RYOBI LIMITED ANNUAL REPORT 2003

P r ofile
Ryobi Limited was founded in December 1943 as a die casting
manufacturer, and since then has accumulated innovativetechnologies in die casting components for a broad range ofindustries, including automobiles, electronics and communications. Backed by these technologies and expertise, theCompany has diversified into the fields of printing equipment,
power tools and builders' hardware.

C ontents
CONSOLIDATED FINANCIAL HIGHLIGHTS

1

MESSAGE FROM THE MANAGEMENT

2SOUND MANAGEMENT PLAN

4

REVIEW OF OPERATIONS6ENVIRONMENTAL EFFORTS

12

FINANCIAL SECTION

13

CORPORATE INFORMATION

31

Cautionary Notes : Forward-Looking Statements
This annual report contains information about forward-looking statements related to such matters as the Company’s plans, strategies and business results. These forward-looking
statements represent judgments made by the Company based on information available at present and are inherently subject to a variety of risks and uncertainties. The Company’s
actual activities and business results could differ significantly from the forward-looking statements due to changes including, but not limited to, those in the economic environment,
business environment, demand and exchange rates.

RYOBI LIMITED ANNUAL REPORT 2003

C onsolidated financial
highlights(For the years ended 31st March 2003, 2002 and 2001)

Thousands of
U.S. Dollars(Note 2)Millions of Yen

2003

2002

2001

2003

Net sales ..........................................................................................

¥156,458¥156,139¥184,282$1,301,647

Operating income................................................................................

8,452

6,364

10,13970,316

Net income .......................................................................................

4,471

2,081

2,907

37,196

Total assets ......................................................................................

¥165,487¥165,401¥193,001$1,376,764

Total shareholders’ equity..................................................................

38,36633,37929,501

319,185

For the fiscal period:

As at fiscal year-end:

U.S. Dollars(Note 2)Yen

Per share data:
Net income—Primary........................................................................

¥ 26.26¥ 12.19¥ 17.04

Cash dividends..................................................................................

—

—

—

$

0.218
—

Notes: 1. Net income 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 ¥ 120.20=US$1, the exchange rate prevailing on 31st March 2003.

NET SALESO P E R AT I N G I N C O M E

NET INCOME (LOSS)(Millions of yen)

(Millions of yen)

(Millions of yen)

300,000

12,000

4,000

4,471

250,000

242,774

2,831

10,139240,074

2,907

10,0002,081
8,452
200,000

8,000

184,282

2,000

7,303
6,817
6,364

156,139 156,458
150,000

6,000

100,000

4,000

50,000

2,000

0

0

0

-2,000-3,086

99

00

01

02

03

-4,000

99

00

01

02

03

99

00

01

02

03

RYOBI LIMITED ANNUAL REPORT 2003

1

M ESSAGE FR OM THE M ANAGEMENT

Create a sound and dynamic corporation
through technology, trust and challenge.
Guided by its corporate philosophy, "Create a sound and dynamic corporation
through technology, trust and challenge," Ryobi seeks to respond to the needsof its customers and society at large with innovative, top-quality products andservices, and thereby become an indispensable company.
Ryobi is exerting its utmost efforts to ensure that everyone connectedwith the Company in any capacity

not only customers, but also shareholders,business associates and employees

regards their association with us to be

rewarding.
We are advancing our Sound Management Plan, which began in the fiscal
year ended 31st March 2001, in an aim to build a high-earnings structure by
optimizing the scale and reinforcing the structure of each of our businesses.
The operating environment has changed significantly, becoming more challenging since the inception of the plan. We have implemented measures in linewith the plan, however, and are producing results by restructuring our businesses, and reducing interest-bearing debt and personnel.
In fiscal 2003, ended 31st March 2003, there remained little prospect forrecovery in the Japanese economy. Business conditions continued to be
extremely severe, with escalating deflation, slower consumer spending, tougher

RYOBI LIMITED ANNUAL REPORT 20032

price competition, and a drop in stock prices. Although the U.S. economy
showed signs of recovery, the future is increasingly uncertain owing to the bankruptcies of large corporations, low-priced stocks and the Iraq war, putting adamper on consumer spending and flattening the economic recovery.
Under these circumstances, Ryobi aggressively engaged in marketing activities while implementing various measures, including the development of new
products in line with user needs, the reduction of costs and expenses, andenhancements in operational efficiency.
In fiscal 2003, Ryobi recorded year-on-year gains in both sales and profits.
Consolidated net sales rose 0.2% compared with the previous fiscal year, to¥156.5 billion. Domestic net sales increased 5.8% to ¥109.9 billion, while overseas net sales decreased 10.9% to ¥46.5 billion.
Operating income climbed 32.8% to ¥8.5 billion, and net income was ¥4.5
billion, an increase of 114.9% from the previous fiscal year.
The overall increase in sales was due mainly to higher sales in the die castings business to automobile manufacturers in Japan and the United States,
despite a considerable decline resulting from the sale of four overseas sales subsidiaries in the power tools business.
Profits increased as a result of higher sales in the die castings business, positive effects from the Sound Management Plan, and cost reductions. The
Company posted a new record high for net income.
We request the continued understanding and support of our shareholders,customers and business associates as we optimize the scale and strengthen the
structure of our businesses. Ryobi will continually endeavor to improve performance, and to achieve the objectives of the Sound Management Plan.
June 2003

Hiroshi Urakami
President

RYOBI LIMITED ANNUAL REPORT 2003

3

S OUND M ANAGEMENT PL AN
The Sound Management Plan, which Ryobi announced on 29th March 2000, aims
to undertake a sweeping review of unprofitable businesses and to maximize theallocation of management resources in such fields of strength as die castings andprinting equipment businesses. Other measures include bolstering efforts to
reduce interest-bearing debt, lower costs and increase business efficiency, in orderto establish a stable, high-earnings structure. The direction and progress of eachbusiness segment is explained as follows.

DIE CASTINGS

POWER TOOLSIn our die castings business, we aim to strengthen and expand

We have carried out a sweeping review of operations in our

relationships with automobile manufacturers by utilizing ourpower tools business and our lawn and garden equipmentknow-how as a world-leading die casting manufacturer and ourbusiness, including the sale of subsidiaries in North America,

three-region structure of Japan, the United States and Europe.

Europe and Oceania. In Japan, we have raised profitability

Our aluminum die castings are lightweight, have excellent

through such measures as strengthening our cross-sectional

durability and are superior in terms of recyclability. In addition

Group management, streamlining our organization, reducing

to the automobile field, these die castings havestaff and consolidating and eliminating models. In addition, we

attracted attention in fields such as electronics andaim to further strengthen competitiveness by focusing efforts

communications as an effective technology for theon bolstering product development and marketing capabilities

protection of the environment, including the conser-

and improving the productivity of a manufacturing subsidiary invation of energy and resources.

Dalian, China.
In our builders' hardware business, we produce
door closers

a mainstay productat our manufacturingsubsidiary in Dalian and affiliate in Taiwan. We aim to improve
profitability by focusing on developing unique products, reducing costs through productivity enhancements, and reinforcing

PRINTING EQUIPMENT

price competitiveness.

In its printing equipment business, the Company is striving toincrease the precision of multicolor rendering, offer increasingly advanced functionality, and further consolidate its reputation
in world markets. To achieve these goals, Ryobi is pressing forward with the development of new products, the enhancementof production capacity and the strengthening of marketing
capabilities. Through the development of products in responseto advancements in information technology (IT) and digitization, as well as creating environmentally friendly products, we
are working to expand our product lineup in line with market
needs.

OTHERS
We have sold our fishing tackle business and discontinued
manufacturing and sales in our sporting goods business.

RYOBI LIMITED ANNUAL REPORT 2003

4

I N T E R E S T- B E A R I N G D E B T( C O N S O L I D AT E D )C A P I TA L E X P E N D I T U R E S &D E P R E C I AT I O N A N D A M O R T I S AT I O N( C O N S O L I D AT E D )(Billions of yen)(Billions of yen)
180

18

150

15

133.4

14.4

126.8

120

12
96.9

9.2

90

77.8

8.7

9

69.7

60

9.5
7.0

6

30

4.5

6.2
3.9

5.6
4.1

3

0

Capital Expenditures
Depreciation and Amortisation

0

99

00

01

02

ROE & ROA
(%)

99

03

00

01

NET ASSETS PER SHARE( Ye n )( Ye n )

8.6

20

9.2

250

16.59 17.04

6.6
5

300

26.26

12.5
10

03

NET INCOME (LOSS) PER SHARE

30

15

02

227.84
12.19

10

200

0

150

-10

100

2.7
1.2

1.3

195.55190.04 195.51
172.81

1.2

0
-1.3
-5

-10

-20

-8.9

-18.02

50

0

-30

-15

99

00

01

02

99

03

00

01

02

99

03

00

01

02

03

ROE
ROA

RETURN ON SALESASSET TURNOVER

FINANCIAL LEVERAGE(%)(Times)(Times)

1.2

8.0

1.1

7.0

2.9

3

7.2
2

1.6

1.03

1.2
1

1.0

1.3

6.9
6.8

1.02
6.0
0.95

0

0.9

-1

0.8

5.7
5.0

0.85

0.87

4.6
4.0

-1.3
0.7

-2

3.0

0

-3

99

00

01

02

03

0

99

00

01

02

03

99

00

01

02

03

Examining the financial and management indicators for the fiscal year ended 31st March 2003, which was the third year of our Sound Management
Plan, total consolidated assets increased slightly as the result of an increase in accounts receivable accompanying the rise in net sales, despite adecline in property, plant and equipment. Meanwhile, shareholders' equity increased approximately 15% from the end of the previous fiscal year.
Profits increased as a result of higher sales in the die castings business, positive effects from the Sound Management Plan and cost reductions.
Accordingly, return on equity (ROE), return on assets (ROA), and return on sales (ROS) figures increased considerably compared with the previous
fiscal year.
Net assets per share improved ¥32.29 to ¥227.84. Financial leverage decreased 1.1 times year-on-year to 4.6 times on account of reductionsin interest-bearing debt and increases in retained earnings.
To achieve the goals of the Sound Management Plan, the Company continues to optimize the scale and strengthen the structure of each of its
business operations, with a focus on improved performance.

