RYOBI LIMITED ANNUAL REPORT 2001

PROFILE

Ryobi Limited is a world-class manufacturer ofdie castings with a lineup of finished productsthat includes printing equipment, power tools,
builders’ hardware and sporting goods. Global capabilities in product development, production andsales and marketing support strong customer
satisfaction throughout the world. With a strategic emphasis on profitability, the Company is refocusing on the strengths of each business line totarget growth in both die castings and finishedproducts.
V6 CYLINDER BLOCKCONTENTSRYOBI 686

Consolidated Financial Highlights

1

Message from the Management

2Sound Management Plan

4

Review of Operations

6

Financial Section

9

Corporate Information

27

C O N S O L I D AT E D F I N A N C I A L H I G H L I G H T S(For the years ended 31st March 2001, 2000 and 1999)
Thousands of
U.S. Dollars(Note 2)Millions of Yen

2001

2000

1999

2001

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

¥184,282
10,1392,907¥240,074
7,303
2,831

¥242,774
6,817(3,086)$1,487,345
81,832
23,462As at fiscal year-end:
Total assets .......................................................................................
Total shareholders’ equity .................................................................

¥193,001
29,501¥238,080
33,360¥233,654
32,540$1,557,716
238,103
U.S. Dollars(Note 2)Yen

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

¥ 17.04
—

¥

16.59
—

¥ (18.02)
3.75

$

0.138
—

2000

2001

Notes: 1. Net income (loss) per share figures are based on the weighted average number of shares outstanding each year.
2. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader at ¥123.90=US$1 the exchange rate prevailing on 31st March 2001.

Net sales (Millions of yen)

Operating income (Millions of yen)

Net income (loss) (Millions of yen)

300,000

12,0004,000

250,000

10,0002,000

200,000

8,000

0

150,000

6,000-2,000100,000

4,000-4,00050,0002,000-6,0000-8,000

0

1997

1998

1999

2000

2001

1997

1998

1999

2000

2001

1997

1998

1999

RYOBI LIMITED ANNUAL REPORT 2001

1

MESSAGE FROM THE MANAGEMENT

soundand dynamic corporation

aiming for a

Ryobi Limited aggressively promotes

the sale of our North American power tool

marketing activities in each of its businesses

business and fishing tackle business, income

and advances a variety of measures to de-increased and the Company recorded an ex-velop new products that match customer

traordinary loss of ¥6.6 billion in accordanceneeds, reduce costs, lower expenses andwith the sale of the fishing tackle businessraise business efficiency. During fiscal year

and the planned sale of sales subsidiaries

2001, ended 31st March 2001, consolidatedof power tools in Europe and Oceania.

net sales decreased 23.2% to ¥184.3 billion

Ryobi has made concerted efforts tocompared with the previous fiscal year. Al-

optimize the scale and reinforce the struc-though domestic net sales showed a slightture of each of its businesses to promote aincrease to ¥118.2 billion, overseas net sales

high earnings structure. The Company is un-

declined 45.8% to ¥66.1 billion due to thedertaking a sweeping review of its businesses

sale of power tool business in North America.

and earnings structures in line with the Sound

Operating income rose 38.8% to ¥10.1 bil-Management Plan, which was announced onlion and net income rose 2.7% to ¥3.0 bil-

29th March, 2000.

lion. Although net sales decreased owing to

2

RYOBI LIMITED ANNUAL REPORT 2001

The objective of the plan is to build astable, high earnings structure through aof Japan, the United States and Europe. We

rent fiscal year to improve results anddecisive review of unprofitable businesses

will also aggressively work to expand sales

strengthen the management structure based

while considering such measures as salein other fields such as electronics and com-on the Sound Management Plan. We willbusinesses. Consequently, the scope of themunications.

make every effort to be a “Sound and Dy-

review covers our power tool and fishing

In printing equipment, we will further re-namic Corporation” to meet the expectations

tackle businesses and is basically proceed-

inforce our solid reputation in world marketsof our shareholders, customers and businessing as planned.

by advancing high precision multicolor andassociates.

Ryobi will continue to maximize the al-functions. By responding to advancements

Thank you for your continued support.

location of management resources in its

in information technology (IT) and digitiza-

fields of strength—die casting and printing

tion, as well as by expanding from small-size

equipment businesses.

printing presses to medium-size printing

In our die casting business, we aim tostrengthen and expand relationships with

June 2001

presses, we are developing a total printing
system from prepress to press.

automobile manufacturers by utilizing our

To further solidify reforms made to busi-

know-how as a world-leading die castingness and earnings structures in fiscal 2001

manufacturer and our three-region structure

we will make concerted efforts in the cur-Hiroshi Urakami
President

RYOBI LIMITED ANNUAL REPORT 2001

3

SOUND MANAGEMENT PLAN

SOUND MANAGEMENT PLAN
We initiated the Sound Management Plan, which was announced on 29th March 2000, to undertake the sweeping
review of unprofitable businesses and to maximize management resources in such fields of strength as die castingand printing equipment businesses. Other measures include bolstering efforts to reduce interest-bearing debt, andlower costs and increase business efficiency, and establishing a stable, high earnings structure. The plan progressedroughly on schedule in fiscal 2001. A summary and progress report of the plan is described below.

SWEEPING REVIEW OF
UNPROFITABLE BUSINESSES

2001, to drastically restructure our domes-

REDUCE INTEREST-BEARING DEBT

tic sales subsidiary, we increased its capital

The Company sold a portion of its market-

Sale of Power Tool Business in North
Americaand discharging of our account receivables

able securities and real estate, and sold infrom the domestic sales subsidiary.

June 2000, North American lawn and gar-

In August 2000, we completed the sale ofpower tool business to TechTronic Industries
Co., Ltd., of Hong Kong. Although the Company is not directly involved in manufacturing and marketing, the Ryobi brand of products continue to exist through TechTronic
Industries.

den equipment business, a relatively strong
Sale of Fishing Tackle Businessbusiness, to MTD Products Inc, of the United

In September 2000, we completed the saleStates to reduce interest-bearing debt andof the fishing tackle business to Johshuyapartially offset losses incurred from the saleCo., Ltd. While the Company no longerof power tool business in North America. As

manufactures and sells fishing tackle, thea result, interest-bearing debt reduced

Ryobi brand name continues to be used at

24.0% to ¥96.9 billion in fiscal 2001 fromJohshuya.

¥127.0 billion in fiscal 2000. We plan to fur-

Review of Power Tool Business Outside

ther reduce interest-bearing debt to ¥65.7

North America
We have entered into negotiations after deciding to sell to a third party four overseas
sales subsidiaries in the United Kingdom,France, Australia and New Zealand.
In domestic power tool business,
Ryobi aims to boost profitability and improve
competitiveness by strengthening management across Group companies, streamlining the organization, reducing personnel aswell as transferring production to a manufacturing subsidiary in Dalian, China, andunifying and eliminating models. In March

4

RYOBI LIMITED ANNUAL REPORT 2001

CONCENTRATE MANAGEMENTRESOURCES IN FIELDS OF STRENGTH

billion in fiscal 2004.

We will maximize the allocation of management resources in such fields of expertise

REDUCE COSTS AND IMPROVE
BUSINESS EFFICIENCY

as die castings and printing equipment andRyobi promoted overall cost reductions by

are working to further increase competitive-

implementing such measures as reducing

ness and earnings power. As a result, these

personnel as a part of its sweeping review

two businesses accounted for 71.0% of net

of unprofitable businesses. Since fiscal 2000,

sales in fiscal 2001, compared with 53.6%

Group personnel have decreased approxi-

in fiscal 2000, a step closer to the fiscal 2004

mately 22.6%, or 1,945 employees, to 6,679

target of 78.0%.

employees in fiscal 2001.

