PROFILE

Ryobi Limited is a world-class manufacturer of die
castings with a lineup of finished products that includes printing equipment, power tools, builders’hardware, fishing tackle and golf equipment. Global
capabilities in product development, production andsales and marketing support strong customer satisfaction throughout the world. With a strategic emphasis on profitability, the Company is refocusing on
V6 CYLINDER BLOCK

the strengths of each business line to target growthin both die castings and finished products.

CONTENTSRYOBI 686

PAGE 28

RYOBI LIMITED ANNUAL REPORT 2000

Consolidated Financial Highlights

1

Message from the Management

2Sound Management Plan

4

Review of Operations

6

Financial Section

9

Corporate Information

25

CONSOLIDATEDFINANCIALHIGHLIGHTS(For the years ended 31st March 2000, 1999 and 1998)
Thousands of
U.S. Dollars(Note 2)Millions of Yen

2000

1999

1998

2000

For the fiscal period:
Net sales ...........................................................................................
Operating income ..............................................................................
Net income (loss) ..............................................................................

¥240,074
7,303
2,831

¥242,774
6,817(3,086)¥232,997
8,999
1,437

$2,261,649
68,79926,670As at fiscal year-end:
Total assets .......................................................................................
Total shareholders’ equity .................................................................

¥238,080
33,360¥233,654
32,540¥239,219
36,916$2,242,864
314,272
U.S. Dollars(Note 2)Yen

Per share data:
Net income (loss)—Primary .................................................................
Cash dividends ..................................................................................

¥

16.59
—

¥ (18.02)
3.75

¥

8.39
7.50

$

0.156
—

Notes: 1. Net income (loss) per share figures are based on the weighted average number of shares outstanding each year.
2. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader at ¥106.15=US$1 the exchange rate prevailing on 31st March 2000.

NET SALESOPERATING INCOME(Millions of yen)

NET INCOME (LOSS)(Millions of yen)

(Millions of yen)

300,000

9,000

4,000

250,000

7,500

2,000

200,000

6,000

0

150,000

4,500-2,000100,000

3,000-4,00050,0001,500-6,000

0

0
1996

1997

1998

1999

2000

1996

1997

1998

1999

2000

1996

1997

1998

1999

RYOBI LIMITED ANNUAL REPORT 2000

2000

PAGE 1MESSAGE

FROM

THE

MANAGEMENTSound and Dynamic Corporation

PAGE 2

RYOBI LIMITED ANNUAL REPORT 2000

Ryobi Limited aggressively pro-

Ryobi has made concerted efforts tomotes marketing activities in each of its

optimize the scale and reinforce theoperations and advances a variety of mea-

structure of each of its operations tosures to research and develop new prod-

implement a high earnings structure.

ucts that match customer needs, reduce

We created and implemented the Sound

cost of sales, lower expenses and raise busi-

Management Plan following a sweeping

ness efficiency. During fiscal year 2000,

review of its business and earnings struc-ended 31st March 2000, consolidated net

ture. The plan aims to improve invest-

sales edged down 1.1% to ¥240.1 billion

ment efficiency and improve perfor-

compared with the previous fiscal year.

mance by considering tie-ups with other

Although domestic net sales increased

companies and curtailing and withdraw-

5.2% to ¥137.2 billion, overseas net sales

ing from unprofitable businesses.

declined 8.4% to ¥102.8 billion, ad-

The scope of the review in the Sound

versely affected by the sharp appreciation

Management Plan covers our Northof the yen. Operating income rose 7.1%

America power tools, domestic power

to ¥7.3 billion. Net income of ¥2.8 bil-tools and fishing tackle businesses. De-lion was recorded as the Company recov-

spite long-term efforts focused on theseered from losses posted in the previous

businesses, revenues have not increased,

term. Although an extraordinary loss was

prompting calls for extensive businessrecorded in accordance with a loss on the

restructuring. We will strive to negate

sale of power tool operations in Northfactors that drive down consolidated in-

America, net income was posted on thecome and improve revenues in each busi-

sale of assets and the application of tax-

ness by applying tough measures to un-

effect accounting.

profitable businesses.

Ryobi will maximize the allocation

profitability on a consolidated and non-of management resources in our com-consolidated basis through the firm andpetitive and profitable core die casting

prompt implementation of its Soundand printing equipment operations.

Management Plan.

To maintain our position as the

We introduced a Corporate Officer

world’s leading die casting manufacturer,

system in June 2000 in an aim to revital-

we will reinforce operations in the three-ize the Board of Directors and strengthen

region structure of Japan, the United States

management decision making functions.

and Europe and further strengthen andRyobi will make every effort to be a

expand ties with die casting customers, es-“Sound and Dynamic Corporation” topecially automobile manufacturers.

meet the expectations of our sharehold-In printing equipment, we will fur-ers, customers and business associates.

ther reinforce our solid reputation in

Thank you for your continued support.

world markets by advancing high precision multicolor and functions. We will

June 2000

also focus efforts on expanding ourlineup of small- and medium-size printing presses.
In fiscal 2001, management is prioritizing the early realization of profits

Hiroshi Urakami
President

on large-scale investment in die casting
operations in North America and at a
new plant for printing equipment. In addition, Ryobi Limited aims to restore

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 3

SOUND

MANAGEMENT

PLAN

Trends in financial and operating measures demonstrate the necessity for improving profitability and efficiency. To be a“Sound and Dynamic Corporation” with solid support from its stakeholders, Ryobi intends to raise its ROS, ROA and other returnmeasures. We have already made concerted efforts to optimize the scale and reinforce the structure of each our operations to create a strong
earnings structure and we are now implementing a thorough reform plan to directly address key issues. Specifically, we aim to achieve theconcrete targets listed on the facing page through our “Sound Management Plan.”

ROE&ROANET INCOME (LOSS) PER SHARE
(%)

15

30

10

8.6
3.9

5

0.6
-1.8

-1.7

-9.6

1996

1997

16.59
8.39

10
-24.35-22.05

-8.9

-15
1999

2000

ROA

ROE

RETURN ON SALES

214.72215.59190.04195.51

1999

2000-18.02

0

150

-10

100

-20

50
0
1996

1997

1998

1999

2000

ASSET TURNOVER

3

1998

(Times)

7.5

1.1

7.2
6.8

7.0

1.2

1.00

1.0

0.6

1997

(Times)

1.2

2

1996

FINANCIAL LEVERAGE(%)

1

244.18

200

-30
1998

250

-1.3

-5
-9.3

(Yen)

300

20

1.2

0

-10

NET ASSET PER SHARE
(Yen)

1.03

1.02
6.3

6.5

0.92

0

0.9

5.8

6.0
0.83

-1

0.8

5.5

0.7

5.0

5.3

-1.3

-2
-2.1

-1.8

-3

0
1996

PAGE 4

1997

1998

1999

2000

RYOBI LIMITED ANNUAL REPORT 2000

0
1996

1997

1998

1999

2000

1996

1997

1998

1999

2000

Challenges● THE NEW RYOBI

Ryobi will promote the concentration of management resources in fields of strength by reviewing unprofitablebusinesses in an aim to increase corporate value.

Initiatives● S W E E P I N G R E V I E W O F U N P R O F I TA B L E B U S I N E S S E S

Our power tool operations in North America will be transferred to a third party. Ryobi Limited will strengthen management across Group companies comprising domestic power tool operations, and promote streamlining and personnel reductions.
In fishing tackle operations, we will reduce personnel and redouble efforts to streamline the product lineup. At thesame time, an extensive review will be conducted while considering the transfer of operations to a third party.
● C O N C E N T R AT E M A N A G E M E N T R E S O U R C E S I N C O R E B U S I N E S S E S

We will maximize the allocation of management resources in the core businesses of die casting and printing equipment, primary sources of revenue, and further increase competitiveness and earnings power. As a result, we expect
the contribution of these core businesses to net sales to increase from 53% in fiscal 1999 to 78% in fiscal 2004.
● R E D U C E I N T E R E S T- B E A R I N G D E B T

The Company sold a portion of its marketable securities and real estate to reduce interest-bearing debt and partially
offset losses incurred from the transfer of power tool operations in North America. In addition, we will transfer to athird party North American lawn and garden equipment operations, which have performed relatively well.
We plan to reduce interest-bearing debt by half, from ¥133.4 billion in fiscal 1999 to ¥65.7 billion in fiscal 2004.
● REDUCE COSTS AND IMPROVE BUSINESS EFFICIENCYRyobi will focus efforts on promoting further improvements in business efficiency while lowering overall costs. Group
personnel following completion of a review of unprofitable businesses are projected to decrease approximately 28%
to 6,571 employees compared with the end of fiscal 1999.