Aiming for target indicesin the fiscal year ending 31st March 2004

ROA and ROS:

k

3.2 %
RYOBI LIMITED ANNUAL REPORT 2003

5

R E VIE W OF OPERATIONSDIE CASTINGS

V6 CYLINDER BLOCK
FOR AUTOMOBILE DIESEL ENGINESThe Company's die casting products are employed in numerous
types of components for automobiles, including engines and transmissions, to improve fuel economy through lighter-weight vehicles.

As one of the world's leading die casting manufacturers, Ryobi supplies die casting products to a variety of fields including automobiles, electronics and communications. 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 Japanand overseas.
Our aluminum die castings are lightweight, have excellent durability and are superior in terms of recyclability. These die castings have also attracted attention in various
fields as an effective technology for the protection of the environment, including the conservation of energy and resources. In addition to aluminum die casting products, Ryobi isfocusing efforts on even lighter-weight magnesium die casting products.
The secret behind our die castings, highly evaluated for their technological capabiliREVIEW

ties and high quality, lies in our integrated manufacturing system, from die design andfabrication to casting, machining and assembly, with the three-region structure of Japan,
the United States and Europe, and our quality assurance structure, which is based oninternational standards such as the ISO 9000 series. As a result, we are able to rapidly andprecisely respond to customer needs. We are concentrating efforts on making new die
casting products, and increasing the quality of various functional die casting products
through innovative technologies and a new die casting production system that enables the
manufacture of high-strength and high-quality die casting products.
Ryobi has acquired ISO 14001 certification, the international standard for environmental management systems, which demonstrates the comprehensiveness andeffectiveness of the Company's systems. We are working aggressively to reduce environmental impact, develop applications for aluminum die casting products and make inroads
into fields with requirements for high recyclability.

RYOBI LIMITED ANNUAL REPORT 2003

6

In the fiscal year ended 31st March
2003, net sales in die castings were¥107.8 billion, up 8.7% from a year earlier. Operating income rose 2.9% to ¥5.7
billion, while the ratio of operating
income to net sales fell from 5.6% in the

NET SALESO P E R AT I N G I N C O M E(Millions of yen)

(Millions of yen)

110,000

105,000

107,754

107,762

104,803

9,000

8,099
7,500

103,284
99,099100,000

5,736

6,000

5,509

5,670

02

03

4,803
95,0004,500

90,0003,000

85,0001,500

previous term to 5.3%.
PERFORMANCE

Although sales increased in themainstay automobile field, mainly inJapan and the United States, customers

0

0

99

00

01

02

03

99

00

01

demanded price reductions, dampening
growth in profits.
Ryobi is using the knowledge and expertise accumulated through its businesses as one of
the world's top manufacturers of die casting products, as well as its three-region structure of Japan, the United States and Europe, to broaden and deepen ties with the world's
automobile manufacturers. The Company is strengthening development of high-vacuum,super-high speed die casting technologies and new magnesium alloys to increase its
employment in automobile parts and promote even lighter-weight die casting products.
Moreover, through thin-wall, precise and high-quality die casting products, the
OUTLOOK

Company is making concerted efforts to expand sales in non-automobile industries,
including large-screen plasma television frames and projector components in the electronics and communications fields, as well as for highway lights and office furniture.
We believe demand for die casting products will grow in the future as an effective
technology that contributes to environmental protection as well as resource and energy
conservation, which are important global concerns.

Ryobi Aluminium Casting (UK),
Limited Receives Award from
Visteon Corporation
MOTORCYCLE FUEL TANK FRAMES

Ryobi Aluminium Casting (UK), Limited received

Using its advanced die casting technologies,
Ryobi succeeded in creating a die castingproduct for motorcycle fuel tank frames. The
new product is well regarded for its cost
reductions and design qualities.

an award from its customer Visteon Corporation, a
global automotive supplier, in recognition of its
contributions in 2002 and the excellence of its
technologies and quality.
Visteon Corporation presented the prestigious award to excellent suppliers from around theworld. The award ceremony took place in
Dearborn, Michigan in the United States. The
award reaffirms the

CHASSIS AND STAND FOR LARGESCREEN PLASMA TELEVISIONS
Ryobi is expanding the range of applications
for its die casting products in fields otherthan automobiles. The Company's products
are employed in the frames of large-screen
plasma televisions.

high quality of theCompany's products andtechnologies.

RYOBI LIMITED ANNUAL REPORT 2003

7

R E VIE W OF OPERATIONSPRINTING EQUIPMENTRYOBI 3404DI
The RYOBI 3404DI digital offset printing press allows theimaging of print data directly to the printing plate mounted in the press for printing.

Ryobi already is a top-ranked manufacturer in the market for small offset printing presses.
We provide high-quality, easy-to-use products as a comprehensive manufacturer of printing systems by participating in the market for medium-size offset printing presses anddigital offset printing presses and developing prepress systems.
Advancing product development with an emphasis on increasing speed, automationand labor-saving functions, our offset printing presses have received high appraisal incountries worldwide, including Japan. In prepress systems, we respond to demands in theprinting industry through the development of high-performance multi-function editing
workstations and original fonts.
REVIEW

We have acquired ISO 14001 certification, the international standard for environmental management systems, and engage in environmental protection activities in all
facets of our operations. The Company develops printing equipment while conducting alife cycle assessment. We also respond to needs in the printing industry for environmentally friendly printing equipment by reducing the volume of ink, organic solvents, waterand trial paper in the printing process through our original labor-saving, automateddevices.
All production facilities in this segment have achieved ISO 9000 series certification,
the international standard for quality control and quality assurance systems, throughwhich we provide high-quality products.

RYOBI LIMITED ANNUAL REPORT 2003

8

In the fiscal year ended 31st March
2003, net sales of printing equipment
grew 0.2% to ¥22.7 billion, and operating income climbed 102.1% to ¥1.3
billion compared with fiscal 2002. The
ratio of operating income to net sales

NET SALESO P E R AT I N G I N C O M E(Millions of yen)

(Millions of yen)

30,000

3,000

2,553

25,40325,00023,173 22,693 22,741

2,500

20,67920,0002,000

15,0001,500

10,000

1,000

5,000

500

1,778

1,289

expanded to 5.7% from 2.8% in the prePERFORMANCE

743

vious fiscal year.
Growth in net sales was hinderedby slow capital investment, which was

0

638

0

99

00

01

02

99

03

00

01

02

03

affected by sluggish economic conditions
domestically and abroad, and by tighter price competition. Profits improved on the backof efforts to shorten product lead times and slash costs. By product, demand grew for
medium-size offset printing presses (B2 and A2 sizes), and declined for small-size offset
printing presses (A3 size).
As with the die castings business, the Company will expand the printing equipment business into a primary source of earnings. Against a backdrop of rising demand forhigh-value-added printing systems, Ryobi is strengthening the development of new markets and products for its medium-size offset printing presses and digital offset printing
OUTLOOK

presses

growth areas in which Ryobi is competitive. We also aim to enhance user sup-port, including technological support services. The Company aims to increase profitability
by seeking further reductions in costs through productivity improvements and higher
overseas procurement.

RYOBI 750 Series Receives
the Red Dot Design Award
The RYOBI 750 series of medium-size offset
printing presses has received the “red dot
award : product design 2003”, one of themost prestigious design awards in the world,from the Design Zentrum Nordrhein
Westfalen in Germany. The award is inrecognition of the superior design and functionality of the RYOBI 750 series.

RYOBI 755P (TYPE 5-A1)
The RYOBI 750 series of B2-Size Multi-Color Offset
Presses incorporates many automatic mechanisms
and offers profitability gains while maintaining highprinting quality. In 2003, we added new models tothis series that automatically convert between single-sided and double-sided printing.

RYOBI LIMITED ANNUAL REPORT 2003

9

R E VIE W OF OPERATIONSPOWER TOOLSPRECISION CIRCULAR SAW DW-191

CO SERIES OF
CONCEALED-IN DOOR CLOSERS

The precision circular saw DW-191 for professionals is easy to use and incorporates an LED light for
more efficient work under poorly lighted conditions.

This series of door closers offers superior durability and uses a high-silicon aluminum die castalloy (R14) developed by Ryobi for housings.