ROE & ROA (%)

Net income (loss) per share (Yen)Net asset per share (Yen)

15

30

300

8.6

10

9.2
20

16.59

17.04

250

214.72
3.9

5

1.2
0

0.6
-1.7

1.3

0

150

-10

100

-20

-15

1998

195.51172.8150-18.02-30

1997

190.04

-1.3

-8.9

-9.6

215.59200-22.05

-5
-10

8.39

10

1999

2000

2001

ROA

ROE

0

1997

1998

1999

2000

2001

1997

1998

1999

Return on sales (%)

Asset turnover (Times)

Financial leverage (Times)

3

1.2

7.5

1.1

7.0

2000

2001

7.2
1.6

2

1.2
1

1.00

1.03

1.02

1.0

0.6

6.9

6.8
6.3

6.5

0.92
0.85

0.9

0
-1

6.0

0.8

5.5

0.7

5.0

5.8

-1.3
-2

-1.8

0

-3

1997

1998

1999

2000

2001

0

1997

1998

1999

2000

2001

1997

1998

1999

2000

2001

Regarding financial and management indices for the fiscal year ended 31st March 2001, in the first year of the Sound Management Plan,
ROE improved 0.6 percentage point compared with the previous fiscal year to 9.2% and ROA increased 0.1 percentage point to 1.3%. ROS
improved 0.4 percentage point to 1.6%.
Asset turnover was 0.85 times, compared with 1.02 times last year, owing to a decrease in net sales resulting from the sale of unprofitable businesses. Financial leverage declined 0.3 to 6.9 times due to reductions in interest-bearing debt. Financial leverage has improved asa result of progress made through the Sound Management Plan, reversing the previous slide.

aiming for target indicesin the fiscal year ending 31st March 2004 ➠ROA and ROS:

3.2%
RYOBI LIMITED ANNUAL REPORT 2001

5

R E V I E W O F O P E R AT I O N S

DIE CASTINGSNet sales (Millions of yen)

Operating profit (Millions of yen)

110,000

9,000

105,000

7,500

100,000

6,000

95,0004,500

90,0003,000

85,000

1,500

0

0

1997 1998 1999 2000 2001

1997 1998 1999 2000 2001

CYLINDER BLOCK

the earnings pillar driving growth at Ryobi
R E V I E W As one of the world’s leading dieof die casting various functional products

manufacturer and our three-region structure

casting manufacturer, Ryobi supplies die

through such innovative technology as Ryobi

of Japan, the United States and Europe. We

casting products to a variety of fields includ-

New Casting (RNC), a new die casting pro-will also aggressively work to expand sales

ing automobile, home appliance and indus-

duction system that enables the manufac-

in other fields such as electronics and com-

trial machinery. Our die casting products forture of high-strength and high-quality die

munications.

automobiles, including cylinder blocks andcasting products.

transmission cases, are employed in approxiRyobi Aluminium Casting (UK),
Limited Receives U.K.’s Best
Factory Awardmately 2,000 parts of more than 100 auto-

P E R F O R M A N C E In the fiscal year ended

mobile models in Japan and overseas. More-

31st March 2001, net sales in die castings

over, our aluminum die casting products con-increased 4.4 % to ¥107.8 billion, and oper-

tribute to energy consumption and resource

ating income surged 41.2% to ¥8.1 billion.

conservation due to their light weight and re-

The ratio of operating income to net sales

at the U.K.’s Best Factory award in the Best

cyclable qualities. In addition to aluminum die

was 7.5% compared with 5.6% in the previ-

Engineering Factory category, presented to

casting products, Ryobi is focusing efforts

ous fiscal year. Sales increased due to strong

top performing manufacturers in the United

on even lighter weight magnesium die cast-

exports of domestic automobile manufactur-

ing products.

ers to North America and Asia in the first half

ity products and technology. This marks the

The secret behind our die castings,of the fiscal year. Additionally, we integrated

second time for RAC(UK) to receive thehighly evaluated for their technological ca-

the plants of our manufacturing subsidiaryaward, with the first one in 1994.

pabilities and high quality, lies in our inte-

in the United States.

Ryobi Aluminium Casting (UK), Limited[RAC(UK)] received a high commendation

Kingdom. RAC(UK) received the award
based on an evaluation of Ryobi’s high-qual-

grated manufacturing system, from die design and fabrication to casting, machining

OUTLOO K We will maximize the allocation

and assembly, which allows a rapid and pre-of management resources in our competi-

cise response to customer needs. We aretive die casting business, reinforcing our pri-concentrating efforts on making new diemary source of earnings. We aim tocasting products and increasing the quality

strengthen and expand relationships with automobile manufacturers by utilizing our
know-how as a world-leading die casting

6

RYOBI LIMITED ANNUAL REPORT 2001

Ryobi Aluminium Casting (UK), Limited

PRINTING EQUIPMENT
Net sales (Millions of yen)

Operating profit (Millions of yen)

30,0003,000

25,0002,500

20,0002,000

15,0001,500

10,000

1,000

5,000

500
0

0

RYOBI 3404DI

1997 1998 1999 2000 2001

1997 1998 1999 2000 2001

Received Distinctive Merit at 31st
Machinery and Industrial Design Awards

aiming to increase revenues by expanding new fields
R E V I E W Ryobi already boasts the largest

P E R F O R M A N C E In the fiscal year ended

by expanding from small-size printing

share of the market for small offset presses.

31st March 2001, net sales of printing equip-

presses to medium-size printing presses, we

We provide high-quality, easy-to-use products

ment decreased 8.8% to ¥23.2 billion andare developing a total printing system fromas a comprehensive manufacturer of printing

operating income fell 58.2% to ¥0.7 billion

prepress to press.

systems by participating in the market forcompared with fiscal 2000. The ratio of op-

medium-size offset presses and digitalerating income to net sales was 3.2%, com-presses and developing prepress systems.

pared with 7.0% in the previous fiscal year.

RYOBI 680 Series Receives Ministerof International Trade and Industry
Award in the 30th Machinery andIndustrial Design Awards

Advancing product development withExports from Japan declined, adversely af-

an emphasis on increasing speed, automa-

fected by such factors as the strong yention and labor-saving functions, our offset

against the euro, and intensified price com-presses have received high appraisal mainly

petition in Japan resulted in lowered net sales

set presses was awarded the Minister ofin Europe and the United States. In prepress

and income. However, domestic sales of ourInternational Trade and Industry (presently

systems, we respond to demands in theA3-size landscape format offset presses

called the Minister of Economy, Trade andprinting industry through the development of

were strong. We also announced a next-gen-high-performance multi-function editing

eration digital offset press to favorable re-Awards presented by a Japanese news-

workstations and original fonts.

views.

paper focusing on business and technol-

The RYOBI 680 series of medium-size off-

Industry) Award, the top honor of the 30th
annual Machinery and Industrial Designogy, the Nikkan Kogyo Shimbun. Ryobi re-

Ryobi has established systems for quality management , quality assurance and en-

O U T L O O K As with die casting business,

vironmental preservation with the acquisition

Ryobi will maximize the allocation of man-of ISO 9001 certification for the design, de-agement resources in printing equipment

velopment and manufacture of offset presses

business to expand our primary source ofand prepress systems and ISO 14001 certi-

earnings. We will further reinforce our solid

fication for environmental management for

reputation in world markets by advancing

its business activities and products.

high precision multicolor and functions. By
responding to advancements in information

ceived favorable evaluations for its technological strengths and advanced designs.