Target
ROA and ROS:

3.2%

(In the fiscal year ending 31st March 2004)

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 5REVIEWOF

OPERATIONSDIE CASTINGS> THE EARNINGS PILLAR DRIVING GROWTH AT RYOBIOPERATING PROFIT(Millions of yen)NET SALES(Millions of yen)

CONVERTER HOUSING

110,000

6,000

105,000

5,000

100,000

4,000

95,0003,000

90,0002,000

85,000

1,000

0

1996

1997

1998

1999

2000

0

1996

1997

1998

1999

2000

REVIEW

As the world’s leading die casting manufacturer, Ryobi supplies die casting products to a variety of fields including automobile, home
appliance and industrial machinery. Our die casting products for automobiles, including cylinder blocks and transmission cases, areemployed in approximately 2,000 parts of more than 100 automobile models in Japan and overseas. In addition, our aluminum die
castings contribute to energy consumption and resource conservation due to their lightweight and recyclable qualities.
The secret behind our die castings, highly evaluated for their technological capabilities and high quality, lies in our integrated
manufacturing system, from die design and fabrication to casting, machining and assembly, which allows a rapid and precise response tocustomer needs. We are concentrating efforts on making new die cast products and increasing the quality of die casting various functional
products through such innovative technology as Ryobi New Casting (RNC), a new die casting production system that enables the
manufacture of high-strength and high-quality die casting products.
PERFORMANCEOUTLOOK

During the fiscal year ended 31st March
2000, net sales in die castings decreased
1.4% to ¥103.3 billion, while operating income advanced 19.4% to ¥5.7 billion compared with the previous fiscal year. In theautomobile industry, sales were favorable forcompact automobiles and medium andlarge two-wheeled vehicles for export, leading to strong orders for the Company. However, overall net sales edged down, adversely
affected by a decrease in production at automobile manufacturers in Japan. The increase in operating income was mainly the
result of improvements made at a manufacturing subsidiary in the United States.

We will maximize the allocation of management resources in our competitive die
casting operations, reinforcing our primarysource of earnings. Strengthening its threeregion structure comprising Japan, theUnited States and Europe, the Company
aims to ensure its unshakable position as
the world’s leading die casting manufacturer
by bolstering and expanding its customer
relationships, especially with the world’s automobile manufacturers. To accomplish
this, management has prioritized the early
realization of profits of die casting opera-

T O P I C S : ISO 9001 and 9002 Certification
With the acquisition of ISO 9001 certification for the design, development and fabrication of
casting dies, and ISO 9002 certification for the manufacture of aluminum die castingproducts in May 1999, we continue to improve our response to quality control and quality
assurance issues.

ISO CERTIFICATIONPAGE 6

RYOBI LIMITED ANNUAL REPORT 2000

tions in North America, which received
large-scale investment in the previous term.
We will make concerted efforts to thoroughly reduce costs and develop die casting technology and materials that willheighten our competitiveness in the future.
With an eye on the next stage of businessdevelopment, we are also examining nonautomobile markets for die casting products.

PRINTING EQUIPMENT> AIMING TO INCREASE REVENUES BY ENTERING NEW FIELDSNET SALESOPERATING PROFIT(Millions of yen)

(Millions of yen)
30,0003,000

25,0002,500

20,0002,000

15,0001,500

10,000

1,000

5,000

500

RYOBI 525HXX

0

1996

1997

1998

1999

2000

0

1996

1997

1998

1999

2000

REVIEW

Ryobi already boasts the largest share of the market for small offset presses. We provide high-quality, easy-to-use products as a comprehensive manufacturer of printing systems by participating in the market for medium-sized offset presses and digital presses and developing prepress systems.
Advancing product development with an emphasis on increasing speed, automation and labor-saving functions, our offset presses
have received high appraisal mainly in Europe and the United States. In prepress systems, we respond to demands in the printing
industry through the development of high-performance multi-function editing workstations and original character fonts.
Ryobi Limited has established systems for quality management and environmental preservation with the acquisition of ISO 9001
certification for the design, development and manufacture of offset presses in 1997 and ISO 14001 certification for environmental
management for its business activities and products in 1998.
PERFORMANCEOUTLOOK

Net sales of printing equipment climbed
22.8% to ¥25.4 billion and operating income fell 30.4% to ¥1.8 billion. Exports
declined, adversely affected by the strong
yen, and non-consolidated net sales decreased 7.5% compared with the previous
fiscal year. However, consolidated net sales
increased overall on account of a domestic
sales subsidiary accounted for by the equity
method becoming a consolidated subsidiary. Sales were strong for our new A3-size
landscape format offset presses, and our A2size high-speed multicolor offset presses
were highly praised in Japan and overseas.
In December 1999, a new plant for printing equipment was completed, strengthening our production structure for mediumsized (A2-size) offset presses.

As with die casting operations, Ryobi will
maximize the allocation of management
resources in printing equipment operations
to expand our primary source of earnings.
To do so, we will focus efforts on the early
realization of profits on the new plant andexpand our share of the market for medium-sized offset presses. We will further
enhance its position in the world market
by pursuing high-precision multicolor in
response to demand for color and advancefunctionality.
Ryobi aims to expand its market shareof offset presses and increase profits by developing highly original products, accelerating development, reducing overall costs,
shortening delivery periods and further enhancing its marketing and service structure.

In the prepress field, we will concentrateefforts on the development and sale of editing workstations and character fonts with
an emphasis on profitability. Ryobi plans
to increase competitiveness by aiming toboost system integration, from prepress topress, through its editing workstations andpresses.

T O P I C S : Construction Completed on New Printing Equipment Plant
In December 1999, construction was completed on a new printing equipment plant with development and design departments and a showroom. Operations began in January 2000. This new plant
will primarily produce medium-sized offset presses, a product area we are currently strengthening.

NEW PRINTINGEQUIPMENT PLANT
RYOBI LIMITED ANNUAL REPORT 2000

PAGE 7

POWER TOOLS> BUILDING A STRUCTURE THAT CREATES STEADY PROFITSNET SALESOPERATING PROFIT(Millions of yen)

(Millions of yen)
120,000

3,000

100,000

1,500

80,000060,000-1,50040,000-3,00020,000-4,500BE4240 BELT SANDER

0

REVIEW

1996

1997

1998

1999

2000

1996

1997

1998

1999

2000

Our Power Tools, which includes power tools and lawn and garden equipment, boasts 400 varieties that are admired throughout theworld. Targeting amateurs and professionals alike, Ryobi promotes product development that closely matches needs while pursuing
higher performance, compactness, safety and ease of use.
In Builders’ Hardware, we develop and sell door closers that are compatible with a diverse range of doors for residences and buildings, as well as such architecture hardware as floor hinges, contributing to the safety and pleasantness of living environments.
PERFORMANCE

Net sales were down 2.9% to ¥104.1 billion, while operating income increased 212%
to ¥1.2 billion. Although net sales increased
due to a domestic sales subsidiary accounted
for by the equity method becoming a consolidated subsidiary, overall net sales declined,as the sales of overseas subsidiaries were adversely affected by the strong yen. Operating income increased on the back of substan-OUTLOOK

tial improvements at marketing subsidiaries in Europe and Oceania and a manufacturing subsidiary in Dalian, China despite adecline in North American operations.

The rate of return will improve with thetransfer of power tool operations in North
America. Ryobi aims to build a structurethat will create steady profits by thoroughly
streamlining its development, production
and sales structures, and focusing on products in fields the Company can deploy its
strengths.