Ryobi boasts a comprehensive lineup of power tools and lawn and garden equipment
powered by electrical current (corded), batteries (cordless), engines and compressed air.
The Company's products are widely used and appreciated by professionals and amateurs
alike. Our product development is geared toward meeting user needs. We create productsthat are highly functional and durable, products that are light and compact to ease physical exertion, products that encourage ecology by decomposing and reusing garden waste
such as fallen leaves and small branches, and products that are safe and easy to use.
The segment is also engaged in the field of builders' hardware, marketing its mainstay door closers for a wide range of residential and office buildings, as well as hinges and
REVIEWa broad lineup of other architecture hardware. We also contribute to the safety and comfort of both residential and business environments through the development of
air-conditioning controllers that contribute to energy conservation, and door closers thatare easy for the elderly, children and disabled persons to use comfortably and safely.
Most of the Company's facilities for power tools and builders' hardware haveacquired ISO 9000 series certification, the international standard for quality control andquality assurance systems, as well as ISO 14001 certification, the international standard
for environmental management systems. We are engaging in environmental protection
activities, including promoting recycling by labeling the quality of materials on parts andpackaging, and the collection of used batteries.

RYOBI LIMITED ANNUAL REPORT 2003

10

In the fiscal year ended 31st March
2003, net sales in power tools dropped
23.6% to ¥25.0 billion, but operating
income climbed 184.5% to ¥1.6 billion.
The ratio of operating income to net sales

NET SALESO P E R AT I N G I N C O M E(Millions of yen)

(Millions of yen)

120,000

3,000

107,239

104,094

100,000

2,500

80,0002,000

increased to 6.3% compared with 1.7%

1,581
60,000PERFORMANCE

40,000

1,154
1,000

32,778The difference in year-on-year net
the sale of four overseas sales subsidiaries

1,500

50,834in the previous fiscal year.
sales for this segment is partially due to

1,866

25,046555
500

20,000

371

0

0

99

00

01

02

03

99

00

01

02

03

in fiscal 2002. In addition, the domestic
market environment continues to be harsh due to a decline in housing construction.
Profits improved on account of cost reduction and positive effects from the Sound
Management Plan.
The power tools business is improving profitability by reviewing and restructuring its
domestic and overseas business structure. We aim to strengthen competitiveness by concentrating efforts on boosting marketing in the development and sale of products, andincreasing productivity at our manufacturing subsidiary in Dalian, China.
Further, the builders' hardware business is producing door closers, its principal

OUTLOOK

product, at a manufacturing subsidiary in Dalian, China and at an affiliate company in
Taiwan. We aim to expand profits by working to reduce costs with productivity enhancements and focusing sales activities on profitability.
Leveraging their strengths in overseas production, both businesses are developing
products that are competitive on pricing and have attractive features.

Door Closer D-1650 Acquires
ANSI Grade 1, the Highest
Standard in the U.S.
Our D-1650 door closer
meets the strictest standard in the U.S. (ANSIRESV-800

Grade 1) for durability.
The product is a highgrade model that

PSV-600

HOT-SELLING BLOWER VACUUMS

features both durability

Our blower vacuums are popular for their easy switching from blower to vacuuming functions. In 2002, weadded the lightweight and compact Portable Blower
Vacuum PSV-600 as an ideal companion to cleaningaround home entrances and car interiors.

and compactness.

RYOBI LIMITED ANNUAL REPORT 2003

11

E NVIR ONMENTAL EFFORTS
Based on the corporate philosophy, "Create a sound and dynamic corporation through technology, trustand challenge," Ryobi is committed to creating products that help create a higher standard of living andbetter quality of life.
Ryobi has positioned as an important management priority the preservation of the environment andthe reduction of environmental impact in its business activities. The Company established the Ryobi Group
Environmental Preservation Committee in September 1990 with the president as committee chairman, andsince then Ryobi and domestic Group companies have made aggressive efforts to contribute to environmental preservation, resource conservation, energy reduction and other activities that benefit society.

k Acquisition of ISO 14001 Certification
The Ryobi Group has acquired ISO 14001 certification, the international standard for environmental management systems, at 18 facilities of 14 companies(as of June 2003). Each company and facility considers environmental impact
by setting environmental targets and objectives, and then working to conserve
resources, lower energy consumption, reduce waste and increase recycling.

k Ryobi Environmental Policy
In its environmental management system, Ryobi sets targets and objectives and conducts reviewsin an aim to continuously improve on its efforts to reduce the impact of its business activities,
products and services on the environment within the range of technological and economical feasibility.
Through these activities, Ryobi aims to achieve the targets in its management plan andcontribute to the advancement of society.

1. Establish and execute policies in line with ISO 14001 standards
2. Strictly observe laws, regulations and agreements related to the environment, andprevent environmental pollution
3. Work to conserve energy, reduce waste and increase recycling
4. Implement preventative measures and training to limit the significant impact of oils
and chemical substances on the environment during emergencies
5. Offer training and educational opportunities to improve employees’ awareness ofthe environment
6. Contribute to local communities through activities to preserve the environment
7. Disclose information on the Ryobi Enviromental Policy to employees andpeople outside the Company

k Environmental Preservation Activities
The Ryobi Group is strongly encouraging campaigns to clean up roads, rivers and beaches nearits premises, and to recycle aluminum cans. Our aluminum can recycling activities began in
February 1991, and profits on the sale of aluminum cans are donated toward the purchase ofwheelchairs and service cars at local welfare facilities. Through activities like these, we are contributing to local communities.

RYOBI LIMITED ANNUAL REPORT 2003

12

F I N A N C I A LS E C T I O N

F 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 and administrative
expenses ...........................................
Operating income .............................
Income taxes .....................................
Net income (loss) ..............................

As at fiscal year-end:
Total assets ........................................
Total shareholders’ equity ...............

2003

2002

2001

2000

1999

1998

¥ 156,458
126,536
29,922¥156,139
126,11330,026¥184,282
144,567
39,715¥240,074
190,21449,860¥242,774
200,494
42,280¥232,997
189,916
43,081

21,470
8,452
1,504
4,471

23,662
6,364
2,188
2,081

29,576
10,139(1,150)2,907

42,557
7,303(11,231)2,831

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

¥ 165,487
38,366¥165,401
33,379¥193,001
29,501¥238,080
33,360¥233,654
32,540¥239,219
36,916¥¥ (18.02)
3.75

¥

Yen

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

¥

26.26
—

¥ 12.19
—

¥

17.04
—

16.59
—

8.39
7.50

Notes: 1. Net income (loss) per share figures are based on the weighted average number of shares outstanding each year.
2. 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 2003

13

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 2003 moderately increased by 0.2% from previous year, resulting in ¥156,458 million. Of this, domestic sales increased 5.8% to ¥109,911 million, while overseas sales declined 10.9% to ¥46,547 million. A significant portion of the decline in overseas revenues isowing to the sales of power tool sales companies both in Europe and Australia. However, the total net sales
remained slight increase from previous year performance with the sales increase in the die castings businesses mainly for automobile industry.
Operating income increased 32.8% to ¥8,452 million, resulting in the improvement in operating income
ratio by 1.3%, as compared with prior year performance.
Net sales and operating income by business segment are discussed below.
Die Castings

Net sales in the Die Castings segment increased 8.7% to ¥107,762 million, with operating income of ¥5,670
million, 2.9% increase from prior year performance. In spite of sales increase in the main product area for
automobile industry, operating income did not rise as the rate of sales growth due to the intensive pressureof price reductions.
Printing Equipment

Net sales in the Printing Equipment segment slightly increased to ¥22,741 million, with a significant improvement of operating income during this fiscal year. With various efforts to reduce costs operating income forthis segment has doubled to ¥1,289 million from prior year performance.

NET SALES(Millions of yen)

300,000

250,000

232,997242,774 240,074

200,000

184,282
156,139 156,458

150,000

100,000

50,000

0

98

99

00

01

02

03

RYOBI LIMITED ANNUAL REPORT 2003

14

Power tools

Net sales in the Power Tools segment was slipped 23.6% to ¥25,046 million, with a significant improvementof operating income during this fiscal year. The decline of sales level during this fiscal year is mainly because power tools sales companies in Europe and Australia were sold during previous year. Operating
income has tripled to ¥1,581 million as compared with prior year performance, owing to the effect of implementation of Sound Management Plan and various efforts to reduce costs.
Other

Net sales in Other business segment dropped 42.1% to ¥909 million, with operating loss of ¥89 million. The
decline of sales level during this fiscal year is because Ryobi ceased the manufacture and sale of golf
equipments in May 2002.
LIQUIDITY AND FINANCIAL POSITION

Net cash generated from operating activities during this fiscal year increased ¥2,022 million to ¥15,159 million.
Net cash used in investing activities was ¥3,132 million mainly for the purchases of property, plant andequipment.
Net cash used in financing activities was ¥8,024 million mainly for the repayment of bank borrowings andother interest-bearing debts.
In the aggregate, the consolidated cash flow of the Ryobi Group recorded a net increase in cash andcash equivalents of ¥3,966 million and resulted in ¥17,845 million at the end of this fiscal year, after making
necessary adjustments of exchange rate changes.
Total assets slightly increased to ¥165,487 million. Total shareholders’ equity improved by 14.9% to ¥38,366
million. Consequently, the equity ratio rose to 23.2% from 20.2% a year earlier.