RYOBI 686

technology (IT) and digitization, as well as

RYOBI LIMITED ANNUAL REPORT 2001

7

POWER TOOLSDOOR CLOSER
B3000VROTARY HAMMER
ED-450E

Net sales (Millions of yen)

Operating profit (Millions of yen)

120,000

3,000

100,000

1,500

80,000060,000-1,50040,000-3,00020,000-4,500-6,00001997 1998 1999 2000 2001

1997 1998 1999 2000 2001

building a structure that creates steady profits
R E V I E W Our Power Tools boast a variety

diverse range of doors for residences andO U T L O O K We aim to improve profitabilityof equipment powered by corded, cordless,buildings, as well as such architecture hard-through the development of unique prod-engines and compressed air. The wide range

ware as floor hinges, contributing to theucts and the manufacture of cost-competi-

of models from large to small are widely usedsafety and comfort of living environments.

tive products by taking advantage ofand appreciated by professionals and do-strengths in overseas manufacturing, includ-

it-yourself types alike. Ryobi aims for higher

P E R F O R M A N C E In the fisical year ended

ing our subsidiary in Dalian, China. Further-performance, lightness, compactness,

31st March 2001, net sales fell 51.2% tomore, we plan to restructure our domestic

safety and ease of use in product develop-¥50.8 billion while operating income rosesales subsidiary of power tools. In Builders’ment that closely matches the needs of the

61.7% to ¥1.9 billion. The ratio of operating

Hardware, in addition to our mainstay door

times.

income to net sales was 3.7%, comparedclosers, we are working to expand and boost

In Builders’ Hardware, the other field inwith 1.1% in the previous fiscal year. Al-other products for residential environments,

this segment, we develop and sell our main-

though net sales decreased owing to the saleincluding air conditioning controllers and alu-

stay door closers that are compatible with aof our North American power tool business,minum roofs.

income increased.

OTHERSNet sales (Millions of yen)

VIGOROUS FM

Operating profit (Millions of yen)

15,000012,500-250

10,000

-500

7,500

-750

5,000

-1,0002,500-1,2500-1,5001997 1998 1999 2000 2001

1997 1998 1999 2000 2001

aiming for a prompt return to profitability with thorough streamlining

8

REVIEW Utilizing its development capabili-

P E R F O R M A N C E In the fiscal year ended

O U T L O O K The Company will continue toties, Ryobi engages in production of such

31st March 2001, net sales decreased

strengthen revenue capabilities by expand-sporting goods as golf clubs. We develop and

65.4% to ¥2.5 billion, and an operating loss

ing and boosting the highly original VIGOR-

provide highly original clubs, including woodsof ¥0.6 billion was recorded. Net sales de-

OUS series of golf clubs.

and irons, and offer a new category of utility

clined due to the sale of our fishing tackle

club that fits into neither category.

business.

RYOBI LIMITED ANNUAL REPORT 2001

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

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

2001

2000

1999

1998

1997

1996

¥184,282
144,567
39,715¥240,074
190,21449,860¥242,774
200,494
42,280¥232,997
189,916
43,081¥208,198
169,568
38,630¥196,417
164,081
32,336

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

31,7436,887
3,421(3,775)30,462
1,874
2,857(4,166)¥193,001
29,501¥238,080
33,360¥233,654
32,540¥239,219
36,916¥225,504
36,767¥227,006
41,789¥¥ (22.05)
7.50¥ (24.35)
7.50

Yen

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

¥ 17.04—¥ 16.59—¥ (18.02)
3.75

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 2001

9

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

OPERATING PERFORMANCE

Consolidated net sales for the fiscal year ended 31st March 2001, declined 23.2% to ¥ 184,282 million. Of this,domestic sales rose slightly to ¥118,182 million, while overseas sales decreased 45.8% to ¥66,100 million. A
major factor of the sales decline was the sale of the North American power tool businesses and fishing tackle
business.
Net sales and operating income by segment are discussed below.
Die Castings

Net sales in the Die Castings segment increased 4.3% to ¥107,754 million, while its operating income increased
41.2% to ¥8,099 million. Our sales were supported by the increase of automobile exports by domestic automobile
manufacturers to the North America and Asian markets.
Printing Equipment

Net sales in the Printing Equipment segment decreased 8.8% to ¥23,173 million, while its operating income also
decreased 58.2% to ¥743 million. The continued strong yen against Euro currency led the decline of export sales
and the increased price competition in the domestic market.
Power Tools

Net sales in the Power Tools segment decreased 51.2% to ¥50,834 million, reflecting the sale of North American
power tool businesses. However, operating income improved and rose 61.7% to ¥1,866 million.
Other

Net sales in other segments fell 65.4% to ¥2,521 million, with an operating loss of ¥ 602 million. The significant
sales decline was due to the sale of the fishing tackle business.

Net sales (Millions of yen)
300,000
250,000
200,000
150,000
100,000
50,000
0

1996

10

1997

1998

RYOBI LIMITED ANNUAL REPORT 2001

1999

2000

2001

Operating income grew 38.8% to ¥10,139 million, resulting in a 2.5% improvement of the operating income ratio.
An extraordinary loss of ¥5,709 million was added during the year due to the sale of fishing tackle business andexpected sale of the European and Oceanic power tool sales subsidiaries.
LIQUIDITY AND FINANCIAL POSITION

Net cash provided by operating activities increased ¥814 million to ¥14,774 million.
Net cash provided by investing activities increased ¥11,993 million to ¥13,258 million. This includes the proceeds of ¥18,645 million from the sale of the North American power tool businesses.
Net cash used in financing activities increased ¥25,230 million to ¥32,598 million, by the repayment of interestbearing debts. In aggregate, the Ryobi Group recorded a net decrease in cash and cash equivalents of ¥4,413
million. After adjustment for exchange rate changes, cash and cash equivalents at the end of fiscal year totaled¥18,669 million.
Total assets decreased 18.9% to ¥193,001 million. A major factor in this decrease was the sale of North American power tool businesses and fishing tackle business.
Total shareholders' equity decreased 11.6% to ¥29,501 million. As a result, the equity ratio rose to 15.3% from
14.0% a year earlier.

Operating income (Millions of yen)
12,00010,000
8,000
6,000
4,000
2,000
0

1996

1997

1998

1999

2000

2001

RYOBI LIMITED ANNUAL REPORT 2001

11

C O N S O L I DAT E D B A L A N C E S H E E T S
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(As at 31st March 2001 and 2000)
Millions of Yen

ASSETS

2001

2000¥ 18,669
2,561—¥ 23,082
2,453
629

44,764
301
2,236
(413)
34,226
1,187
929

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

361,291
2,429
18,047(3,333)
276,239
9,580
7,498

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

104,460

127,650

843,099

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

20,661
38,68086,634
1,169

21,35642,862
101,858
2,266

166,755
312,187
699,225
9,435

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

147,144(86,191)

168,342(95,989)

1,187,602(695,649)

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

60,95372,353491,953

Investments and other assets
Investments in securities (Notes 3 and 5) ..............................................................
Investments in and advances to unconsolidated subsidiaries and affiliates ..........
Intangible fixed assets ...........................................................................................
Deferred tax assets (Note 9) ..................................................................................
Other .....................................................................................................................
Allowance for doubtful accounts ...........................................................................