OTHERS> AIMING FOR A PROMPT RETURN TO PROFITABILITY WITH THOROUGH STREAMLININGOPERATING PROFIT(Millions of yen)NET SALES(Millions of yen)

VIGOROUS V333

12,0000

10,000

-250

8,000

-500

6,000

-750

4,000

-1,0002,000-1,2500

REVIEW

1996

1997

1998

1999

2000

1996

1997

1998

1999

2000

Utilizing its development capabilities, Ryobi Limited engages in production of such sporting goods and leisure products as fishing tackle
and golf equipment. The Company develops and supplies highly original products, especially fishing reels and golf clubs.
PERFORMANCEOUTLOOK

Net sales declined 27.5% to ¥7.3 billion
and an operating loss of ¥1.4 billion wasrecorded, adversely affected by a drop in
domestic demand for fishing tackle.

Ryobi Limited is focusing efforts on streamlining through personnel reductions and aslimmer product lineup while considering
the transfer of operations to a third party, as
previously stated. In Sporting Goods, thePAGE 8RYOBI LIMITED ANNUAL REPORT 2000

Company will continue to strengthen its
profit structure by placing priority on products high in originality, as represented by
the VIGOROUS series of golf clubs.

FINANCIAL

SECTIONF I S C A L P E R I O D C O M PA R AT I V E S U M M A R Y
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended 31st March)Millions of Yen

For the fiscal period:
Net sales ..........................................
Cost of sales .....................................
Gross profit .......................................
Selling, general andadministrative expenses ..................
Operating income .............................
Income taxes ....................................
Net income (loss) ..............................
As at fiscal year-end:
Total assets ......................................
Total shareholders’ equity ................

2000

1999

1998

1997

1996

1995

¥240,074
190,21449,860¥242,774
200,494
42,280¥232,997
189,916
43,081¥208,198
169,568
38,630¥196,417
164,081
32,336¥197,624
162,306
35,31842,557
7,303(11,231)2,831

35,4636,817
1,719(3,086)34,082
8,999
3,066
1,437

31,7436,887
3,421(3,775)30,462
1,874
2,857(4,166)28,121
7,197
3,063
(457)

¥238,080
33,360¥233,654
32,540¥239,219
36,916¥225,504
36,767¥227,006
41,789¥247,320
48,183Yen

Per share data:
Net income (loss)—Primary .............
Cash dividends .................................

¥

16.59
—

¥

(18.02)
3.75

¥

8.39
7.50

¥

(22.05)7.50¥(24.35)
7.50¥(2.67)
8.50

Notes: 1. Net income (loss) per share figures are based on the weighted average number of shares outstanding each year.
2. The 1995 ¥8.50 cash dividend includes a special ¥1.00 dividend.
3. Cash dividends per share are the amounts applicable to the respective years, including dividends to be paid after the end of the year.

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 9

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S

OPERATING PERFORMANCE

Consolidated net sales for the fiscal year ended 31st March 2000, declined 1.1% to ¥240,074 million. Of this,domestic sales rose 5.2%, while overseas sales decreased 8.4%. A major factor in the overseas sales decline
was the strong yen appreciation against major currencies during the fiscal year based on average exchange
rates, which are used for translating income statement accounts into yen. For example, the average yen to
dollar rate appreciated 13.9% from ¥132.33 to ¥113.88.
Net sales and operating income by segment are discussed below.
Die Castings

Net sales in the Die Casting segment slipped 1.4% to ¥103,284 million, reflecting a decrease in domestic
automobile production. Operating income, however, climbed 19.4% to ¥5,736 million, supporting highly improved productivity at a U.S. manufacturing subsidiary.
Printing Equipment

Net sales in the Printing Equipment segment grew 22.8% to ¥25,403 million, reflecting the addition of a newconsolidated company, but the parent company’s sales decreased 7.5% as the yen appreciation hinderedexport sales. Operating income fell 30.4% to ¥1,778 million.
Power Tools

Net sales in the Power Tools segment declined 2.9% to ¥104,094 million, reflecting a decrease in overseas
subsidiaries sales as the yen appreciated against major currencies during the fiscal year. However, with agreat improvement in European and Oceanic sales and distribution subsidiaries as well as in a Chinese manufacturing subsidiary, operating income soared 211.2% to ¥1,154 million, which compensated for lower resultsin the U.S. market.
Other

Net sales fell 27.5% to ¥7,293 million, with an operating loss of ¥1,355 million, as a result of a slump in thedomestic fishing tackle market.

NET SALES(Millions of yen)

300,000
250,000
200,000
150,000
100,000
50,0000
1995

PAGE 10

1996

1997

1998

1999

RYOBI LIMITED ANNUAL REPORT 2000

2000

Operating income grew 7.1% to ¥7,303 million, with the operating income to net sales ratio improving 0.2
percent.
Other expenses increased ¥11,160 million to ¥22,286 million, reflecting a special charge for disposal of the
U.S. power tools segment. However, the Ryobi Group recorded a net income for the period of ¥2,831 million,
reflecting the gain on sale of assets and the adoption of deferred tax accounting.
LIQUIDITY AND FINANCIAL POSITION

Net cash provided by operating activities increased ¥5,330 million to ¥13,960 million.
Net cash provided by investing activities increased ¥18,664 million to ¥1,265 million, including the proceeds from sales of property, plant and equipment, and of investments in securities.
And net cash used in financing activities increased ¥15,934 million to ¥7,368 million, including the decrease in interest-bearing debts. In aggregate, the Ryobi Group recorded a net increase in cash and cash
equivalents of ¥7,461 million. After adjustment for exchange rate changes and increase of consolidated subsidiaries, cash and cash equivalents at end of fiscal year totaled ¥23,082 million.
Total assets edged up 1.9% to ¥238,080 million. Major factors in this increase are due to accounting fordeferred tax assets and proceeds from sales of property, plant and equipment, and investment in securities.
Total shareholders’ equity increased 2.5% to ¥33,360 million. As a result, the equity ratio rose to 14.0%
from 13.9% a year earlier.

OPERATING INCOME(Millions of yen)

9,000
7,500
6,000
4,500
3,000
1,500
0
1995

1996

1997

1998

1999

2000

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 11

C O N S O L I DAT E D B A L A N C E S H E E T S
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(As at 31st March 2000 and 1999)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2000

1999

2000

¥ 23,082
2,453
629¥ 13,146
2,240
1,273

$ 217,447
23,1095,926

49,004
308
2,779
(430)
44,8733,717
1,235

44,653
10,3593,641(335)
49,926
170
708

461,649
2,902
26,180(4,051)
422,732
35,016
11,634

Total current assets ...........................................................................................

127,650

125,781

1,202,544

Property, plant and equipment (Note 5)
Land ......................................................................................................................
Buildings and structures ........................................................................................
Machinery and equipment .....................................................................................
Construction in progress .......................................................................................

21,35642,862
101,858
2,266

20,72939,82386,991
6,931

201,187403,787
959,567
21,347

Total ..................................................................................................................
Accumulated depreciation .....................................................................................

168,342(95,989)

154,474(80,800)

1,585,888(904,277)

Net property, plant and equipment ....................................................................

72,35373,674

681,611

Current assets
Cash and cash equivalents ....................................................................................
Time deposits (Note 5) ..........................................................................................
Marketable securities (Notes 3 and 5) ...................................................................
Notes and accounts receivable (Note 5)
Trade .................................................................................................................
Unconsolidated subsidiaries and affiliates ........................................................
Other .................................................................................................................
Allowance for doubtful accounts .......................................................................
Inventories (Note 4) ...............................................................................................
Deferred tax assets (Note 8) ..................................................................................
Prepaid expenses and other ..................................................................................

Investments and other assets
Investments in securities (Notes 3 and 5) ..............................................................
Investments in and advances to unconsolidated subsidiaries
and affiliates ........................................................................................................
Intangible fixed assets ...........................................................................................
Deferred tax assets (Note 8) ..................................................................................
Other .....................................................................................................................
Allowance for doubtful accounts ...........................................................................

6,697

7,678

63,090790
12,069
6,955
4,264
(770)

1,042
13,693
—
4,949
(757)

7,442
113,698
65,52040,170(7,254)

Total investments and other assets ...................................................................

30,00526,605

282,666

Adjustments on foreign currency statement translation ................................

8,072

7,594

76,043

Total ................................................................................................................