O P E R AT I N G I N C O M E(Millions of yen)

12,000

10,13910,000

8,999
8,452

8,000

7,303
6,817
6,364

6,000

4,000

2,000

0

98

99

00

01

02

03

RYOBI LIMITED ANNUAL REPORT 2003

15

C O N S O L I D AT E D B A L A N C E S H E E T S
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(As at 31st March 2003 and 2002)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2003

2002

2003

¥ 17,845
2,636¥ 13,879
2,715$ 148,461
21,93033,933
63
1,598
(116)
29,1693,424
634
89,186

31,625
78
1,509
(113)
30,026
2,018
988
82,725282,304524
13,294(965)
242,671
28,486
5,275
741,980

Property, plant and equipment (Notes 6 and 7)
Land ................................................................................................................................
Buildings and structures ............................................................................................
Machinery and equipment .........................................................................................
Construction in progress ............................................................................................
Total .......................................................................................................................
Accumulated depreciation .........................................................................................
Net property, plant and equipment ..................................................................

20,111
38,74482,608450
141,913(86,134)
55,77920,13738,90685,737744
145,524(86,895)
58,629167,313322,329
687,255
3,744
1,180,641(716,589)
464,052

Investments and other assets
Investments in securities (Notes 4 and 7) ...............................................................
Investments in and advances to unconsolidated subsidiaries and affiliates ....
Intangible fixed assets ................................................................................................
Deferred tax assets (Note 10) ....................................................................................
Other ..............................................................................................................................
Allowance for doubtful accounts ..............................................................................
Total investments and other assets ......................................................................
Total ................................................................................................................................

10,709
313
1,794
4,913
3,177
(384)
20,522¥165,487

10,876
342
2,109
7,594
3,494
(368)
24,047¥165,401

89,093
2,604
14,92540,874
26,431(3,195)
170,732$1,376,764

Current assets
Cash and cash equivalents ........................................................................................
Time deposits (Note 7) ................................................................................................
Notes and accounts receivable (Note 7)
Trade ..........................................................................................................................
Unconsolidated subsidiaries and affiliates .........................................................
Other ..........................................................................................................................
Allowance for doubtful accounts .........................................................................
Inventories (Note 5) .....................................................................................................
Deferred tax assets (Note 10) ....................................................................................
Prepaid expenses and other ......................................................................................
Total current assets ............................................................................................

See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2003

16

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

LIABILITIES AND SHAREHOLDERS’ EQUITY

2003

2002

2003

¥ 28,088
13,505¥ 28,963
22,297$ 233,677
112,354

30,737
334
4,213
4,145
658
6,509
88,18929,616
260
1,573
5,392
205
7,122
95,428

255,716
2,779
35,05034,484
5,474
54,151
733,685

Long-term liabilities
Long-term debt (Note 7) ..............................................................................................
Accrued severance indemnities (Note 8) ................................................................
Other long-term liabilities (Note 7) ............................................................................
Total long-term liabilities ........................................................................................

28,5195,912
3,867
38,29827,202
5,111
3,658
35,971

237,263
49,18532,171
318,619

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

634

623

5,275

18,472
23,517
365
626
3,666
(7,843)(437)
38,366¥165,487

18,472
23,517(4,106)610
2,641(7,689)(66)
33,379¥165,401

153,677
195,649
3,037
5,208
30,499(65,249)(3,636)319,185$1,376,764

Current liabilities
Short-term borrowings (Note 7) ................................................................................
Current portion of long-term debt (Note 7) ..............................................................
Notes and accounts payable
Trade .....................................................................................................................
Unconsolidated subsidiaries and affiliates ....................................................
Other .....................................................................................................................
Accrued expenses .......................................................................................................
Income taxes payable .................................................................................................
Other current liabilities ...............................................................................................
Total current liabilities ............................................................................................

Commitments and contingent liabilities (Note 13)
Shareholders’ equity (Note 9)
Common stock
Authorised: 500,000,000 shares
Issued : 171,230,715 shares ...............................................................................
Capital surplus ..............................................................................................................
Retained earnings (deficits) .......................................................................................
Land revaluation reserve (Note 6) ............................................................................
Unrealised gain on available-for-sale securities ...................................................
Foreign currency translation adjustments ..............................................................
Treasury stock (2,844,418 shares in 2003, 532,672 shares in 2002) .......................
Total shareholders’ equity ......................................................................................
Total ................................................................................................................................

RYOBI LIMITED ANNUAL REPORT 2003

17

C O N S O L I D AT E D S TAT E M E N T S O F I N C O M E
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended 31st March 2003 and 2002)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2003

2002

2003

Net sales ...........................................................................................................................
Cost of sales .....................................................................................................................
Gross profit ..........................................................................................................
Selling, general and administrative expenses .........................................................
Operating income ...............................................................................................
Other income
Interest and dividends ................................................................................................
Foreign exchange gain ...............................................................................................
Gain on sales of investments in securities ..............................................................
Gain on exemption from future pension obligation (Note 8) .................................
Other ..............................................................................................................................
Total other income ..............................................................................................
Other expenses
Interest ..........................................................................................................................
Loss on disposal of property, plant and equipment ...............................................
Loss on disposal of business segment .....................................................................
Loss on devaluation of investments in securities ..................................................
Early retirement benefits ............................................................................................
Other ..............................................................................................................................
Total other expenses ..........................................................................................
Income before income taxes and minority interests ...............................................
Income taxes (Note 10)
Current ...........................................................................................................................
Deferred ........................................................................................................................
Total income taxes ..............................................................................................

¥156,458
126,536
29,922
21,4708,452¥156,139
126,11330,026
23,662
6,364$1,301,647
1,052,712
248,935
178,619
70,316

224
8
3
619
1,674
2,528

323
424
753
—
1,421
2,921

1,864
66
25
5,150
13,927
21,032

1,480
369
—
1,762
570
786
4,967
6,013

2,379
678
205
350
565
1,152
5,329
3,956

12,3133,070—
14,6594,742
6,539
41,32350,025

831
673
1,504

281
1,907
2,188

6,914
5,599
12,513

Minority interests ...........................................................................................................
Net income .......................................................................................................................

38¥ 4,471(313)¥ 2,081$

U.S. Dollars(Note 1)Yen

Per share of common stock
Net income ....................................................................................................................
Fully diluted net income ..............................................................................................
Cash dividends applicable to the year .....................................................................

¥ 26.26——

316
37,196¥ 12.19
11.59
—

$

0.218
—
—

See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2003

18

C O N S O L I D AT 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 2003 and 2002)
Millions of Yen

Balance at 31st March 2001 ......................
Net income ................................................
Bonuses to directors and statutory
auditors .....................................................
Transfer to land revaluation reserve ....
Land revaluation reserve ........................
Unrealised gain on available-for-salesecurities increased ...............................
Foreign currency translation
adjustments .............................................
Treasury stock increased, net(11,335 shares) .........................................
Balance at 31st March 2002 ......................
Net income ................................................
Increase due to change in normal
effective statutory tax rates ..................
Unrealised gain on available-for-salesecurities increase .................................
Foreign currency translation
adjustments .............................................
Treasury stock increase, net(2,311,746 shares) ....................................
Balance at 31st March 2003 ......................

Number of
Shares ofCommon Stock(Thousands)

Capiatal
SurplusRetained
Earnings(Deficits)

Land
Revaluation
Reserve

Unrealised
Gain onAvailable-for-Sale Securities

Foreign
Currency
Translation
Adjustments

CommonStockTreasuryStock

171,231—¥18,472—¥23,517—¥(5,652)
2,081

¥—
—

¥2,229—¥(9,001)—¥ (64)
—

—
—
—

—
—
—

—
—
—

(5)
(530)
—

—
—
610

—
—
—

—
—
—

—
—
—

—

—

—

—

—

412

—

—

—

—

—

—

—

—

1,312

—

—
171,231——
18,472——
23,517——(4,106)
4,471

—
610
—

—
2,641
—

—
(7,689)
—

(2)
(66)
—

—

—

—

—

16

—

—

—

—

—

—

—

—

1,025

—

—

—

—

—

—

—

—

(154)

—

—
171,231—¥18,472—¥23,517

—
¥ 365

—
¥626

—
¥3,666—¥(7,843)(371)¥(437)$153,677—$195,649—$(34,159)
37,196$5,075—$21,972—$(63,968)—$ (549)
—

—

—

—

133

—

—

—

—

8,527

—

—

—

—

—

—

—

(1,281)——$153,677—$195,649—$ 3,037—$5,208—$30,499—$(65,249)(3,087)$(3,636)

Thousands of U.S. Dollars (Note 1)

Balance at 31st March 2002 ......................
Net income ................................................
Increase due to change in normal
effective statutory tax rates ..................
Unrealised gain on available-for-salesecurities increase .................................
Foreign currency translation
adjustments .............................................
Treasury stock increase, net(2,311,746 shares) ....................................
Balance at 31st March 2003 ......................
See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2003

19

C O N S O L I D AT 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 2003 and 2002)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2003

2002

2003

¥ 6,013¥ 3,956$ 50,025

(375)
5,721
—
243
1

(118)
6,195
205
498
(750)

(3,120)47,596—2,022
8(2,727)667
3,752(1,230)3,094
15,15910,443
1,115(5,667)(1,920)(820)
13,137(22,687)
5,549
31,215(10,233)
25,740126,115

Investing activities
Purchase of property, plant and equipment ............................................................
Proceeds from sale of property, plant and equipment ..........................................
Proceeds from sale of investments in securities ...................................................
Proceeds from disposal of business segment ........................................................
Payments for disposal of business segment ...........................................................
Other ..............................................................................................................................
Net cash used in investing activities ............................................................