10,922617
2,253
10,556
4,218
(978)

6,697
790
12,069
6,955
4,264
(770)

88,152
4,980
18,18485,19834,043(7,893)

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

27,58830,005

222,664

Current assets
Cash and cash equivalents ....................................................................................
Time deposits (Note 5) ..........................................................................................
Marketable securities (Notes 3 and 5) ...................................................................
Notes and accounts receivable (Note 5)
Trade .................................................................................................................
Unconsolidated subsidiaries and affiliates ........................................................
Other .................................................................................................................
Allowance for doubtful accounts .......................................................................
Inventories (Note 4) ...............................................................................................
Deferred tax assets (Note 9) ..................................................................................
Prepaid expenses and other ..................................................................................

2001$

150,678
20,670—Adjustments on foreign currency statement translation ....................................

—

8,072

—

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

¥ 193,001¥238,080$ 1,557,716

See notes to consolidated financial statements.

12

Thousands of
U.S. Dollars(Note 1)

RYOBI LIMITED ANNUAL REPORT 2001

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

LIABILITIES AND SHAREHOLDERS’ EQUITY

2001

2000

¥ 34,440
23,959¥ 61,581
13,27337,317
421
2,350
7,909
133
1,810
7,428

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

301,186
3,398
18,967
63,834
1,073
14,60959,952

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

115,767

143,939

934,359

Long-term liabilities
Long-term debt (Note 5) ........................................................................................
Accrued severance indemnities (Note 7) ...............................................................
Other long-term liabilities (Note 6) ........................................................................

39,594
4,116
3,090

53,3403,897
2,696

319,564
33,22024,940Total long-term liabilities ...................................................................................

46,80059,933

377,724

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

933

848

7,530

18,472
23,517(5,652)
2,229(9,001)(64)

18,472
23,517(8,555)——(74)

149,088
189,806(45,617)
17,990(72,647)(517)

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

2001$

277,966
193,374

Commitments and contingent liabilities (Note 12)
Shareholders’ equity (Notes 5 and 8)
Common stock, par value ¥50 per share:
Authorised: 500,000,000 shares
Issued: 171,230,715 shares ..............................................................................
Additional paid-in capital .......................................................................................
Deficits ..................................................................................................................
Unrealised gain on available-for-sale securities ....................................................
Adjustments on foreign currency statement translation ........................................
Treasury stock (521,337 shares in 2001, 600,169 shares in 2000) ......................
Total shareholders’ equity .................................................................................

29,50133,360238,103

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

¥ 193,001¥238,080$ 1,557,716

RYOBI LIMITED ANNUAL REPORT 2001

13

C O N S O L I DAT 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 2001 and 2000)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2001

2000

2001

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

¥ 184,282
144,567¥240,074
190,214$ 1,487,345
1,166,804

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

39,71529,57649,86042,557

320,541
238,709

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

10,1397,303

81,832

460
660
736
1,294

378
3,261
—
2,881

3,713
5,327
5,940
10,444

Total other income .............................................................................................
Other expenses
Interest ..................................................................................................................
Amortisation of intangible fixed assets ..................................................................
Loss on disposal of business segment (Note 11) ...................................................
Other .....................................................................................................................

3,150

6,520

25,424

3,677
39
5,709
2,073

5,003
614
12,625
4,044

29,677315
46,077
16,732

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

11,49822,28692,801

Income (loss) before income taxes and other items ...........................................
Income taxes (Note 9)
Current ..................................................................................................................
Deferred ................................................................................................................

1,791(8,463)

14,455278(1,428)587(11,818)

2,244(11,526)

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

(1,150)(11,231)(9,282)

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

(34)

63

(275)

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

¥

2,907

¥

2,831

$

U.S. Dollars(Note 1)Yen

Per share of common stock
Net income ............................................................................................................
Fully diluted net income ........................................................................................
Cash dividends applicable to the year ...................................................................
See notes to consolidated financial statements.

14

RYOBI LIMITED ANNUAL REPORT 2001

¥

17.04
15.72
—

23,462

¥

16.59
16.19
—

$

0.138
0.127
—

C O N S O L I DAT E D S TAT E M E N T S O F S H A R E H O L D E R S ’ E Q U I T Y
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended 31st March 2001 and 2000)
Millions of Yen
Unrealised
gain onavailablefor-sale
Deficits
securities

Number of
Shares ofCommon Stock(Thousands)

CommonStock

Additional
Paid-in
CapitalBalance at 31st March 1999 .................................
Net income ...........................................................
Decrease due to adoption of deferred tax
accounting ...........................................................
Deficit of unconsolidated subsidiary previously
not accounted for under the equity method .........
Bonuses to directors and statutory auditors .........
Treasury stock increased, net (594,771 shares) ...

171,231—¥18,472—¥23,517—¥(9,448)
2,831

—

—

—

(1,414)

—
—
—

—
—
—

—
—
—

Balance at 31st March 2000 .................................
Net income ...........................................................
Bonuses to directors and statutory auditors .........
Unrealised gain on available-for-sale securities
increased .............................................................
Adjustments on foreign currency statementtranslation decreased ..........................................
Treasury stock decreased, net (78,832 shares) ....

171,231——

18,472———

Balance at 31st March 2001 .................................

¥——

Adjustments
on foreign
currency
statement
translation¥

Treasury
stock

—
—

¥ (1)
—

—

—

—

(523)
(1)
—

—
—
—

—
—
—

—
—
(73)

23,517——(8,555)
2,907
(4)

—
—
—

—
—
—

(74)
—
—

—

—

—

2,229

—

—

—
—

—
—

—
—

—
—

—
—

(9,001)——
10

171,231¥18,472¥23,517¥(5,652)¥2,229¥(9,001)¥(64)

Balance at 31st March 2000 .................................
Net income ...........................................................
Bonuses to directors and statutory auditors .........
Unrealised gain on available-for-sale securities
increased .............................................................
Adjustments on foreign currency statementtranslation decreased ..........................................
Treasury stock decreased, net (78,832 shares) ....

$149,088——$189,806——$ (69,047)
23,462
(32)

$

—
—
—

$ (597)
—
—

—

—

—

17,990

—

—

—
—

—
—

—
—

—
—

(72,647)——
80

Balance at 31st March 2001 .................................

$149,088$189,806$ (45,617)$17,990$(72,647)$(517)

Thousands of U.S. Dollars (Note 1)

$

—
—
—

See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 200115

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 2001 and 2000)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2001
Operating activities
Income (loss) before income taxes and other items ..............................................
Adjustments for :Income taxes-returned (paid) ............................................................................
Depreciation and amortisation ..........................................................................
Loss on disposal of business segment ..............................................................
Loss (gain) on sales or disposals of property, plant and equipment ..................
Gain on sale of investments in securities ..........................................................
Changes in assets and liabilities
Decrease (increase) in notes and accounts receivable ..................................
Decrease (increase) in inventories ................................................................
Increase (decrease) in notes and accounts payable ......................................
Decrease in accrued expenses .....................................................................
Other, net ..........................................................................................................
Net cash provided by operating activities ...............................................

16

2001

1,791

¥ (8,463)

130
8,052
5,709
344
(660)

(1,565)
10,111
12,625(796)(3,261)

1,049
64,98846,077
2,776(5,327)

(809)
(456)
181
(620)
1,112
14,774

3,727
5,335(1,400)(136)(2,217)
13,960(6,529)(3,680)1,461(5,004)
8,975
119,241

Investing activities
Payments for purchase of property, plant and equipment .....................................
Proceeds from sale of property, plant and equipment ...........................................
Payments for purchase of intangible fixed assets .................................................
Proceeds from sale of marketable securities .........................................................
Proceeds from sale of investments in securities ...................................................
Proceeds from disposal of business segment .......................................................
Payments for disposal business segment ..............................................................
Other .....................................................................................................................
Net cash provided by investing activities ................................................