¥238,080¥233,654$2,242,864

See notes to consolidated financial statements.

PAGE 12RYOBI LIMITED ANNUAL REPORT 2000

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND SHAREHOLDERS’ EQUITY

2000

1999

2000

¥ 61,581
13,273¥ 62,187
13,518$ 580,132
125,040

40,231
491
2,715
6,371
285
12,625
6,367

40,598
467
2,908
6,026
395
—
8,453

379,001
4,626
25,57760,0192,685
118,935
59,981

Total current liabilities .......................................................................................

143,939

134,552

1,355,996

Long-term liabilities
Long-term debt (Note 5) ........................................................................................
Accrued severance indemnities .............................................................................
Other long-term liabilities (Note 6) ........................................................................

53,3403,897
2,696

58,801
3,380
4,193

502,497
36,71225,398

Total long-term liabilities ...................................................................................

59,933

66,374564,607

Minority interests ..................................................................................................

848

188

7,989

18,472
23,517(8,555)(74)

18,472
23,517(9,448)(1)

174,018
221,545(80,594)(697)

Current liabilities
Short-term borrowings (Note 5) .............................................................................
Current portion of long-term debt (Note 5) ............................................................
Notes and accounts payable
Trade .................................................................................................................
Unconsolidated subsidiaries and affiliates ........................................................
Other .................................................................................................................
Accrued expenses .................................................................................................
Income taxes payable ............................................................................................
Accrued loss on disposal of business segment (Note 2 (g)) ...................................
Other current liabilities ..........................................................................................

Commitments and contingent liabilities (Notes 10 and 11)

Shareholders’ equity (Notes 5 and 7)
Common stock, par value ¥50 per share:
Authorised: 500,000,000 shares
Issued: 171,230,715 shares ..............................................................................
Additional paid-in capital .......................................................................................
Deficits ..................................................................................................................
Treasury stock (600,169 shares in 2000, 5,398 shares in 1999) ..........................
Total shareholders’ equity .................................................................................

33,36032,540314,272

Total ................................................................................................................

¥238,080¥233,654$2,242,864

See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 13

C O N S O L I DAT E D S TAT E M E N T S O F O P E R AT I O N S
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended 31st March 2000 and 1999)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2000

1999

2000

Net sales .................................................................................................................
Cost of sales ..........................................................................................................

¥240,074
190,214¥242,774
200,494$2,261,649
1,791,936

Gross profit .......................................................................................................
Selling, general and administrative expenses ..................................................

49,86042,55742,28035,463

469,713400,914

Operating income ..............................................................................................
Other income
Interest and dividends ...........................................................................................
Gain on sales of investment securities ..................................................................
Other .....................................................................................................................

7,303

6,817

68,799

378
3,261
2,881

583
—
2,178

3,561
30,721
27,140Total other income .............................................................................................

6,520

2,761

61,422Other expenses
Interest ..................................................................................................................
Amortisation of intangible fixed assets ..................................................................
Equity in loss of affiliates .......................................................................................
Loss on disposal of business segment (Note 2 (g)) ................................................
Other .....................................................................................................................

5,003
614
—
12,625
4,044

5,749
724
1,432
—
3,221

47,131
5,784—
118,935
38,098

Total other expenses .........................................................................................

22,286

11,126

209,948

Loss before income taxes and other items .......................................................
Income taxes (Note 8)
Current ..................................................................................................................
Deferred ................................................................................................................

(8,463)(1,548)(79,727)587(11,818)

1,719
—

5,530
(111,333)

Total income taxes ............................................................................................

(11,231)

1,719(105,803)

Minority interests ..................................................................................................

63

181

594

2,831

¥ (3,086)

Net income (loss) ..................................................................................................

¥

See notes to consolidated financial statements.

PAGE 14RYOBI LIMITED ANNUAL REPORT 2000

¥

16.59
16.19
—

26,670U.S. Dollars(Note 1)Yen

Per share of common stock (Note 2 (n))
Net income (loss) ...................................................................................................
Fully diluted net income ........................................................................................
Cash dividends applicable to the year ...................................................................

$¥ (18.02)
—
3.75

$

0.156
0.153
—

C O N S O L I DAT E D S TAT E M E N T S O F S H A R E H O L D E R S ’ E Q U I T Y
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended 31st March 2000 and 1999)
Millions of Yen
Number of
Shares ofCommon Stock(Thousands)

CommonStock

Additional
Paid-in
CapitalDeficits

Treasurystock

Balance at 31st March 1998 ...........................................................
Net loss ............................................................................................
Cash dividends, ¥7.50 per share ......................................................
Bonuses to directors and statutory auditors .....................................
Treasury stock increased, net (2,906 shares) ...................................

171,231————¥ 18,472————¥ 23,517————¥ (5,072)(3,086)(1,284)
(6)
—

¥

(1)
—
—
—
0

Balance at 31st March 1999 ...........................................................
Net income .......................................................................................
Decrease due to adoption of deferred tax accounting ......................
Deficit of unconsolidated subsidiary previously notaccounted for under the equity method ...........................................
Bonuses to directors and statutory auditors .....................................
Treasury stock increased, net (594,771 shares) ...............................

171,231——

18,472——

23,517——(9,448)2,831(1,414)

(1)
—
—

—
—
—

—
—
—

—
—
—

(523)
(1)
—

—
—
(73)

Balance at 31st March 2000 ...........................................................

171,231¥ 18,472¥ 23,517¥ (8,555)¥ (74)

Thousands of U.S. Dollars (Note 1)

Balance at 31st March 1999 ...........................................................
Net income .......................................................................................
Decrease due to adoption of deferred tax accounting ......................
Deficit of unconsolidated subsidiary previously notaccounted for under the equity method ...........................................
Bonuses to directors and statutory auditors .....................................
Treasury stock increased, net (594,771 shares) ...............................

$174,018——$221,545——$(89,006)
26,670(13,321)

$

(9)
—
—

—
—
—

—
—
—

(4,927)
(10)
—

—
—
(688)

Balance at 31st March 2000 ...........................................................

$174,018$221,545$(80,594)$(697)

See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 15

C O N S O L I DAT E D S TAT E M E N T S O F C A S H F L O W S
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended 31st March 2000 and 1999)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2000

1999

2000

¥ (8,463)¥ (1,548)$ (79,727)(1,565)
10,111
12,625(2,736)
9,585—(14,743)
95,252
118,935(796)(3,261)
(51)

305
—
1,432

(7,499)(30,721)
(480)

3,727
5,335
(1,400)(136)(2,166)
13,9605,588(2,603)(744)
1,236(1,885)
8,630

35,11150,259(13,189)(1,281)(20,405)
131,512Investing activities
Payments for purchase of property, plant and equipment ..............................
Proceeds from sale of property, plant and equipment ....................................
Payments for purchase of intangible fixed assets ..........................................
Decrease (increase) in marketable securities .................................................
Decrease (increase) in investment in securities .............................................
Other ..............................................................................................................
Net cash provided by (used in) investing activities ............

(7,766)
2,891
(376)
710
4,181
1,625
1,265

(15,754)
74
(470)
(247)
(108)
(894)
(17,399)(73,161)
27,235(3,542)
6,689
39,38815,308
11,917

Financing activities
Proceeds from long-term debt .......................................................................
Repayments of long-term debt .......................................................................
Increase (decrease) in short-term borrowings ................................................
Cash dividends paid .......................................................................................
Other ..............................................................................................................
Net cash provided by (used in) financing activities ............

7,254(13,495)
(817)
—
(310)
(7,368)

10,205(6,420)6,289(1,284)
(224)
8,566

68,337(127,131)(7,697)—(2,920)(69,411)

Effect of exchange rate changes on cash and cash equivalents .................

(396)

(143)

(3,731)

Net increase (decrease) in cash and cash equivalents ............................

7,461

(346)

70,287

Cash and cash equivalents at beginning of year ......................................

13,146

13,492

123,844

Cash and cash equivalents increased by newly consolidated
companies .....................................................................................................

2,475

—

23,316

Cash and cash equivalents at end of year .................................................

¥ 23,082¥ 13,146$217,447

Additional cash flow information
Interest paid ...................................................................................................