(3,857)
545
33
—
—
147
(3,132)(4,020)
1,295
1,134
750
(247)
535
(553)

(32,088)
4,534
274
—
—
1,223
(26,057)

Financing activities
Proceeds from long-term debt ..................................................................................
Repayments of long-term debt ..................................................................................
Decrease in short-term borrowings, net .................................................................
Acquisition of treasury stock .....................................................................................
Other ..............................................................................................................................
Net cash used in financing activities ...........................................................

15,041(22,119)
(234)
(399)
(313)
(8,024)

10,616(24,421)(3,381)—(484)(17,670)

125,133(184,018)(1,947)(3,319)(2,604)(66,755)

Foreign currency translation adjustments on cash and cash equivalents ..........

(37)

296

(308)

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

3,966(4,790)32,995

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

13,87918,669115,466

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

¥ 17,845¥ 13,879$ 148,461

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

¥ 1,507¥ 2,405$ 12,537

Operating activities
Income before income taxes and minority interests .............................................
Adjustments for:
Income taxes—paid ...............................................................................................
Depreciation and amortisation .............................................................................
Loss on disposal of business segment ................................................................
Loss on sales or disposals of property, plant and equipment ..........................
Gain on sales of investments in securities .........................................................
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable ..............................
Decrease in inventories .....................................................................................
Increase (decrease) in notes and accounts payable ...................................
Decrease in accrued expenses .......................................................................
Other, net ...................................................................................................................
Net cash provided by operating activities ...................................................

See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2003

20

N O T E S T O C O N S O L I D AT 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 2003 and 2002

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
and Exchange Law and its related accounting regulations, and in conformity with accounting principles and practices generally accepted in Japan which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
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 aform which is more familiar to readers outside Japan. In addition, thenotes to the consolidated financial statements include information
which is not required under accounting principles generally acceptedin Japan but is presented herein as additional information.
The consolidated financial statements are not intended to present
the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted incountries and jurisdictions other than Japan.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which Ryobi Limited ("the Company") isincorporated 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 ¥120.20 to $1, theapproximate rate of exchange at 31st March 2003. Such translations
should not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.
Certain reclassifications have been made in the 2002 consolidated
financial statements to conform to the classifications used in 2003.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries ("the Ryobi Group"). Under the control
or influence concept, those companies in which the Company, directly or
indirectly, is able to exercise control over operations are fully consolidated,
and those companies over which the Ryobi Group has the ability to exercise significant influence are accounted for by the equity method.
(i) Consolidated subsidiaries
The major consolidated subsidiaries are listed below:
Tokyo Light Alloy Co., Ltd. (Japan)
Ryobi North America, Inc. (U.S.A.)
Ryobi Die Casting (U.S.A.), Inc.
(ii) Affiliate
The major affiliate accounted for under the equity method is listed
below:
Ryobi—Tech Corporation (Taiwan)
The number of consolidated subsidiaries and affiliates accounted forunder the equity method as at 31st March 2003 and 2002 were as follows:

2003

2002

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

15

15

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

3

3

The number of unconsolidated subsidiaries and affiliates not accounted for under the equity method as at 31st March 2003 and 2002
were as follows:
2003

2002

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

3

4

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

00

The investments in such unconsolidated subsidiaries and affiliates
not accounted for under the equity method are carried at cost. If theequity method of accounting had been applied to the investment inthese companies, the effect on the accompanying consolidated financial statements would not be material.
All significant inter-company transactions, account balances andunrealised profits among the companies have been eliminated.
The excess of the cost of an acquisition over the fair value of the net
assets of the acquired subsidiary at the date of acquisition is being
amortised over a period of 5 years.
(b) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks
and financial institutions which are unrestricted as to withdrawal oruse, and which have original 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
The average method for the Company and domestic subsidiaries.
Foreign subsidiaries mainly adopt first-in first-out method.
(ii) Raw materials, supplies and purchased goods
Die castings ...................... Average method
Others ................................ Last purchase invoice price method
Foreign subsidiaries mainly adopt first-in first-out method.
Effective 1st April 2002, the Company and certain domestic subsidiaries changed their cost determination method of inventories (seeNote 3).
(d) Marketable securities and investments in securities
Marketable and investment securities are classified, depending on
management’s intent, as follows:I) trading securities, which are held for the purpose of earning capitalgains in near term are reported at fair value, and the related unrealised
gains and losses are included in income, II) held-to-maturity debt securities, which are expected to be held to maturity with the positive
intent and ability to hold to maturity are reported at amortised cost,and III) available-for-sale securities, which are not classified as eitherof the aforementioned securities, are reported at fair value, withunrealised gains and losses, net of applicable taxes, reported in a sepa-

RYOBI LIMITED ANNUAL REPORT 200321

rate component of shareholders’ equity.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other than temporary declines in fair value, investment securities are reduced to net realisable value by a charge to income.
(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
the estimated useful lives of the assets, while the straight-line method isprincipally applied to the property, plant and equipment of consolidated
foreign subsidiaries. The range of useful lives is from 3 to 50 years for buildings and structures, and from 2 to 20 years for machinery and equipment.
Effective 1st April 2002, foreign subsidiaries in North America adopted
Statement of Financial Accounting Standards No. 142 (SFAS 142) "Goodwill and Other Intangible Assets". Under SFAS 142, goodwill is no longer
amortised, but rather will be tested for impairment on an annual basis
and between annual test if an event occurs or circumstances changethat would more likely than not reduce the fair value below its carrying
amount. Prior to the adoption of SFAS 142, goodwill was amortised by
the straight-line method, over a period ranging from 5 to 40 years.
No impairment loss on goodwill was recognized for the year ended
31st March 2003. As a result, the effect on the adoption of SFAS 142,
was not material.
(f) Accrued severance indemnities and pension plan
The Company and domestic consolidated subsidiaries have a contributory or a non-contributory funded pension plan and unfunded pension
plans, which cover substantially all of their employees. Certain foreign
consolidated subsidiaries have defined benefit pension plans.
Effective 1st April 2000, the Ryobi Group adopted a new accounting
standard for employees’ retirement benefits and accounted for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. The amount of thetransitional obligation of ¥9,092 million ($75,641 thousand), determined
as at the beginning of this fiscal year, is amortised over ten years.
Unrecognised prior service cost is amortised at the beginning of thisfiscal year by using straight-line method over employees’ remaining
service period or shorter period (ranging from 11 to 16 years).
Unrecognised net actuarial loss is amortised from next fiscal year byusing straight-line method over employees’ remaining service period
or shorter period (ranging from 11 to 16 years).
(g) Leases
All leases are accounted for as operating leases. Under Japanese
accounting standards for leases, finance leases that deem to transfer
ownership of the leased property to the lessee are to be capitalised,
while other finance leases 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.
(h) Income taxes
The Ryobi Group adopted an accounting method for interperiod allocation of income taxes based on the asset and liability method.

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 deferred taxes are measured by applying currently enacted tax
laws to the temporary differences.
(i) 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.
(j) Translation of foreign currency accounts
All current and non-current receivables and payables denominated inforeign currencies are translated into Japanese yen at the exchange
rates at the balance sheet date. The foreign exchange gains and losses
from translations are recognised in the income statement to the extent that they are not hedged by forward exchange contracts.
(k) Translation of foreign currency financial statements (accounts offoreign subsidiaries)
The balance sheet accounts of the consolidated overseas subsidiaries are translated into yen at the current exchange rates as at the balance sheet date except for shareholders’ equity, which is translated
at the historical exchange rate. Differences arising from such translation are shown as "Foreign currency translation adjustments" in a separate component of shareholders’ equity in accordance with the revised accounting standard for foreign currency translations.
Revenue and expense accounts of the consolidated overseas subsidiaries are translated into yen at the average exchange rate.
(l) Derivative and hedging activities
The Ryobi Group uses derivative financial instruments to manage its
exposure to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts, currency swaps and interest rate
swaps are utilised by the Ryobi Group to reduce foreign currency exchange and interest rate risks. The Ryobi Group does not enter into
derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions areclassified and accounted for as follows: a) all derivatives be recognised
as either assets or liabilities and measured at fair value, and gains orlosses on derivative translations are recognised in the income statement
and b) for derivatives used for hedging purposes, if derivatives qualify forhedge accounting because of high correlation and effectiveness between
the hedging instruments and the hedged items, gains or losses on derivatives are deferred until of maturity of the hedged transaction.
The interest rate swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but thedifferential paid or received under the swap agreements are recognised
and included in interest expense or income.
(m) Per share information
Basic net income per share is computed by dividing net income available to common shareholders, by the weighted-average number ofcommon shares outstanding for the period, retroactively for stock splits.
Diluted net income per share reflects the potential dilution that could
occur if securities were exercised or converted into common stock. Diluted net income per share of common stock assumes full conversion of

RYOBI LIMITED ANNUAL REPORT 200322

the outstanding convertible notes and bonds 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.
Diluted net income per share is not disclosed because no dilutive instruments were issued and outstanding for the year ended 31st March 2003.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year.
3. Accounting Change
Prior to 1st April 2002, costs of finished products and work in process
were determined by the retail method, costs of raw materials were
determined by last purchase invoice price method, both of which were

held by the Company and certain domestic subsidiaries in the Die castings segment. Effective 1st April 2002, the Company and certain domestic subsidiaries changed their methods of accounting for such costs
of inventories to the average cost method.
The effect of this change was to increase inventories by ¥27 million($225 thousand) and decrease cost of sales and increase income before income taxes and other items by the same.
4. Marketable Securities and Investments in Securities
Information regarding each category of the securities classified as trading, held-to-maturity and available-for-sale at 31st March 2003 and 2002
was as follows:

Millions of Yen

Thousands of U.S.Dollars

2003

2002

Cost

Unrealised
Gain

Unrealised
Loss

Fair
value

Corporate shares ....