(5,322)
794
(55)
—
878
18,645(1,516)(166)
13,258(7,766)
2,891
(376)
719
4,196
—
—
1,601
1,265

(42,954)
6,409
(444)
—
7,086
150,484(12,236)(1,339)107,006

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

16,677(20,314)(28,666)(295)(32,598)

7,254(13,495)
(817)
(310)
(7,368)

134,600(163,955)(231,364)(2,380)(263,099)

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

153

(396)

1,235

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

(4,413)

7,461(35,617)

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

23,082

13,146

186,295

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

—

2,475

—

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

¥ 18,669¥ 23,082$

150,678

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

¥

¥

$

32,793

See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2001

¥

2000

4,063

5,669

$

14,455

N OT E S T O C O N S O L I DAT E D F I N A N C I A L S TAT E M E N T S
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIESFOR THE YEARS ENDED 31ST MARCH 2001 AND 2000

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese Securities andExchange Law and its related accounting regulations, and in conformity withaccounting principles and practices generally accepted in Japan.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial
statements issued domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, the notes to the consolidated financial statements include information which is not required underaccounting principles generally accepted in Japan but is presented herein
as additional information.
The consolidated financial statements are not intended to present thefinancial position, results of operations and cash flows in accordance withaccounting principles and practices generally accepted in countries and jurisdictions other than Japan.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which Ryobi Limited (“the Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside
Japan and have been made at the rate of ¥123.90 to $1, the approximate
rate of exchange at 31st March 2001. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries (“the Ryobi Group”). Under the control or influence concept, those companies in which the Parent, directly or indirectly, is able toexercise 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 for under the equity method as at 31st March 2001 and 2000 was as follows:
2001

2000

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

20

28

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

3

3

The accounts of certain subsidiaries of the Company are excluded fromconsolidation in the accompanying consolidated financial statements as total assets, net sales, net income and retained earnings of those subsidiaries,
in the aggregate, are not material.
The investments in such unconsolidated subsidiaries and affiliates notaccounted for under the equity method are carried at cost.
The number of unconsolidated subsidiaries and affiliates not accounted
for under the equity method as at 31st March 2001 and 2000 was as follows:
2001

2000

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

6

7

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

0

0

For the purpose of preparing the consolidated financial statements, allsignificant inter-company transactions, account balances and unrealised
profits among the companies have been eliminated, and the portion thereof
attributable to minority interests is charged to minority interests.
The 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 or use,
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
Inventories held by the Company and domestic subsidiaries:
Die castings .............................. Selling price method
Dies .......................................... Specific identification method
Printing equipment ................... Average method
Mainly first-in first-out method for foreign subsidiaries.
(ii) Raw materials, supplies and purchased goods
Last purchase invoice price method for the Company and domestic
subsidiaries.
Mainly first-in first-out method for foreign subsidiaries.
(d) Marketable securities and investments in securities
Prior to 1st April 2000, marketable securities and investment securities listed
on stock exchanges were stated at the lower of cost, determined by themoving-average method, or market. Other securities were principally statedat cost which was determined by the moving-average method.
Effective 1st April 2000, the Ryobi Group adopted a new accounting standard for financial instruments, including marketable and investment securities. The standard requires applicable securities to be classified and accounted for, depending on management’s intent, as follows:i) trading securities, which are held for the purpose of earning capital gains
in near term are reported at fair value, and the related unrealised gains and
RYOBI LIMITED ANNUAL REPORT 2001

17

losses are included in the income, ii) held-to-maturity debt securities, which
are expected to be held to maturity with the positive intent and ability to holdto maturity are reported at amortised cost, and iii) available-for-sale securities, which are not classified as either of the aforementioned securities, arereported at fair value, with unrealised gains and losses ,net of applicabletaxes, reported in a separate component of shareholders’ equity.
The effect of adoption of the new standard was to increase income before income taxes and other items by ¥393 million ($3,172 thousand). Marketable securities classified as current assets decreased by ¥629 million($5,077 thousand) and investment securities increased by the same amountas at 1st April 2000.
(e) Depreciation and amortisation
Property, plant and equipment are stated at cost. Depreciation of property,
plant and equipment of the Company and its consolidated domestic subsidiaries is computed by the declining-balance method at rates based on theestimated useful lives of the assets, while the straight-line method is principally applied to the property, plant and equipment of consolidated foreignsubsidiaries. The range of useful lives is from 3 to 50 years for buildings andstructures, and from 2 to 20 years for machinery and equipment.
Amortisation of intangible fixed assets, which consists of mainly goodwill
for foreign subsidiaries, is computed by the straight-line method, over a
period ranging from 5 to 40 years.
(f) Accrued severance indemnities and pension plan
Prior to 1st April 2000, the policy for the non-contributory and contributory
trusteed pension plans for employees is to fund and charge to operations
normal costs as accrued on the basis of an accepted actuarial method plus
prior service costs for the pension plans amortised. In addition, the Company and certain subsidiaries have unfunded retirement benefit plans andhave established a liability for retirement allowances at 40% of the amountwhich would be required if all employees voluntarily terminated their employment at each balance sheet date, less amounts funded by a contributory or non-contributory pension funds.
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 the transitional obligation of¥9,092 million ($73,382 thousand), determined as at the beginning of thisfiscal year, is amortised over ten years. Unrecognised net actuarial loss willbe amortised from next fiscal year by using straight-line method over employees’ remaining service period or shorter period (ranging from 11 to 16
years).
As a result, net periodic benefit costs, as compared with prior method,
decreased and income before income taxes and other items increased by¥269 million ($2,171 thousand).
(g) Accrued loss on disposal of business segment
A liability for allowance is established at the amount which would be accounted as a loss on disposal of foreign power tool business segment.

18

RYOBI LIMITED ANNUAL REPORT 2001(h) Leases
All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that deem to transfer ownership ofthe leased property to the lessee are to be capitalised, while other financeleases are permitted to be accounted for as operating lease transactions if
certain “as if capitalised” information is disclosed in the notes to the lessee’s
financial statements.
(i) Income taxes
The Company and its domestic subsidiaries 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 deferredtaxes are measured by applying currently enacted tax laws to the temporary
differences.
(j) 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.
(k) Translation of foreign currency accounts
Prior to 1st April 2000, current receivables and payables denominated inforeign currencies were translated into yen at the exchange rates in effectat the respective balance sheet dates. Non-current receivables and payables
denominated in foreign currencies were translated into yen at the historicalexchange rates.
Effective 1st April 2000, the Ryobi Group adopted a revised accounting
standard for foreign currency translations. In accordance with the revised
standard, all current and non-current receivables and payables denominatedin foreign currencies were translated into Japanese yen at the exchange
rates at the balance sheet date. The foreign exchange gains and losses fromtranslations are recognised in the income statement to the extent that they
are not hedged by forward exchange contracts.
(l) Translation of foreign currency financial statements (accounts offoreign subsidiaries)
The balance sheet accounts of the consolidated overseas subsidiaries aretranslated into yen at the current exchange rates as at the balance sheet
date except for shareholders’ equity, which is translated at the historicalexchange rate. Prior to 1st April 2000, differences arising from such translation were shown as “Adjustments on foreign currency statement translation” as assets or liabilities in the accompanying consolidated balance sheets.
Effective 1st April 2000, such differences are shown as “Adjustments on
foreign currency statement translation” 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.
(m) 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.
Effective 1st April 2000, the Ryobi Group adopted a new accounting standard for derivative financial instruments and a revised accounting standard
for foreign currency translations. These standards require that : a) all derivatives be recognised as either assets or liabilities and measured at fair value,and gains or losses on derivative translations are recognised in the income
statement and b) for derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains or losses onderivatives are deferred until maturity of the hedged transaction.
Long-term debt denominated in foreign currencies for which currency
swaps are used to hedge the foreign currency fluctuations are translated at
the contracted rate if the currency swaps qualify for hedge accounting.
The interest rate swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but the differ-ential paid or received under the swap agreements are recognised and included in interest expenses or income.
The effect of adopting the new accounting standard on income before
income taxes and other items was immaterial.
(n) Per share information
The computation of net income (loss) per share is based on the weighted
average number of shares of common stock outstanding during each year.
The average number of common shares used in the computation, excluding
treasury stock, was 170,639 thousands shares and 170,659 thousands
shares for 2001 and 2000, respectively.
Fully diluted net income per share of common stock assumes full conversion of the outstanding convertible notes at the beginning of the year (or at
the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated
statements of operations are dividends applicable to the respective years
including dividends to be paid after the end of the year.