¥ 4,876¥ 5,669$ 45,935

Operating activities
Loss before income taxes and other items .....................................................
Adjustments for:
Income taxes-paid ......................................................................................
Depreciation and amortisation ...................................................................
Accrued loss on disposal of business segment ..........................................
Loss (profit) on sales or disposals of property, plant andequipment .................................................................................................
Profit on sale of investments in securities ..................................................
Equity in losses (profit) of affiliates ............................................................
Changes in assets and liabilities
Decrease in notes and accounts receivable ...........................................
Decrease (increase) in inventories .........................................................
Decrease in notes and accounts payable ...............................................
Increase (decrease) in accrued expenses ..............................................
Other, net ...................................................................................................
Net cash provided by operating activities ............................

See notes to consolidated financial statements.

PAGE 16

RYOBI LIMITED ANNUAL REPORT 2000

N OT E S T O C O N S O L I DAT E D F I N A N C I A L S TAT E M E N T S
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIESFOR THE YEARS ENDED 31ST MARCH 2000 AND 1999

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese Securities andExchange Law and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial
statements issued domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, the notes to the consolidated financial statements include information which is not required underaccounting principles generally accepted in Japan but is presented herein
as additional information.
Effective 1st April 1999, consolidated statements of cash flows are required to be prepared under Japanese accounting standards, and those forthe years ended 31st March 2000 and 1999 are presented herein.
The consolidated financial statements are not intended to present thefinancial position, results of operations and cash flows in accordance withaccounting principles and practices generally accepted in countries and jurisdictions other than Japan.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which Ryobi Limited (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside
Japan and have been made at the rate of ¥106.15 to $1, the approximate
rate of exchange at 31st March 2000. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
2. Summary of Significant Accounting Policies(a) Principles of consolidation(i) Consolidated subsidiaries
Effective 1st April 1999, the Company and its subsidiaries (“the Ryobi
Group”) changed its consolidation scope of subsidiaries and associatedcompanies from the application of the ownership concept to control or
influence concept in accordance with the new accounting standard forconsolidation. Under the control or influence concept, those companies
in which the Parent, directly or indirectly, is able to exercise control over
operations are fully consolidated, and those companies over which theRyobi Group has the ability to exercise significant influence are accounted
for by the equity methods.
The consolidated financial statements include the accounts of the Company and the Ryobi Group. The major consolidated subsidiaries are listed
below:
Tokyo Light Alloy Co., Ltd. (Japan)
Ryobi North America, Inc. (U.S.A.)
Ryobi Motor Products Corp. (U.S.A.)(ii) Affiliates
The major affiliate accounted for under the equity method is listed below:
Ryobi - Tech Corporation (Taiwan)
The number of consolidated subsidiaries and affiliates accounted for under the equity method as at 31st March 2000 and 1999 is as follows:
2000

1999

Consolidated subsidiaries .........................................

28

23

Affiliates ...................................................................

3

5

The accounts of certain subsidiaries of the Company are excluded fromconsolidation in the accompanying consolidated financial statements as total assets, net sales, net income and retained earnings of those subsidiaries,
in the aggregate, are not material.
The investments in such unconsolidated subsidiaries and affiliates notaccounted for under the equity method are carried at cost or less.
The number of unconsolidated subsidiaries and affiliates not accounted
for under the equity method as at 31st March 2000 and 1999 is as follows:
2000

1999

Unconsolidated subsidiaries .....................................

7

6

Affiliates ...................................................................

02

For the purpose of preparing the consolidated financial statements, allsignificant inter-company transactions, account balances and unrealised
profits among the companies have been eliminated, and the portion thereof
attributable to minority interests is charged to minority interests.
The differences between the cost of an acquisition and the fair value ofthe net assets of the acquired subsidiary at the date of acquisition are amortised using the straight - line method over five years.
(b) Cash and cash equivalents
Cash and cash equivalents consist of deposits with banks and financial institutions which are unrestricted as to withdrawal or use, and which haveoriginal maturities of three months or less.
(c) Inventories
Inventories are valued at cost for the Company and domestic subsidiaries
and the lower of cost or market for foreign subsidiaries. Cost is determinedby methods according to the classification of inventories as follows:(i) Finished products and work in process
Inventories held by the Company and domestic subsidiaries:
Die castings .................................. Selling price method
Dies .............................................. Specific identification method
Printing equipment ........................ Average method
Mainly first-in first-out method for foreign subsidiaries.

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 17

(ii) Raw materials, supplies and purchased goods
Last purchase invoice price method for the Company and domestic subsidiaries.
Mainly first-in first-out method for foreign subsidiaries.
(d) Marketable securities and investments in securities
Marketable securities and investment securities listed on stock exchanges
are stated at the lower of cost, determined by the moving-average method,or market.
Other securities are principally stated at cost which is determined by themoving-average method.
(e) Depreciation and amortisation
Property, plant and equipment are stated at cost. Depreciation of property,
plant and equipment of the Company and its consolidated domestic subsidiaries is computed by the declining-balance method at rates based on theestimated useful lives of the assets, while the straight-line method is principally applied to the property, plant and equipment of consolidated foreignsubsidiaries. The range of useful lives is from 3 to 50 years for buildings andstructures, and from 2 to 20 years for machinery and equipment.
Amortisation of intangible fixed assets, which consist of mainly goodwill
for foreign subsidiaries, is computed by the straight-line method, over a
period ranging from 5 to 40 years.
(f) Accrued severance indemnities and pension plan
Employees whose service with the Company and certain subsidiaries is terminated are, under most circumstances, entitled to lump-sum indemnities
by reference to the current basic rates of pay, length of service and conditions under which the termination occurs.
The Company and certain consolidated subsidiaries have retirement pension funds for employees. The policy for the non-contributory and contributory trusteed pension plans for employees is to fund and charge to operations normal costs as accrued on the basis of an accepted actuarial method
plus prior service costs for the pension plans amortised.
In addition, the Company and certain subsidiaries have unfunded retirement benefit plans and have established a liability for retirement allowancesat 40% of the amount which would be required if all employees voluntarily
terminated their employment at each balance sheet date, less amounts
funded by a contributory or non-contributory pension funds.
(g) Accrued loss on disposal of business segment
The Company and certain subsidiaries have established a liability for allowance at the amount which would be accounted loss on disposal of North
American power tools business segment.
(h) Research and development costs
Effective 1st April 1999, research and development costs are charged toincome as incurred in accordance with the new accounting standard forresearch and development costs.
(i) Leases
All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that deem to transfer ownership ofthe leased property to the lessee are to be capitalised, while other financeleases are permitted to be accounted for as operating lease transactions if
certain “as if capitalised” information is disclosed in the notes to the lessee’s
financial statements.
PAGE 18

RYOBI LIMITED ANNUAL REPORT 2000(j) Income taxes
Effective 1st April 1999, the Company and its domestic subsidiaries adopted
an accounting method for interperiod allocation of income taxes based on
the asset and liability method. The cumulative effect of the application ofinterperiod tax allocation in prior years in the amount of ¥1,414 million($13,321 thousand) is included as an adjustment to deficits as of 1st April
1999. Such cumulative effect is calculated by applying the income tax rate
stipulated by enacted tax laws as of 1st April 1999.
Deferred income taxes are recorded to reflect the impact of temporary
differences between assets and liabilities recognised for financial reporting
purposes and such amounts recognised for tax purposes. These deferredtaxes are measured by applying currently enacted tax laws to the temporary
differences.
(k) Appropriation of retained earnings
Appropriations of retained earnings at each year end are reflected in thefinancial statements for the following year upon shareholder’s approval.
(l) Translation of foreign currency accounts
Current receivables and payables denominated in foreign currencies aretranslated into yen at the exchange rates in effect at the respective balance
sheet dates.
Non-current receivables and payables denominated in foreign currencies
are translated into yen at the historical exchange rates. Long-term debts
hedged by forward exchange contracts are translated into yen at the forward exchange contract rates.
(m) Translation of foreign currency financial statements (accounts offoreign subsidiaries)
The balance sheet accounts of the consolidated overseas subsidiaries aretranslated into yen at the current exchange rates as of the balance sheet
date except for shareholders’ equity, which is translated at the historicalexchange rate. Differences arising from such translation are shown as “Adjustments on foreign currency statement translation” in the accompanying
consolidated balance sheets. Revenue and expense accounts of the consolidated overseas subsidiaries are translated into yen at the average exchange rate.
(n) Per share information
The computation of net income (loss) per share is based on the weighted
average number of shares of common stock outstanding during each year.
The average number of common shares used in the computation was
170,659 thousand shares and 171,227 thousand shares for 2000 and 1999,
respectively.
Fully diluted net income per share of common stock assumes full conversion of the outstanding convertible notes at the beginning of the year (or at
the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
Fully diluted net income per share is not disclosed because of the Ryobi
Group’s net loss position for 1999.
Cash dividends per share presented in the accompanying consolidated
statements of operations are dividends applicable to the respective years
including dividends to be paid after the end of the year.