¥3,366¥6,264¥(159)

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

—

—

—

Others .......................

10

1

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

¥ 3,376¥ 6,265

2003

Cost

Unrealised
Gain

Unrealised
Loss

Fair
value

Cost

Unrealised
Gain

Unrealised
Loss

Fair
value

¥9,471¥5,083¥5,456¥(939)

—

34

—

(4)

¥9,600$28,003$52,113$(1,322)$78,794

30

—

—

—

—

11

—

—

—

—

—

83

8

—

¥(159)¥ 9,482¥ 5,117¥ 5,45691¥(943)¥ 9,630$28,086$ 52,121$ (1,322)$78,885

Available-for-sale

Available-for-sale securities whose fair value was not readily determinable as at 31st March 2003 and 2002 were as follows:
Thousands of
U.S.Dollars

Millions of Yen

2003

2002

2003

Corporate shares ....................................

¥1,226¥1,245$10,200

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

1

1

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

¥1,227¥1,246Due in one year or less ...............................

¥

Due after one year through five years ......
Total ..............................................................

—

2003

Finished products and purchased goods ...

¥13,785¥14,680$114,684

Work in process ..........................................

10,181

9,980

84,701

8

Raw materials and supplies .......................

5,203

5,366

43,286$10,208

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

¥29,169¥30,026$242,671

Thousands of
U.S.Dollars

2002
¥

1
¥

1

30

2003
$

1
¥

31

Thousands of
U.S.Dollars

2002

Proceeds from sales of available-for-sale securities for the years
ended 31st March 2003 and 2002 were ¥33 million ($274 thousand) and¥1,134 million, respectively. Gross realised gains and losses on thesesales, computed on the moving-average cost basis, were ¥3 million($25 thousand) and ¥4 million ($33 thousand), respectively, for the years
ended 31st March 2003 and ¥753 million and ¥2 million, respectively,
for the years ended 31st March 2002.
The book value of bonds by contractual maturity for securities classified as available-for-sale as at 31st March 2003 and 2002 are as follows:

Millions of Yen

Millions of Yen

2003

Available-for-sale

2003

5. Inventories
Inventories as at 31st March 2003 and 2002 consisted of the following:—

6. Land Revaluation
Under the "Law of Land Revaluation", a subsidiary elected a one-timerevaluation of its own-use land to a value based on real estate appraisal information as at 31st March 2002.
The resulting land revaluation excess represents unrealised appreciation of land and is stated, net of income taxes, as a component ofshareholders’ equity. There is no effect on the statements of income.
Continuous readjustment is not permitted unless the land value subsequently declines significantly such that the amount of the decline invalue should be removed from the land revaluation excess accountand related deferred tax liabilities.
The details of the one-time revaluation as at 31st March 2002 wereas follows:

8$

8

RYOBI LIMITED ANNUAL REPORT 2003

23

Millions of Yen

Thousands of
U.S.Dollars

Land before revaluation ...............................

¥ 275$ 2,288

Land after revaluation ..................................

1,981

16,481Thousands of
U.S.Dollars

Millions of Yen

2003

2002

2003

Net book value of property:

Land revaluation reserve, net of income

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

¥ 3,434¥ 3,256$28,569

taxes of ¥700 million ($5,824 thousand)

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

1,465

1,696

12,188and attribution of minority interest ofLand .........................................................

2,859

2,858

23,785Time deposit ............................................

108

108

899

Notes and accounts receivable ............

3,815

4,209

31,739¥394 million ($3,278 thousand) ...................

¥ 610$ 5,075

During the year ended 31st March 2003, land revaluation reserve
increased due to a change in the normal effective statutory tax rate
(see Note 10).
As at 31st March 2003, the carrying amount of the land after theabove one-time revaluation exceeded the market value by ¥167 million($1,389 thousand).
7. Short-Term Borrowings and Long-Term Debt
The annual weighted average interest rates applicable to short-termborrowings were 1.3%, as at 31st March 2003 and 2002, respectively.
Commercial paper included short-term borrowings totaling ¥2,263
million ($18,827 thousand) and ¥2,492 million, as at 31st March 2003
and 2002, respectively.
Long-term debt at 31st March 2003 and 2002 consisted of the following:Thousands of
U.S.Dollars

Millions of Yen

2003

2002

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

—

83

—

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

¥11,681¥12,210$97,180

8. Accrued Severance Indemnities and Pension Plan
The Company and its certain consolidated subsidiaries have severance
payment plans for employees. Under most circumstances, employees
terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service
and certain other factors. Such retirement benefits are made in the formof a lump-sum severance payment from the Company or from certain
consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by
retirement at the mandatory retirement age, by death, or by voluntary
retirement at certain specific ages prior to the mandatory retirement age.
The liabilities for employees’ retirement benefits at 31st March 2003
and 2002 consisted of the following:

2003

Loans principally from banks andranging from 0.78% to 7.26% :Secured .......................................................

¥ 1,665¥ 1,991$ 13,852

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

39,97739,929332,587

Floating-rate guaranteed notes in Eurodue 2003 ......................................................

—

6,880

—

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

382

699

3,178

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

42,02449,499349,617

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

(13,505)(22,297)(112,354)

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

¥28,519¥ 27,202$ 237,263

2003

2002

2003

Projected benefit obligation .......................

¥ 34,946¥ 54,289$ 290,732

Fair value of plan assets .............................

(14,484)(31,676)(120,499)

Unrecognised prior service cost ...............

212

1,804

1,764

Unrecognised actual loss ..........................

(10,274)(12,120)(85,474)

Unrecognised transitional obligation ........

(4,488)(7,186)(37,338)

Net liabilities ................................................

¥ 5,912¥ 5,111$ 49,185

The components of net periodic retirement benefit costs for the years
ended 31st March 2003 and 2002 were as follows:

The aggregate annual maturities of long-term debt at 31st March
2003 were as follows:

Millions of Yen

Thousands of
U.S.Dollars

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

¥13,505$112,354

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

10,52887,587

2006 ...................................................................

10,26985,4332007 ...................................................................

5,640

46,922

2008 ...................................................................

1,758

14,626

Years Ending 31st March

Thousands of
U.S.Dollars

Millions of Yen

insurance companies with interest rates

2009 and thereafter .......................................

324

2,695

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

¥42,024$349,617

Thousands of
U.S.Dollars

Millions of Yen

Service cost ................................................

2003

2002

2003

¥ 1,631¥ 1,799$13,569

Interest cost ................................................

1,495

1,517

12,438

Expected return on plan assets .................

(1,036)(1,061)(8,619)Amortisation of prior service cost .............

(111)

(45)

(923)

Recognised actual loss ..............................

787

663

6,547

Amortisation of transitional obligation ......

869

1,086

7,230

Gain on exemption from future pension
obligation ....................................................

(619)

—

(5,150)Net periodic retirement benefit costs .......

¥ 3,016¥ 3,959$25,092

The assets of the Ryobi Group pledged as collateral for short-termloans and long-term debt with banks and other financial institutions at
31st March 2003 and 2002 were as follows:
RYOBI LIMITED ANNUAL REPORT 2003

24

The Company and certain domestic subsidiaries have two types ofpension plans for employees; a non-contributory and a contributory funded
defined benefit pension plan. The contributory funded defined benefit
pension plan, which is established under the Japanese Welfare Pension
Insurance Law, covers a substitutional portion of the governmental pension program managed by the Company on behalf of the government anda corporate portion established at the discretion of the Company. According to the enactment of the Defined Benefit Pension Plan Law in April
2002, the Company applied for an exemption from obligation to pay benefits for future employee services related to the substitutional portion
which would result in the transfer of the pension obligations and related
assets to the government by another subsequent application. The Company obtained an approval of exemption from future obligation by the
Ministry of Health, Labor and Welfare on 1st March 2003. As a result of
this exemption, the Company and certain subsidiaries recognized a gain
on exemption from future pension obligation of the governmental program in the net amount of ¥619 million ($5,150 thousand) in accordancewith a transitional measurement of the accounting standard for employees’ retirement benefits for the year ended 31st March 2003.
The substitutional portion of the plan assets which will be transferredto the government in the subsequent year is measured to be approximately ¥13,786 million ($114,692 thousand) as at 31st March 2003.
Assumptions used for the years ended 31st March 2003 and 2002
were set forth as follows:
2003

2002

Discount rate ..............................................................