3. Marketable Securities and Investments in Securities
Information regarding each category of the securities classified as trading, held-to-maturity and available-for-sale at 31st March 2001 was as follows:
Millions of Yen

Thousands of U.S. Dollars

2001
Cost

2001

Unrealised
Gain

Unrealised
Loss

Fair value

Cost

Unrealised
Gain

Unrealised
Loss

Fair value

Trading .........................................

—

—

—

—

—

—

—

—

Held-to-maturity ...........................

—

—

—

—

—

—

—

—

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

¥ 5,690¥ 4,252¥ (397)¥ 9,545$ 45,924$ 34,318$ (3,204)$ 77,038

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

34

—

(3)

31

274

—

(24)

250

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

¥ 5,724¥ 4,252¥ (400)¥ 9,576$ 46,198$ 34,318$ (3,228)$ 77,288

Available-for-sale

Available-for-sale securities whose fair value was not readily determinable as at 31st March 2001 was as follows:

Millions of Yen

Thousands of
U.S. Dollars

Millions of Yen

Thousands of
U.S. Dollars

2001

2001

2001

2001

¥1,346$10,864

Available-for-saleCorporate shares ......................................

The book value of bonds by contractual maturity for securities classified
as available-for-sale as at 31st March 2001 were as follows:

Proceeds from sales of available-for-sale securities for the years ended
31st March 2001 were ¥878 million ($7,086 thousand). Gross realised gains
on these sales, computed on the moving-average cost basis, were ¥632
million ($5,101 thousand).

Due in one year or less .................................

——

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

¥31

$250
—

Due after five years through ten years .........

—

Due after ten years .......................................

——

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

¥31

$250

Market value information of the applicable portion of the short-term marketable securities and investments in securities as at 31st March 2000 was
as follows:

RYOBI LIMITED ANNUAL REPORT 2001

19

The aggregate annual maturities of long-term debt at 31st March 2001
were as follows:

Millions of Yen

2000
Book valueMarket value

Gain (loss)

Marketable securities:

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

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

¥23,959$193,374

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

22,195

179,136

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

10,25982,801

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

4,711

38,023

Investments in securities:

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

1,788

14,431Market value available:

2007 and thereafter .....................................

641

5,173

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

¥63,553$512,938

Market value available:
Corporate shares ........................

¥ 595¥1,610¥1,015

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

34

31

(3)

¥ 629

¥1,641¥1,012

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

¥5,314Market value not available ...............

1,383¥9,670¥4,356¥6,697

4. Inventories
Inventories as at 31st March 2001 and 2000 consisted of the following:

The assets of the Ryobi Group pledged as collateral for short-term loans
and long-term debt with banks and other financial institutions at 31st March
2001 and 2000 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
Thousands of
U.S. Dollars

2001

2000

2001

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

¥3,129¥2,003$25,254

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

2,037

2,569

16,441

83,809Land ......................................................

960

1,010

7,748

6,893

42,486Time deposits .........................................

4

4

32

¥44,873$276,239

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

546

611

4,407

Millions of Yen

2001

2000

2001

purchased goods .......................................

¥18,578¥25,910$149,944

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

10,384

12,070Raw materials and supplies .........................

5,264

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

¥34,226

Finished products and5. Short-term Borrowings and Long-term Debt
The annual average interest rates applicable to short-term borrowings were2.3% and 3.3%, as at 31st March 2001 and 2000, respectively.
Short-term borrowings included commercial paper totaling ¥2,183 million ($17,619 thousand) and ¥7,702 million, as at 31st March 2001 and
2000, respectively.
Long-term debt at 31st March 2001 and 2000 consisted of the following:

Millions of Yen

2001

2000

Thousands of
U.S. Dollars

insurance companies with interest
rates ranging from 0.69% to 7.38%:
Secured ..................................................

¥ 1,617¥ 1,803$ 13,051

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

39,29033,608317,111

6,880

6,880

55,529—8,000—
118,418

Floating-rate guaranteed notes
2.45% unsecured notesin yen due 2001 .........................................
2.8% convertible notes

20

in yen due 2002 .........................................

14,672

14,956

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

1,094

1,366

8,829

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

63,553

66,613512,938

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

(23,959)(13,273)(193,374)

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

¥39,594¥53,340$319,564

RYOBI LIMITED ANNUAL REPORT 2001

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

—

88

—

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

445

167

3,592

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

¥7,121¥6,452$57,474

Additional information with respect to convertible notes outstanding at
31st March 2001 was as follows:

Principal Amountat Issue (Millions)Issued in

Current Conversion
or Exercise
Price per Share¥15,000

March 1995

¥484.00

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

2001

Loans principally from banks andin Deutsche marks due 2003 ......................

Net book value of property:

The convertible notes outstanding at 31st March 2001 were convertible
into 30,314 thousand shares of common stock of the Company. The conversion prices of the convertible notes are subject to adjustments in certain
circumstances.
Under the terms of indenture for the 2.8% convertible notes due March
2002 , the Company’s cash dividend payments are restricted from exceeding the amount equivalent to accumulated ordinary income minus income
taxes during the years for which the notes have been outstanding plus ¥4,000
million, on a cumulative basis.
In this case, interim cash dividends may be regarded as the prior year’s
cash dividends.
6. Other Long-term Liabilities
In applying the equity method, the Company recognises negative net assets

of affiliates, if any, in total and such negative equity in investees is recorded
as an allowance for investee losses. Such allowance amounted to ¥435
million ($ 3,511 thousand) and ¥452 million at 31st March 2001 and 2000,
respectively, and is included in the “Other long-term liabilities” in the accompanying balance sheets.
7. 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 basedon the rate of pay at the time of termination, years of service and certain
other factors. Such retirement benefits are made in the form of 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 (assets) for employees’ retirement benefits at 31st March
2001 consisted of the following:

Millions of Yen

Thousands of
U.S. Dollars

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

¥(53,109)$(428,644)
260,920

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

32,328Unrecognised prior service cost ...................

——

Unrecognised actuarial loss .........................

8,558

69,072

Unrecognised transitional
obligation ....................................................

8,276

66,796

Prepaid pension cost ....................................

(169)(1,364)

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

¥ (4,116)$ (33,220)

The components of net periodic benefit costs for the year ended 31st
March 2001 were as follows:

Service Cost .................................................

Millions of Yen

Thousands of
U.S. Dollars¥1,603$12,938

Interest Cost .................................................

1,561

12,599

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

(1,151)(9,290)

Amortisation of prior service cost .................

——

Recognised actuarial loss .............................

——

Amortisation of transitional
obligation ......................................................
Net periodic benefit costs .............................

799¥2,812

6,449$22,696

Assumptions used for the year ended 31st March 2001 were set forth asfollows:
Discount rate ...............................................................................