3. Marketable Securities and Investments in Securities
Market value information of the applicable portion of the short-term mar-ketable securities and investments in securities as at 31st March 2000 was
as follows:

Millions of Yen

Thousands of U.S. Dollars

2000
Book
Value

2000

MarketValue

Gain(Loss)Book
Value

MarketValue

Gain(Loss)$ 9,562

Marketable securities:
Market value available:
Corporate shares .................................

¥ 595¥1,610¥1,015$ 5,605$15,167

Bonds ....................................................

34

31

(3)

321

292

(29)

¥ 629

¥1,641¥1,012$ 5,926$15,459$ 9,533¥5,314¥9,670¥4,356$50,061$91,097$41,036

Investments in securities:
Market value available:
Corporate shares ....................................
Market value not available ...........................

1,383

13,029¥6,697$63,090

Note: Effective 31st March 2000, the disclosure of market value information of the applicable portion of the short-term marketable securities and investments in securities has become mandatory.

4. Inventories
Inventories as at 31st March 2000 and 1999 consisted of the following:

Millions of Yen

Thousands of
U.S. Dollars

2000

1999

2000

Loans principally from banks andMillions of Yen

Finished products and purchased goods ....
Work in process .........................................

Thousands of
U.S. Dollars

insurance companies with interest
rates ranging from 0.85% to 7.38%:

2000

1999

2000

¥25,910¥28,461$244,089

Secured ................................................

¥ 1,803¥ 1,765$ 16,985

113,707

Unsecured .............................................

33,60839,571

316,60964,814

12,07012,069Raw materials and supplies .......................

6,893

9,396

64,936

Total ..........................................................

¥44,873¥49,926$422,732

5. Short-term Borrowings and Long-term Debt
The annual interest rates applicable to short-term borrowings ranged from
0.61% to 10.9% and 0.65% to 9.25%, as at 31st March 2000 and 1999,
respectively.
Commercial paper included short-term borrowings totaling ¥7,702 million ($72,558 thousand) and ¥8,574 million, as at 31st March 2000 and
1999, respectively.
Long-term debt at 31st March 2000 and 1999 consisted of the following:

Floating-rate guaranteed notes
in Deutsche marks due 2003 ....................

6,880

6,880

2.45% unsecured notes in yen due 2001 ...

8,000

8,000

75,365

2.8% convertible notes in yen due 2002 ....

14,956

14,956140,895

Other .........................................................

1,366

1,147

12,869Total ..........................................................

66,61372,319627,537

Less: Current portion .................................

(13,273)(13,518)(125,040)

Long-term debt, less current portion ..........

¥53,340¥ 58,801$ 502,497

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 19

The aggregate annual maturities of long-term debt at 31st March 2000
were as follows:

Years Ending 31st MarchMillionsof YenThousands of
U.S. Dollars

2001 .............................................................

¥13,273$125,040

2002 .............................................................

24,433

230,174

2003 .............................................................

19,757

186,124

2004 .............................................................

3,483

32,812

2005 .............................................................

2,520

23,7402006 and thereafter .....................................

3,147

29,647

Total ..............................................................

¥66,613$627,537

The assets of the Ryobi Group pledged as collateral for short-term loans
and long-term debt with banks and other financial institutions at 31st March
2000 and 1999 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2000

1999

2000

Buildings and structures ........................

¥2,003¥2,426$18,869

Machinery and equipment .....................

2,569

3,253

24,202Land .....................................................

1,010

757

9,515

Time deposit .........................................

4

—

38

Notes and account receivables ..............

611

240

5,756

Net book value of property:

Marketable securities ............................

88

92

829

Investments in securities .......................

167

164

1,573

Total ..........................................................

¥6,452¥6,932$60,782

Additional information with respect to convertible notes outstanding at
31st March 2000 is as follows:

Principal Amountat Issue (Millions)Issued in

Current Conversion
or Exercise
Price per Share¥15,000

March 1995

¥484.00

2.8% convertible notes inyen due March 2002 ...........

The convertible notes outstanding at 31st March 2000 were convertible
into 30,900 thousand shares of common stock of the Company. The conversion prices of the convertible notes are subject to adjustments in certain
circumstances.

PAGE 20

RYOBI LIMITED ANNUAL REPORT 2000

Under the terms of indenture for the 2.8% convertible notes due March
2002 and the 2.45% unsecured notes due December 2000, the Company’s
cash dividend payments are restricted from exceeding the amount equivalent to accumulated ordinary income minus income taxes during the years
for which the notes have been outstanding plus ¥4,000 million, on a cumulative basis. In this case, interim cash dividends may be regarded as theprior year’s cash dividends. (See Note 13 (1))
6. Other Long-term Liabilities
In applying the equity method, the Company recognises negative net assets
of affiliates, if any, in total and such negative equity in investees is recorded
as an allowance for investee losses. Such allowance amounted to ¥452
million ($4,258 thousand), ¥2,360 million at 31st March 2000 and 1999,
respectively, and is included in the “Other long-term liabilities” in the accompanying balance sheets.
7. Shareholders’ Equity
The Japanese Commercial Code (the “Code”) requires at least 50% of theissue price of new shares, with a minimum of the par value thereof, to be
designated as stated capital as determined by resolution of the Board of
Directors. Proceeds in excess of amounts designated as stated capital are
credited to additional paid-in capital.
The Code also requires companies to appropriate from retained earnings
to a legal reserve an amount equal to at least 10% of all cash payments
which are made as an appropriation of retained earnings until such reserve
equals to 25% of stated capital. This reserve amount, which is included in
deficits, totals ¥2,873million ($27,065 thousand) and ¥2,819 million as at
31st March 2000 and 1999, respectively, and is not available for dividends
but may be used to reduce a deficit by resolution of the shareholders.
The Company may transfer portions of additional paid-in capital to statedcapital by resolution of the Board of Directors. The Company may also transfer portions of unappropriated retained earnings, available for dividends, tostated capital by resolution of the shareholders.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Semiannualinterim dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code. Year-end dividends
are reflected in the consolidated statements of shareholders’ equity whenauthorised.
8. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal
effective statutory tax rates of 40.87% and 46.37% for the years ended 31st
March 2000 and 1999, respectively.

The tax effects of significant temporary differences and loss carryforwards
which resulted in deferred tax assets and liabilities at 31st March 2000 are
as follows:
Millionsof Yen(2) Leases
Future minimum lease payments of the Ryobi Group as at 31st March 2000
and 1999 under noncancelable finance leases that do not transfer ownership of leased assets to the lessee are as follows:

Thousands of
U.S.Dollars

Deferred tax assets:
Accrued severance costs .........................

¥

490

$

4,616

Tax loss carryforwards .............................

20,460192,746

Other ........................................................

1,002

9,439

Valuation allowance .................................

(9,510)(89,590)

Deferred tax assets ......................................

¥12,442$117,211

Deferred tax liabilities:
Land revaluation difference ......................

Thousands of
U.S. dollars

Millions of Yen

¥

(707)

$ (6,660)

Other ........................................................

(1,063)(10,015)

Deferred tax liabilities ..................................

¥ (1,770)$ (16,675)

Net deferred tax assets ................................

¥10,672$100,536

A reconciliation between the normal effective statutory tax rate for theyear ended 31st March 2000 and the actual effective tax rates reflected in
the accompanying consolidated statement of operation is as follows:

2000

1999

2000

Current ..................................