2.5%

2.7%~3.0%

Expected rate of return on plan assets .................

3.5%

3.5%

Amortisation of prior service cost ......................... 11~16 years 11~16 years
Recognition period of actuarial gain / loss .......... 11~16 years 11~16 years
Amortisation of transitional obligation .................

10 years

10 years

9. Shareholders’ Equity
Japanese companies are subject to the Japanese Commercial Code(the "Code") to which certain amendments became effective from 1st
October 2001.
The Code was revised whereby common stock par value was eliminated resulting in all shares being recorded with no par value and at
least 50% of the issue price of new shares is required to be recorded
as common stock and the remaining net proceeds as additional paidin capital, which is included in capital surplus. The Code permits Japanese companies, upon approval of the Board of Directors, to issue
shares to existing shareholders without consideration as a stock split.
Such issuance of shares generally does not give rise to changes within
the shareholders’ accounts. The revised Code also provides that an
amount at least equal to 10% of the aggregate amount of cash dividends and certain other appropriations of retained earnings associated with cash outlays applicable to each period shall be appropriated as a legal reserve (a component of retained earnings) until suchreserve and additional paid-in capital equals 25% of common stock.
The amount of total additional paid-in capital and legal reserve thatexceeds 25% of the common stock may be available for dividends byresolution of the shareholders. In addition, the Code permits the transfer of a portion of additional paid-in capital and legal reserve to thecommon stock by resolution of the Board of Directors.
The revised Code eliminated restrictions on the repurchase and useof treasury stock allowing Japanese companies to repurchase treasury stock by a resolution of the shareholders at the general shareholders meeting and dispose of such treasury stock by resolution of
the Board of Directors beginning 1st April 2002. The repurchasedamount of treasury stock cannot exceed the amount available for future dividend plus amount of common stock, additional paid-in capitalor legal reserve to be reduced in the case where such reduction was
resolved at the general shareholders meeting.
The amount of retained earnings and capital surplus available fordividends under the Code was ¥4,407 million ($36,664 thousand) as at
31st March 2003, based on the amount recorded in the parent
company’s general books of account. In addition to the provision that
requires an appropriation for a legal reserve in connection with the
cash payment, the Code imposes certain limitations on the amount ofretained earnings available for dividends.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Semiannual interim dividends may also be paid upon resolution of the Boardof Directors, subject to certain limitations imposed by the Code.
10. Income Taxes
The Company and its domestic subsidiaries are subject to Japanesenational and local income taxes which, in the aggregate, resulted innormal effective statutory tax rates of 40.9% for the years ended 31st
March 2003 and 2002.
As at 31st March 2003, a tax reform law concerning local enterprise
tax was enacted in Japan which changed the normal effective statutory tax rate from 40.9% to 39.5%, effective for years beginning on orafter 1st April 2004. The effect of this change was to decrease deferred tax assets—non-current and deferred tax liabilities—non-current by ¥142 million ($1,181 thousand) and ¥5 million ($42 thousand),
respectively, increase income taxes—deferred by ¥218 million ($1,814
thousand), and increase unrealised gain on available-for-sale securities by ¥81 million ($674 thousand) in the consolidated financial statements for the year ended 31st March 2003.
In addition to the above, deferred tax liability concerning land revaluation decreased ¥26 million ($216 thousand), land revaluation reserve and minority interests increased ¥16 million ($133 thousand) and¥10 million ($83 thousand), respectively.
The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities at
31st March 2003 and 2002 were as follows:

RYOBI LIMITED ANNUAL REPORT 2003

25

2003

2003

2002

40.9%

40.9%

purposes .....................................................................

2.1

6.4

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

(28.1)

6.4—

Thousands of
U.S.Dollars

Millions of Yen

2002

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

2003

Expenses not deductible for income tax

Deferred tax assets:
Accrued severance cost ............................

¥ 1,647

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

¥ 1,071

30,483$ 13,702

35,905

253,602

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

2,742

1,947

22,812

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

(23,015)(27,438)(191,472)

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

¥11,857¥ 11,485

Unrealised gain in excess of taxable income of$ 98,644

Deferred tax liabilities:
Unrealised gain on available-for-salesecurities ....................................................

¥ (2,417)¥ (1,855)

the sales entities ......................................................

1.8

Effect of tax rate reduction ......................................

3.7—

Undistributed earnings of foreign subsidiaries .....

3.2—

Other, net ......................................................................

1.4

1.6

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

25.0%

55.3%

$ (20,108)

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

(1,882)(832)(15,657)

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

¥ (4,299)¥ (2,687)$ (35,765)

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

¥ 7,558¥ 8,798$ 62,879

11. Research and Development Costs
Research and development costs were ¥1,589 million ($13,220 thousand) and ¥1,771million for the years ended 31st March 2003 and 2002,
respectively.

Reconciliation between the normal effective statutory tax rate forthe years ended 31st March 2003 and 2002 and the actual effective tax
rates reflected in the accompanying consolidated statements of income was as follows:

12. Leases
Lease expenses on such finance lease contracts without ownershiptransfer amounted to ¥789 million ($6,564 thousand) and ¥550 million,
for the years ended 31st March 2003 and 2002, respectively.

As at 31st March 2003 and 2002, 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 other assets under finance leases without ownershiptransfer were as follows:
Thousands of
U.S.Dollars

Millions of Yen

2003

2002

Acquisition
Cost

Accumulated
Depreciation

Net Leased
Property

Acquisition
Cost

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

¥ —

¥ —

¥ —

¥

Machinery and equipment ........

3,991

1,281

2,710

Accumulated
Depreciation

4

¥ 4

3,416

960

2003
Net Leased
Property

Acquisition
Cost

Accumulated
Depreciation

Net Leased
Property

¥

$

$

$

0
2,456

—
33,203—

10,657—22,546

Other assets ...............................

1,685

535

1,150

1,652

240

1,412

14,018

4,451

9,567

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

¥5,676¥1,816¥3,860¥5,072¥1,204¥3,868$47,221$15,108$32,113

Depreciation expense and interest expense, which are not reflectedin the accompanying statement of income, computed by the straightline method and the interest method were ¥789 million ($6,564 thousand) and ¥550 million for the years ended 31st March 2003 and 2002,
respectively.
Future minimum lease payments of the Ryobi Group as at 31st March
2003 and 2002 under noncancelable finance leases that do not transfer ownership of leased assets to the lessee were as follows:

Millions of Yen

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

Future minimum lease payments of the Ryobi Group as at 31st March
2003 and 2002 under noncancelable operating leases were as follows:

Millions of Yen

Thousands of
U.S.Dollars

2003

2002

2003

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

¥ 722

¥ 867

$ 6,007

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

1,648

2,614

13,710Total ..............................................................

¥2,370¥3,481$19,717

Thousands of
U.S.Dollars

2003

2002

2003

¥ 841

¥ 727

$ 6,997

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

3,019

3,141

25,116

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

¥3,860¥3,868$32,113

RYOBI LIMITED ANNUAL REPORT 2003

26

All derivative transactions are related to qualified hedges of interest and foreign currency exposures incorporated with its business.
Market risk of these derivatives is basically offset by opposite movements in the value of hedged assets. The Ryobi Group does not hold or
issue derivatives for speculative 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
the counterparties to these derivatives are limited to major international financial institutions.
The execution of derivatives is controlled by the Finance Departmentof 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 2003 and 2002.

13.Contingent Liabilities
The Ryobi Group had the following contingent liabilities as at 31st March
2003 and 2002.
Thousands of
U.S.Dollars

Millions of Yen

Trade notes discounted ..............................

2003

2002

2003

¥ 840

¥1,398$ 6,988

Guarantees and similar items
Bank loans ..............................................

228

259

1,897

Leases .....................................................

1,853

1,603

15,416

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

¥2,921¥3,260$24,301

14. 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 andinterest rates associated with certain assets and liabilities.

Thousands of
U.S.Dollars

Million of Yen

2003
Contract or
Notional Amount

¥100

2002
Fair ValueContract or
Notional Amount

¥(5)

¥100

2003
Fair ValueContract or
Notional Amount

Fair Value

¥(2)

$832

$(42)

Interest swap:
Fixed rate payment, floating rate receipt ........

Note: Derivatives which qualify for hedge accounting were excluded from the market value information in 2003 and 2002.

15. Segment Information
The segment information classified by industry and geographical market area is presented below with respect to the years ended 31st March
2003 and 2002.

(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 office equipment manufacturing, etc. ("Other")
Millions of Yen

2003
Die castings

Printing equipment

Power tools

Other

Eliminations /corporate

Consolidated¥¥156,458

Net sales
Unaffiliated customer ......................................

¥107,762¥22,741¥25,046¥ 909

Intersegment ....................................................

249

—

13

—

(262)

—

—

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

108,01122,741

25,059909(262)

156,458

Operating costs and expenses ...........................

102,341

21,452

23,478998(263)

148,006

Operating income (loss) ......................................

¥ 5,670¥ 1,289¥ 1,581¥ (89)¥

1¥ 8,452

Total Assets ..........................................................

