Americas............................................................... Euro ......................................................................... Other ........................................................................... Corporate and eliminations .......................................... Corporate..................................................................... Consolidated .................................................................... Change (%) 885,998 259,792 1,145,790 830,731 240,352 1,071,083 +55,267 (6.7) +19,440 (8.1) +74,707 (7.0) 230,496 5,988 236,484 237,420 8,019 245,439 -6,924 (-2.9) -2,031(-25.3) -8,955 (-3.6) 265,621 3,355 268,976 290,159 6,032 296,191 -24,538 (-8.5) -2,677(-44.4) -27,215 (-9.2) 65,042 36,026 101,068 67,689 39,218 106,907 -2,647 (-3.9) -3,192 (-8.1) -5,839 (-5.5) -305,161 1,447,157 -293,621 1,425,999 -11,540 (3.9) +21,158 (1.5) 1,083,227 226,210 255,698 95,802 -302,701 1,358,236 1,020,515 233,292 283,816 103,701 -288,872 1,352,452 +62,712 -7,082 -28,118 -7,899 -13,829 +5,784 62,563 10,274 13,278 5,266 -2,460 88,921 -18,528 70,393 50,568 12,147 12,375 3,206 -4,749 73,547 -20,493 53,054 +11,995 (23.7) -1,873(-15.4) +903 (7.3) +2,060 (64.3) +2,289(-48.2) +15,374 (20.9) +1,965 (-9.6) +17,339 (32.7) 956,670 93,191 120,587 52,791 -104,415 424,496 1,543,320 1,008,764 111,768 138,697 53,715 -109,321 424,394 1,628,017 -52,094 (-5.2) -18,577(-16.6) -18,110(-13.1) -924 (-1.7) +4,906 (-4.5) +102 (0.0) -84,697 (-5.2) (6.1) (-3.0) (-9.9) (-7.6) (4.8) (0.4) Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 VIII. Notes to Consolidated Financial Statements (1) Fair Market Value of Marketable Securities The non-marketable securities as of March 31, 2000 and 1999 primarily relate to less than 20%-owned companies and are stated at cost. The securities and the respective cost, gross unrealized holding gains, gross unrealized holding losses and fair value as of March 31, 2000 and 1999 are as follows: Year ended March 31, 2000 Cost (Millions of yen) Gross unrealized Gross unrealized holding gains Current: Equity securities .................................................... Japanese and foreign governmental bond securities...... Corporate debt securities................................................ Bank debt securities....................................................... Other............................................................………….. Noncurrent: Equity securities .................................................... Corporate debt securities................................................ Other............................................................………….. Non-marketable securities.............................................. 2,993 1,012 33,640 158 90,508 128,311 199 43 592 71 905 441 2 5 448 2,751 1,053 34,232 153 90,579 128,768 6,791 4,147 40 2,621 13,599 15,290 15,290 70 34 104 22,011 4,113 40 2,621 28,785 Year ended March 31, 1999 Cost (Millions of yen) Gross unrealized Gross unrealized holding gains Current: Equity securities .................................................... Japanese and foreign governmental bond securities...... Corporate debt securities................................................ Bank debt securities....................................................... Other............................................................………….. Noncurrent: Equity securities .................................................... Corporate debt securities................................................ Other............................................................………….. Non-marketable securities.............................................. Fair value holding losses Fair value holding losses 2,740 1,021 26,825 2,837 64,988 98,411 55 74 236 365 385 2 38 105 530 2,410 1,093 27,061 2,799 64,883 98,246 14,327 7,927 16 5,203 27,473 18,107 18,107 223 355 578 32,211 7,572 16 5,203 45,002 Other includes money management funds of 25,633 million yen and 38,868 million yen as of March 31, 1999 and 2000, respectively, and investment trusts consisting of investments in marketable debt and equity securities. Ricoh Co., Ltd. Flash Report Year ended March 31, 2000 (2) Derivative The Company and certain of its subsidiaries enter into various financial instrument contracts in the normal course of business and in connection with the management of its assets and liabilities. The Company and certain of its subsidiaries enter into foreign currency contracts to hedge assets and liabilities denominated in foreign currencies. The contracted amounts outstanding as of March 31, 1999 and 2000 were 105,022 million yen and 91,627 million yen, respectively. Gains or losses on those contracts used to hedge existing assets and liabilities are recognized in income currently. In connection with short-term borrowings and long-term indebtedness, the Company and certain of its subsidiaries have used interest rate swap agreements as a means of managing its interest exposure; at March 31, 1999 and 2000, they had 351,893 million yen and 378,010 million yen of contractual amounts under interest rate swap agreements. Interest rate swap transactions generally involve the exchange of floating rate for fixed rate interest payment obligations without an exchange of underlying principal amounts. The differentials to be paid or received under the interest rate swap agreements are accrued. The counterparties to the above financial instrument contracts are major financial institutions and, therefore, the Company and certain of its subsidiaries are exposed to credit risk in the event of nonperformance by counterparties. However, the Company does not anticipate nonperformance by them. The carrying amount and estimated fair value of derivative financial instruments as of March 31, 1999 and 2000 are as follows: Year ended March 31, 2000 (Millions of yen) Carrying amount Estimated Fair value Profit/loss Interest rate swap agreements, net ....................................... Foreign currency contracts-net credit................................... -47 2,314 2,685 2,102 2,732 -212 Total ................................................................................... 2,267 4,787 2,520 Year ended March 31, 1999 (Millions of yen) Carrying amount Estimated Fair value Profit/loss Interest rate swap agreements, net ....................................... Foreign currency contracts-net credit................................... 12 -1,462 2,018 -2,276 2,006 -814 Total ................................................................................... -1,450 -258 1,192 (3) Transactions of Ricoh with affiliates (Millions of yen) March 31, 2000 Account balances: Receivables .................................................................................... Payables ........................................................................................ 4,406 3,030 March 31, ‘99 10,861 2,171 (Millions of yen) Year ended March 31, 2000 Transactions: Sales ........................................................................................ Purchases....................................................................................... Dividend income............................................................................ 23,231 13,412 1,651 Year ended March 31, ‘99 32,057 34,992 1,168 Ricoh Co., Ltd. Flash Report Year ended March 31, 2000