¥ 244

¥173

$ 2,299

Non-current ...........................

1,236

760

11,644

Total ......................................

¥1,480¥933$13,943

Lease expenses on such finance lease contracts without ownership transfer amounted to ¥203 million ($1,912 thousand) and ¥155 million, for theyears ended 31st March 2000 and 1999, respectively.
As at 31st March 2000, summarised information showing the assumed
figures of acquisition cost, accumulated depreciation and net book value,
which include the portion interest thereon, of the leased properties and otherassets under finance leases without ownership transfer is as follows:
Millions of Yen
Acquisition
Cost

Normal effective statutory tax rate ......................................

40.87 %

Valuation allowance ............................................................

(83.81)

Revaluation loss on investments in subsidiaries .................

180.94

Unrealised gain in excess of taxable income ofthe sales entities ................................................................

(3.09)

Taxation on per capita basis ................................................

(2.45)

Other-net ..............................................................................

0.26

Actual effective tax rate .......................................................

132.72 %9. Reserch and Development Costs
Research and development costs were ¥3,816 million ($35,949 thousand)for the year ended 31st March 2000. Effective 31st March 2000, the disclosure of research and development costs has become mandatory.

¥ 2 ¥

2

Thousands of U.S. Dollars
Net
Accumulated Book
Depreciation Value

Acquisition
Cost

¥

4

$

38

$

19 $

19

Machinery andequipment .........

2,015

570

1,445

18,983

Other assets .......

58

25

33

546

Total ...................

¥2,077¥597¥1,480$19,567

5,370 13,613
235

311

$5,624 $13,943

Depreciation expense and interest expense, which are not reflected in
the accompanying statement of operation, computed by the straight-line
method and the interest method were ¥203 million ($1,912 thousand) for
the year ended 31st March 2000.
Future minimum lease payments of the Ryobi Group as at 31st March
2000 and 1999 under noncancelable operating leases are as follows:

Millions of Yen

Current ..................................

10. Leases and Contingent Liabilities(1) Contingent liabilities
The Ryobi Group was contingently liable as a guarantor of loans to unconsolidated subsidiaries, affiliates and others in the aggregate amount of ¥1,995
million ($18,794 thousand) and ¥4,080 million at 31st March 2000 and 1999,
respectively. Contingent liabilities for notes discounted by banks in the ordinary course of business amounted to ¥1,302 million ($12,266 thousand)and ¥1,197 million at 31st March 2000 and 1999, respectively.

Net
Book
Value

Buildings andstructures ..........

2000

Accumulated
Depreciation

Thousands of
U.S. dollars

2000

1999

2000

¥ 957

¥ 994

$ 9,015

Non-current ...........................

3,827

3,997

36,053

Total ......................................

¥4,784¥4,991$45,068

11. Derivatives
The Ryobi Group enters into foreign exchange forward contracts, currency
swaps and interest rate swaps to hedge risk and reduce exposure to fluctuations in market values of foreign exchange rates and interest rates associated with certain assets and liabilities.

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 21

All derivative transactions are related to qualified hedges of interest andforeign currency exposures incorporated with its business. Market risk ofthese derivatives is basically offset by opposite movements in the value ofhedged assets. The Ryobi Group does not hold or issue derivatives for speculation or trading purposes.
Market risk is the exposure created by potential fluctuations in market
conditions, including interest or foreign exchange rates. The Ryobi Group
does not anticipate any losses arising from credit risk because thecounterparties to these derivatives are limited to major international financial institutions.
The execution of derivatives is controlled by the Finance Department of
the Company, and by the Finance Division of consolidated subsidiaries. Derivative transactions have been made in accordance with internal policies
which regulate the authorisation and credit limit amounts.
The Ryobi Group had the following derivatives contracts outstanding as
at 31st March 2000:
Millions of Yen
Contract or
Fair
notional amountvalue

Thousands of U.S. Dollars
Contract or
Fair
notional amountvalue

Thousands of
U.S. Dollars

Millions of Yen

2000

1999

2000

Die castings ..........................................

¥103,284¥104,803 $ 973,001

Printing equipment ................................

25,403

20,679239,312Power tools ...........................................

104,094

107,240

980,631

Other ....................................................

7,293

10,052

68,705

Consolidated .........................................

240,074

242,774

2,261,649

918,964

Net sales:

Operating costs and expenses:
Die castings ..........................................

97,548100,000

Printing equipment ................................

23,625

18,126

222,562

Power tools ...........................................

102,940

106,869

969,760

Other ....................................................

8,648

10,943

81,470Eliminations ..........................................

10

19

94

Consolidated .........................................

232,771

235,957

2,192,850

Operating income (loss):
Die castings ..........................................

5,736

4,803

54,037

Forward exchange

Printing equipment ................................

1,778

2,553

16,750Contracts:

Power tools ...........................................

1,154

371

10,871Other ....................................................

(1,355)(891)(12,765)

Buying US dollar ..............

¥ 108

¥ 106

$ 1,017$

999

Currency swap:

Eliminations ..........................................

Buying

Consolidated

Deutsche mark ................

6,880

5,002

64,814(19)(94)¥ 7,303¥ 6,817 $

68,799Die castings ..........................................

¥ 87,542¥ 93,388 $ 824,701

Printing equipment ................................

23,016

17,467

216,825

Power tools ...........................................

73,59982,379693,349

Other ....................................................

7,542

8,836

71,051Eliminations or corporate assets ............

46,381

31,584436,938

Consolidated .........................................

¥238,080¥233,654 $2,242,864

Die castings ..........................................

¥ 4,946¥ 5,366 $Printing equipment ................................

487

379

4,588

Power tools ...........................................

3,720

3,320

35,04547,122
Total assets:

Interest swap
(Fixed rate payment,
floating rate receipt) .........

¥4,848¥ (55)$45,671$ (518)

Note: Effective 31st March 2000, the disclosure of derivatives has become
mandatory.
12. Segment Information
The segment information classified by industry and geographical market
area is presented below with respect to the years ended 31st March 2000
and 1999.
(1) Industry segment information
The Ryobi Group operates in four industry segments according to the product groups which are:—Die castings (“Die castings”)—Printing equipment (“Printing equipment”)—Electric and petro engine tools (“Power tools”)—Other products such as fishing tackle, golf equipment, etc. (“Other”)

PAGE 22(10)...................................

RYOBI LIMITED ANNUAL REPORT 2000

Depreciation:
46,594

Other ....................................................

339

150

3,194

Consolidated .........................................

¥ 9,492¥ 9,215 $89,421

Capital expenditure:
Die castings ..........................................

¥ 3,717¥ 8,771 $

35,017

Printing equipment ................................

2,506

756

23,60819,896

Power tools ...........................................

2,112

4,722

Other ....................................................

337

127

3,175

Consolidated .........................................

¥ 8,672¥ 14,376 $

81,696

The amounts of corporate assets as at 31st March 2000 and 1999 includedin the “Eliminations or corporate assets” are, respectively, ¥46,534 million($438,380 thousand) and ¥31,718 million, which mainly consist of surplus
assets in the Company (cash and securities) and long-term investment assets(investments in securities).

(2) Geographical segment information
Thousands of
U.S. Dollars

Millions of Yen

2000

1999

2000

Domestic (Japan) ..................................

¥137,247¥130,498 $1,292,953

North America .......................................

86,61895,957815,997

Other overseas ......................................

16,20916,319152,699

Consolidated .........................................

240,074

242,774

2,261,649

Domestic (Japan) ..................................

132,497

125,804

1,248,205

North America .......................................

84,877

94,035

799,595

Other overseas ......................................

15,462

16,055

145,662

Eliminations ..........................................

(65)

63

(612)

Consolidated .........................................

232,771

235,957

2,192,850

Domestic (Japan) ..................................

4,750

4,694

44,748

North America .......................................

1,741

1,922

16,402Other overseas ......................................

747

264

7,037

Eliminations ..........................................

65

(63)

612

Consolidated .........................................

¥ 7,303¥ 6,817 $

68,799¥122,913 $1,175,280

Net sales:

Operating costs and expenses:

Operating income (loss):

Total assets:
Domestic (Japan) ..................................

¥124,756

North America .......................................

52,85063,975

Other overseas ......................................