¥83,813¥24,547¥26,527¥ 926¥29,674¥165,487

Depreciation .........................................................

4,068

627

912

24

—

5,631

Capital expenditure ..............................................

3,369

401

344

3

—

4,117

RYOBI LIMITED ANNUAL REPORT 2003

27

Millions of Yen

2002
Die castings

Printing equipment

Power tools

Other

Eliminations /corporate

Consolidated¥

Net sales
Unaffiliated customer ......................................

¥99,099¥22,693¥32,778¥1,569—¥156,139

Intersegment ....................................................

387

—

7

—

(394)

—

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

99,486

22,69332,785

1,569

(394)

156,139

Operating costs and expenses ...........................

93,97722,05532,230

1,911

(398)

149,775

Operating income (loss) ......................................

¥ 5,509

¥

638

¥ 555

¥ (342)¥4¥ 6,364

Total Assets ..........................................................

¥83,249¥25,449¥28,765¥1,395¥26,543¥165,401

Depreciation .........................................................

4,321

733

1,090

54

—

6,198

Capital expenditure ..............................................

3,075

441

418

9

—

3,943

Thousands of U.S.Dollars

2003
Die castings

Printing equipment

Power tools

Other

Eliminations /corporate

Consolidated$$1,301,647

Net sales
Unaffiliated customer ......................................

$896,523$189,193$208,369$ 7,562Intersegment ....................................................

2,071

—

108

—

(2,179)——Total .......................................................................

898,594

189,193

208,477

7,562(2,179)1,301,647

Operating costs and expenses ...........................

851,423

178,469

195,324

8,303(2,188)1,231,331

Operating income (loss) ......................................

$ 47,171$ 10,724$ 13,153$ (741)$

Total Assets ..........................................................

$697,280$204,218$220,690$ 7,704$246,872

Depreciation .........................................................

33,844

5,216

7,587

200

—

46,847

Capital expenditure ..............................................

28,028

3,336

2,862

25

—

34,251

9$70,316$1,376,764

The amounts of corporate assets as at 31st March 2003 and 2002 included in the "Eliminations or corporate assets" were, respectively, ¥29,708
million ($247,155 thousand) and ¥26,571 million, which mainly consist of cash, securities and long-term investment assets (investments in securities).
The effect of the change in the accounting for the cost determination methods of inventories described in Note 3 was to increase operating
income of the Die castings segment, for the year ended 31st March 2003, by ¥27 million ($225 thousand) in comparison to the prior year.

(2) Geographical segment information
Millions of Yen

2003
Japan

North America

Other overseas

Eliminations /corporate

Consolidated

Net sales:
Unaffiliated customer ........................................................................

¥125,889¥24,441¥ 6,128

Intersegment ......................................................................................

3,575

—

4,502

(8,077)—

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

129,464

24,441

10,630(8,077)

156,458

Operating costs and expenses .............................................................

122,334

Operating income ..................................................................................

¥ 7,130¥

23,842

Total Assets ............................................................................................

¥107,417¥17,115599¥—¥156,458

9,770(7,940)148,006860¥ (137)¥ 8,452¥12,810¥28,145¥165,487¥

RYOBI LIMITED ANNUAL REPORT 2003

28

Millions of Yen

2002
Japan

North America

Other overseas

Eliminations /corporate

Consolidated

Net sales:
Unaffiliated customer ........................................................................

¥119,428¥21,393¥15,318—¥156,139

Intersegment ......................................................................................

4,033

2

3,571

(7,606)—

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

123,461

21,395

18,889(7,606)

156,139

Operating costs and expenses .............................................................

118,551

21,09518,007(7,878)

149,775

Operating income ..................................................................................

¥ 4,910

¥

882

¥ 272

¥ 6,364

Total Assets ............................................................................................

¥109,206¥19,229¥11,969¥24,997¥165,401

300

¥

¥

Thousands of U.S.Dollars

2003
Japan

North America

Other overseas

Eliminations /corporate

Consolidated$

Net sales:
Unaffiliated customer ........................................................................

$1,047,329$203,336$ 50,982—$1,301,647

Intersegment ......................................................................................

29,742—37,454(67,196)—

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

1,077,071

203,336

88,436(67,196)

1,301,647

Operating costs and expenses .............................................................

1,017,754

198,353

81,281(66,057)

1,231,331

Operating income ..................................................................................

$ 59,317$ 4,983$ 7,155$ (1,139)$

Total Assets ............................................................................................

$893,652$142,388$106,572$234,152$1,376,764

70,316

The amounts of corporate assets as at 31st March 2003 and 2002 included in the "Eliminations or corporate assets" were ¥29,708 million($247,155 thousand) and ¥26,571 million, respectively, which mainly comprise cash, securities and long-term investment assets (investments insecurities).
The effect of the change in the accounting for cost determination methods of inventories described in Note 3 was to increase operating
income in Japan, for the year ended 31st March 2003, by ¥27 million ($225 thousand) in comparison to the prior year.

(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 2003 and 2002 are presented below:
Thousands of
U.S.Dollars

Millions of Yen

2003

2002

2003

Exports sales and sales by overseas
subsidiaries
North America ........................................

¥29,156¥26,498$242,562

Europe .....................................................

12,625

15,590105,033

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

4,766

10,14339,651

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

¥46,547¥52,231$387,246

16. Subsequent Event
At general shareholders’ meeting held on June 27 2003, the Company’s
shareholders approved that the Company repurchases treasury stock,at management discretion, of up to 4 million shares or ¥1,200 million($9,983 thousand) during the period ending next general shareholders’meeting.

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

18.6%

17.0%

Europe .....................................................

8.1

10.0

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

3.1

6.5

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

29.8%

33.5%

RYOBI LIMITED ANNUAL REPORT 2003

29

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
www.tohmatsu co.jp

Deloitte
ToucheTohmatsu

INDEPENDENT AUDITORS' REPORTTo the Board of Directors and Shareholders of
Ryobi Limited:
We have audited the accompanying consolidated balance sheets of Ryobi Limited and consolidated subsidiaries
as of March 31, 2003 and 2002, and the related consolidated statements of income, shareholders' equity, andcash flows for the years then ended, all expressed in Japanese yen. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted
and applied in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Ryobi Limited and consolidated subsidiaries as of March 31, 2003 and 2002,
and the consolidated results of their operations and their cash flows for the years then ended in conformity withaccounting principles and practices generally accepted in Japan.
As discussed in Note 3 to the consolidated financial statements, the Company and certain domestic
consolidated subsidiaries changed their method of accounting for inventories.
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.

June 27, 2003

RYOBI LIMITED ANNUAL REPORT 2003

30

C O R P O R A T E

I N F O R M A T I O NBOARD OF DIRECTORSCORPORATE DIRECTORY

President
Hiroshi Urakami

Company Name (Country)

Senior Vice President
Tsuyoshi Mifune
Vice Presidents
Hiroyuki Harada
Susumu Yoshikawa
Takao Tanaka
Takashi Yokoyama
Mikio Kamura
Shiro Muroya
Standing Auditor
Shozo Kobayashi

Major Consolidated Subsidiaries
Ryobi Imagix Co. (Japan)
Ryobi Sales Co. (Japan)
Ryobi Mirasaka Co. (Japan)
Ryobi Mitsugi Co. (Japan)
Tokyo Light Alloy Co. Ltd. (Japan)
lkuno Co. (Japan)
Ryobi Power Tool Co. (Japan)
Ryobi Die Casting (USA), Inc. (U.S.A.)
Ryobi Aluminium Casting (UK), Limited (U.K.)
Ryobi Dalian Machinery Co., Ltd. (P.R.C.)
Ryobi Finance Corporation (U.S.A.)

Principal Business

Printing equipment and related product sales
Power tool and lawn and garden equipment sales
Die casting manufacturing
Die casting manufacturing
Cast aluminum and die casting manufacturing
and sales
Secondary aluminum alloy bullion manufacturing
and sales
Power tool and lawn and garden equipment
manufacturing
Die casting manufacturing and sales
Die casting manufacturing and sales
Power tool, lawn and garden equipment andbuilders’ hardware manufacturing
Financial operations

Corporate Auditors
Hiroshi Fukano
Satoshi Ohoka
Hiroaki Takahashi

CORPORATE DATAHead Office762, Mesaki-cho, Fuchu,
Hiroshima 726-8628, Japan
Telephone: 81-847-41-1111
Tokyo Branch
5-2-8, Toshima, Kita-ku,
Tokyo 114-8518, Japan
Telephone: 81-3-3927-5541
Tokyo Branch
Toranomon Office
Toranomon Central Building 4th Floor
1-7-1 Nishi-shinbashi, Minato-ku,
Tokyo 105-0003, Japan
Telephone: 81-3-3501-0511

Established16th December 1943
Number of Shares Issued
171,230,715
Listing
Common Stock—Tokyo
Transfer Agent
The Mitsubishi Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8212, Japan

RYOBI LIMITED ANNUAL REPORT 2003

31

762, Mesaki-cho, Fuchu,
Hiroshima 726-8628, Japan
Telephone: 81-847-41-1111
http://www.ryobi-group.co.jp/

PRINTED IN JAPAN©RYOBI LIMITED 2003