3.0%

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

3.5%

Recognised period of actuarial gain / loss ....................................

11~16 years

Amortisation period of transitional obligation ................................

10 years

8. Shareholders’ Equity
The Japanese Commercial Code (the “Code”) requires at least 50% of theissue price of new shares, with a minimum of the par value thereof, to be
designated as stated capital as determined by resolution of the Board of
Directors. Proceeds in excess of amounts designated as stated capital are
credited to additional paid-in capital.
The Code also requires companies to appropriate from retained earnings
to a legal reserve an amount equal to at least 10% of all cash payments
which are made as an appropriation of retained earnings until such reserve
equals to 25% of stated capital. This reserve amount, which is included in
deficits, totals ¥172 million ($1,388 thousand) and ¥2,873 as at 31st March
2001 and 2000, respectively, and is not available for dividends but may be
used to reduce a deficit by resolution of the shareholders.
The Company may transfer portions of additional paid-in capital to statedcapital by resolution of the Board of Directors. The Company may also transfer portions of unappropriated retained earnings, available for dividends, tostated capital by resolution of the shareholders.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Semiannualinterim dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code. Year-end dividends
are reflected in the consolidated statements of shareholders’ equity whenauthorised.
9. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal
effective statutory tax rates of 40.9% for the years ended 31st March 2001
and 2000.
The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities at 31st
March 2001 and 2000 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2001

2000

2001

Deferred tax assets:
Accrued loss on disposal of
business segment ..................................

¥

740

¥

—

$

5,973

Accrued severance cost ..........................

572

490

4,617

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

32,934

20,460265,811

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

2,044

1,002

16,497

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

(22,750)(9,510)(183,616)

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

¥ 13,540¥12,442$109,282¥

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

¥ (1,575)—$ (12,712)

Land revaluation difference ......................

(707)

(707)

(5,706)

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

(746)(1,063)(6,021)

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

(3,028)(1,770)(24,439)

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

¥ 10,512¥10,672$ 84,843

RYOBI LIMITED ANNUAL REPORT 200121

Reconciliation between the normal effective statutory tax rate for the years
ended 31st March 2001 and 2000 and the actual effective tax rates reflected in the accompanying consolidated statement of income was as follows:
2001

12. Leases and Contingent Liabilities(1) Contingent liabilities
The Ryobi group had the following contingent liabilities as at 31st March
2001 and 2000.

2000
Millions of Yen

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

40.9%

40.9%

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

(74.3)(83.8)

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

(31.2)

180.9

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

2.9

(2.5)

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

(2.5)

(2.8)

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

(64.2)%

132.7%

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

Thousands of
U.S. dollars

2001

2000

2001

¥2,196¥1,302$17,724

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

294

336

2,373

Lease ....................................................

1,570

1,659

12,672

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

¥4,060¥3,297$32,769(2) Leases
Future minimum lease payments of the Ryobi Group as at 31st March 2001
and 2000 under noncancelable finance leases that do not transfer ownership of leased assets to the lessee were as follows:

10. Research and Development Costs
Research and development costs were ¥2,279 million ($18,394 thousand)and ¥3,816 million for the years ended 31st March 2001and 2000, respectively.
11. Loss on Disposal of Business Segment
Loss on disposal of business segments was recognised principally for thesale of power tool businesses in Europe and Oceania, and fishing tackle
business in 2001, and for the sale of power tool business in North America
in 2000.

Millions of Yen

Thousands of
U.S. dollars

2001

2000

2001

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

¥ 389

¥ 244

$ 3,140

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

1,849

1,236

14,923

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

¥2,238¥1,480$18,063

Lease expenses on such finance lease contracts without ownership transfer amounted to ¥294 million ($2,373 thousand), ¥203 million, for the years
ended 31st March 2001 and 2000, respectively.
As at 31st March 2001 and 2000, summarised information showing the assumed figures of acquisition cost, accumulated depreciation and net bookvalue, which include the portion interest thereon, of the leased properties and other assets under finance leases without ownership transfer were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2001
Acquisition
Cost

Buildings and structures ..............
Machinery and equipment ...........

¥

2000

Accumulated
Depreciation

4

¥

2,772

3
832

Net Book
Value

Acquisition
Cost

¥

¥

1
1,940

¥

2
570

2001
Net Book
Value

Acquisition
Cost

¥

$

2
1,445

32
22,373

Accumulated
Depreciation

$

24
6,715

Net Book
Value

$

8
15,658Other assets .............................

351

54

297

58

25

33

2,833

436

2,397

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

¥ 3,127¥ 889¥ 2,238¥ 2,077¥ 597¥ 1,480$ 25,328$ 7,175$ 18,063

Depreciation expense and interest expense, which are not reflected in
the accompanying statement of income, computed by the straight-line
method and the interest method were ¥294 million ($2,373 thousand) and¥203 million for the years ended 31st March 2001 and 2000, respectively.
Future minimum lease payments of the Ryobi Group as at 31st March
2001 and 2000 under noncancelable operating leases are as follows:

Millions of Yen

22

4
2,015

Accumulated
Depreciation

Thousands of
U.S. dollars

2001

2000

2001

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

¥ 841

¥ 957

$ 6,788

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

3,009

3,827

24,286

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

¥3,850¥4,784$31,074

RYOBI LIMITED ANNUAL REPORT 2001

13. Related Party Transactions
Transactions of the Ryobi Group with relative of directors for the year ended
31st March 2001 was as follows:

Sales of land and buildings ..........................

Millions of Yen

Thousands of
U.S. Dollars

¥85

$686

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 and interest rates associated with certain assets and liabilities.
All derivative transactions are related to qualified hedges of interest and foreign currency exposures incorporated with its business. Market risk of thesederivatives 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 Department of the Company, and by the Finance Division of consolidated subsidiaries. Derivativetransactions 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 2001 and 2000.
Millions of Yen

Thousands of U.S. Dollars

2001

2000

Contract ornotional amount

Fair
value

2001

Contract ornotional amount

Fair
value

Contract ornotional amount

Fair
value

Forward exchange contracts:
Buying US dollar .............................................

¥

—

¥

—

¥

108

¥

106

$

—

$

—

Currency swap:
Buying Deutsche mark .................................

—

—

6,880

5,002

—

—

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

¥

—

¥

—

¥

4,848

¥

(55)

$

—

$

—

Note: Derivatives which qualify for hedge accounting were excluded from the market value information in 2001.

15. Segment Information
The segment information classified by industry and geographical market area is presented below with respect to the years ended 31st March 2001 and
2000.
(1) Industry segment information
The Ryobi Group operates in four industry segments according to the product groups which are:—Die castings (“Die castings”)—Printing equipment (“Printing equipment”)—Electric and petro engine tools (“Power tools”)—Other products such as fishing tackle, golf equipment, etc. (“Other”)
Millions of Yen

2001
Die castings

Printing
equipment

Power tools

Other

Eliminations /corporate

Consolidated

Unaffiliated customer ......................................

¥ 107,754¥ 23,173¥ 50,834¥ 2,521

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

447

—

59

—

¥

—

¥ 184,282

(506)

—

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

108,201

23,17350,893

2,521

(506)

184,282

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

100,10222,43049,027

3,123

(539)

1,866

¥ (602)¥

Net sales:

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

¥

8,099

¥

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

¥

743

¥

33

174,143¥

10,13990,226¥ 25,282¥ 40,060¥ 1,004¥ 36,429¥ 193,001

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

4,743

721

1,511

27

—

7,002

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

3,263

498

655

125

—

4,541

RYOBI LIMITED ANNUAL REPORT 200123

Millions of Yen

2000
Die castings

Printing
equipment

Power tools

Other

Eliminations /corporate

Consolidated

Unaffiliated customer ......................................