20,26021,788

190,862

Eliminations or corporate assets ............

40,214

24,978378,842

Consolidated .........................................

¥238,080

497,880¥233,654 $2,242,864

The amounts of corporate assets as at 31st March 2000 and 1999 included in the “Eliminations or corporate assets” are ¥46,534 million($438,380 thousand) and ¥31,718 million, respectively, which mainly comprise surplus assets in the Company (cash and securities) and long-term
investment assets (investments in securities).

(3) Export sales and sales by overseas subsidiaries
Export sales of the companies (i.e., export amounts made by the Company
and its domestic subsidiaries) plus the sales by overseas consolidated subsidiaries for the years ended 31st March 2000 and 1999 are presented below:

Millions of Yen

Thousands of
U.S. Dollars

2000

1999

2000

¥102,331 $ 867,621

Export sales and sales
by overseas subsidiaries:
North America .......................................

¥ 92,098

Other ....................................................

29,848

Total .............................................

¥121,946

32,440281,187¥134,771 $1,148,808

Percentage of such sales against
consolidated net sales:
North America .......................................

38.4%

42.2%

Other ....................................................

12.4%

13.3%

Total ..........................................................

50.8%

55.5%

13. Subsequent Event(1) Provision of maintaining net assets and set up of deposit security
The 2.45% unsecured notes in yen due December 2000 amounting to ¥8,000
million ($75,365 thousand) went against a provision for maintaining net assets. Therefore, effective 31st May 2000, the Company switched the notes
to secured notes pledged by time deposits amounted to ¥8,213 million($77,372 thousand).
(2) Sale of North American power tool group
The Company signed a definitive agreement dated 30th May 2000, in the
U.S.A., with TechTronic Industries Co., Ltd., Hong Kong, with respect to saleand purchase of businesses and assets of the Company’s North American
power tool group consisting of the following subsidiaries:
Ryobi Motor Products Corp.
Ryobi America Corporation
Ryobi Canada Inc.
Ryobi Taiwan Corporation
Sales price is equivalent to the book value at closing date (approximately
at end of June 2000) of assets to be transferred (with outer limit set at
US$123.3 million).
(3) Sale of North American Lawn & Garden GroupThe Company signed a definitive agreement dated 14th June 2000, in the
U.S.A., with MTD Products Inc, U.S.A., with respect to sale and purchase ofbusinesses and assets of the Company’s North American lawn & garden
equipment group, and transferred them at the same date. The Company’s
North American lawn & garden equipment group consisted of the following
subsidiaries:
Ryobi Outdoor Products, Inc.
Ryobi Outdoor Products Mexico S.A. de C.V.
Ryobi Outdoor Products Chile Limitada
Ryobi Concepts International, Inc.
These lawn & garden group companies belong to Power Tools segment in
the Note 12 (1).
Sales price was US$ 73 million, however, special arrangements for augments have been set up based on future sales to a major customer, andmethod of settlement was cash settlement.

RYOBI LIMITED ANNUAL REPORT 2000

PAGE 23

Tohmatsu & Co.
MS Shibaura Building
13-23, Shibaura 4-chome,
Minato-ku, Tokyo 108-8530, Japan

Tel:+81-3-3457-7321
Fax:+81-3-3457-1694

Deloitte
ToucheTohmatsu

INDEPENDENT AUDITORS' REPORTTo the Board of Directors of Ryobi Limited:
We have examined the consolidated balance sheets of Ryobi Limited and consolidated subsidiaries as of 31st
March 2000 and 1999, and the related consolidated statements of operations, shareholders' equity, and cash
flows for the years then ended, all expressed in Japanese yen. Our examinations were made in accordance withauditing standards, procedures and practices generally accepted and applied in Japan and, accordingly, included
such tests of the accounting records and such other auditing procedures as we considered necessary in thecircumstances.
In our opinion, the consolidated financial statements referred to above present fairly the financial position of
Ryobi Limited and consolidated subsidiaries as of 31st March 2000 and 1999, and the results of their operations
and their cash flows for the years then ended in conformity with accounting principles and practices generally
accepted in Japan applied on a consistent basis.
As described in Note 2, effective 1st April 1999, the consolidated financial statements have been prepared inaccordance with new accounting standards for consolidated financial statements, research and development
costs and interperiod allocation of income taxes.
Our examinations also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in
our opinion, such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar
amounts are presented solely for the convenience of readers outside Japan.

29th June 2000

PAGE 24

RYOBI LIMITED ANNUAL REPORT 2000

CORPORATEBOARD OF DIRECTORSINFORMATIONCORPORATE DIRECTORY(As of 31st March 2000)

President
Hiroshi Urakami
Senior Vice President
Tsuyoshi Mifune

Company Name (Country)

Principal Business

Major Consolidated Subsidiaries

Ryobi Imagix Co. (Japan)

Printing equipment and related product sales

Ryobi Sales Co. (Japan)

Power tool and lawn and garden equipment sales

Ryobi Mirasaka Co. (Japan)

Die casting manufacturing

Ryobi Mitsugi Co. (Japan)

Die casting manufacturing

Vice Presidents
Hiroyuki Harada
Masami Arai
Susumu Yoshikawa
Takao Tanaka
Takashi Yokoyama
Mikio Kamura
Shiro Muroya

Tokyo Light Alloy Co., Ltd. (Japan)

Cast aluminum and die casting manufacturing and sales

Standing Auditor
Shozo Kobayashi

Ryobi Finance Corporation (U.S.A.)

Financial operations

lkuno Co. (Japan)

Secondary aluminum alloy bullion manufacturing and sales

Ryobi Power Tool Co. (Japan)

Power tool manufacturing

Ryobi North America, Inc. (U.S.A.)

North American operations general management

Ryobi Die Casting (USA), Inc. (U.S.A.)

Die casting manufacturing and sales

Ryobi Outdoor Products, Inc. (U.S.A.)

Lawn and garden equipment manufacturing and sales

Ryobi Motor Products Corp. (U.S.A.)

Power tool and motor manufacturing and sales

Ryobi America Corporation (U.S.A.)

Power tool and builders’ hardware sales

Ryobi Concepts International, Inc. (U.S.A.)

Research and development

Ryobi Canada Inc. (Canada)

Corporate Auditors
Hiroshi Fukano
Takuomi Matsumoto
Hiroshi Toriyama

Power tool, lawn and garden equipment, and builders’ hardware
sales

Ryobi Australia Pty. Ltd. (Australia)

Power tool, lawn and garden equipment, and builders’ hardware
sales

Ryobi New Zealand Limited (New Zealand)

Power tool, lawn and garden equipment, and builders’ hardware

Ryobi Dalian Machinery Co., Ltd. (P.R.C.)

Power tool and builders’ hardware manufacturing

Ryobi Aluminium Casting (UK) Limited (U.K.)

Die casting manufacturing and sales

sales

Ryobi Europe S.A. (France)

Power tool and lawn and garden equipment sales

Ryobi Power Equipment (UK) Limited (U.K.)

Power tool and lawn and garden equipment sales

CORPORATE DATAHead Office762, Mesaki-cho, Fuchu,
Hiroshima 726-8628, Japan
Telephone: (0847) 41-1111
Tokyo Branch
5-2-8, Toshima, Kita-ku,
Tokyo 114-8518, Japan
Telephone: (03) 3927-5541
Tokyo Branch
Toranomon Office
Toranomon Central Building 4th Floor
1-7-1 Nishi-shinbashi,
Minato-ku, Tokyo, 105-0003, Japan
Telephone: (03)3501-0511

Established16th December 1943
Number of Shares Issued
171,230,715
Listings
Common Stock—Tokyo,
OsakaContinental Depositary
Receipts—Frankfurt
Transfer Agent
The Mitsubishi Trust andBanking Corporation
11-1, Nagata-cho, 2-chome,
Chiyoda-ku,
Tokyo 100-8212, Japan
RYOBI LIMITED ANNUAL REPORT 2000

PAGE 25

762, Mesaki-cho, Fuchu,
Hiroshima 726-8628, Japan
Telephone: (0847) 41-1111
http://www.ryobi-group.co.jp

PRINTED IN JAPAN©RYOBI LIMITED 2000