¥ 103,284¥ 25,403¥ 104,094¥ 7,293

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

783

—

16

—

¥

—

¥ 240,074

(799)

—

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

104,067

25,403

104,110

7,293

(799)

240,074

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

98,331

23,625102,956

8,648

(789)

232,771

1,154¥ (1,355)¥

Net sales:

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

¥

5,736

¥

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

¥

1,778

¥

(10)

¥

7,303

87,542¥ 23,016¥ 73,599¥ 7,542¥ 46,381

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

4,946

487

3,720

339

—

¥ 238,080
9,492

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

3,717

2,506

2,112

337

—

8,672

Eliminations /corporate

Consolidated$$ 1,487,345

Thousands of U.S. Dollars

2001
Die castings

Printing
equipment

Power tools

Other

Unaffiliated customer ......................................

$ 869,685$ 187,030$ 410,283$ 20,347

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

3,608

—

476

—

(4,084)—

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

873,293

187,030

410,759

20,347(4,084)

1,487,345

Net sales:

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

807,926—

181,033

395,698

25,206

5,997$ 15,061$ (4,859)$$ 728,216$ 204,052$ 323,325$ 8,104$ 294,019

38,281

5,819

12,195218—

56,513

26,336

4,019

5,287

1,009

—

36,651

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

$

Total Assets ........................................................
Depreciation .......................................................
Capital expenditure .............................................

65,367$(4,350)266

1,405,513$

81,832$ 1,557,716

The amounts of corporate assets as at 31st March 2001 and 2000 included in the “Eliminations or corporate assets” were, respectively, ¥36,451 million($294,197 thousand), ¥46,534 million, which mainly consist of surplus assets in the Company (cash and securities) and long-term investment assets(investments in securities).
(2) Geographical segment information
Millions of Yen

2001
Japan

North
AmericaOtheroverseas

Eliminations /corporate

Consolidated

Unaffiliated customer .....................................................................

¥ 133,306¥ 33,933¥ 17,043¥—¥ 184,282

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

5,728

858

4,321

(10,907)—

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

139,034

34,791

21,364(10,907)184,282

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

131,216

33,805

20,103(10,981)

174,143

Net sales:

24

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

¥

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

¥ 120,875

RYOBI LIMITED ANNUAL REPORT 2001

7,818

¥

986

¥ 19,010¥

1,261¥ 21,573¥

74¥ 31,543¥

10,139¥ 193,001

Millions of Yen

2000
Japan

North
AmericaOtheroverseas

Eliminations /corporate

Consolidated

Unaffiliated customer .....................................................................

¥ 137,247¥ 86,618¥ 16,209¥—¥ 240,074

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

6,356

2,085

4,246

(12,687)—

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

143,60388,703

20,455(12,687)

240,074

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

138,853

86,962

19,708(12,752)

Net sales :Operating income ..............................................................................

¥

4,750

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

¥ 124,756

¥

1,741

¥ 52,850¥

747¥ 20,260¥65

232,771¥

7,303¥ 40,214¥ 238,080

Thousands of U.S. Dollars

2001
Japan

North
AmericaOtheroverseas

Eliminations /corporate

Consolidated

Unaffiliated customer .....................................................................

$1,075,916$ 273,874$ 137,555$$ 1,487,345

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

46,231

6,925

34,875(88,031)—

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

1,122,147

280,799

172,430(88,031)

1,487,345

Net sales :Operating costs and expenses ............................................................

1,059,048

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

$

63,099Total Assets .......................................................................................

$ 975,585—

272,841

162,252

7,958$ 10,178$$ 153,430$ 174,116$ 254,585$(88,628)597

1,405,513$

81,832$ 1,557,716

The amounts of corporate assets as at 31st March 2001 and 2000 included in the “Eliminations or corporate assets” were ¥36,451 million($294,197 thousand) and ¥46,534 million, respectively, which mainly comprise surplus assets in the Company (cash and securities) and long-term
investment assets (investments in securities).
(3) Export sales and sales by overseas subsidiaries
Export sales of the companies (i.e., export amounts made by the Company
and its domestic subsidiaries) plus the sales by overseas consolidated subsidiaries for the years ended 31st March 2001 and 2000 are presented below:

Millions of Yen

Thousands of
U.S. Dollars

2001

2000

2001

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

¥38,772¥ 92,098$ 312,930

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

27,32829,848220,565

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

¥66,100¥121,946$ 533,495

Exports sales and sales
by overseas subsidiaries:

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

21.1%

38.4%

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

14.8

12.4

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

35.9%

50.8%

RYOBI LIMITED ANNUAL REPORT 200125

Tohmatsu & Co
MS shibaura Building
13-23, shibaura 4-chome,
Minato-ku, Tokyo 108-8530, Japan
Te1:+81-3-3457-7321
Fax:+81-3-3769-8508
www.tohmatsu.co.jp

Deloitte
ToucheTohmatsu

INDEPENDENT AUDITORS' REPORTTo the Board of Directors of
Ryobi Limited:
We have examined the consolidated balance sheets of Ryobi Limited and consolidated subsidiaries
as of 31st March 2001 and 2000, and the related consolidated statements of income, shareholders'equity, and cash flows for the years then ended, all expressed in Japanese yen. Our examinations
were made in accordance with auditing standards, procedures and practices generally accepted andapplied in Japan and, accordingly, included such tests of the accounting records and such otherauditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements referred to above present fairly the financial
position of Ryobi Limited and consolidated subsidiaries as of 31st March 2001 and 2000, and theresults of their operations and their cash flows for the years then ended in conformity withaccounting principles and practices generally accepted in Japan applied on a consistent basis.
As discussed in Note 2, effective 1st April 2000, the consolidated financial statements have been
prepared in accordance with the new accounting standards for employees’ retirement benefits andfinancial instruments and a revised accounting standard for foreign currency transactions.
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 statedin Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside
Japan.

28th June 2001

26

RYOBI LIMITED ANNUAL REPORT 2001

mlining

C O R P O R AT E I N F O R M AT I O NBOARD OF DIRECTORSCORPORATE DIRECTORY(As of 31st March 2001)

President
Hiroshi Urakami
Senior Vice President
Tsuyoshi Mifune

Company Name (Country)

Principal Business

Major Consolidated Subsidiaries

Ryobi Imagix Co. (Japan)

Printing equipment and related product sales

Ryobi Sales Co. (Japan)

Power tool and lawn and garden equipment sales

Ryobi Mirasaka Co. (Japan)

Die casting manufacturing

Ryobi Mitsugi Co. (Japan)

Die casting manufacturing

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

Tokyo Light Alloy Co. Ltd. (Japan)

Cast aluminum and die casting manufacturing and sales

Standing Auditor
Shozo Kobayashi

Ryobi New Zealand Limited (New Zealand)

Power tool, lawn and garden equipment, and builders’Ryobi Dalian Machinery Co., Ltd. (P.R.C.)

Power tool and builders’ hardware manufacturing

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

Die casting manufacturing and sales

lkuno Co. (Japan)

Secondary aluminum alloy bullion manufacturing and sales

Ryobi Power Tool Co. (Japan)

Power tool and lawn and garden equipment manufacturing

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

Die casting manufacturing and sales

Ryobi Finance Corporation (U.S.A.)

Financial operations

Ryobi Australia Pty. Ltd. (Australia)

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

Corporate Auditors
Hiroshi Fukano
Takuomi Matsumoto
Hiroshi Toriyama

hardware sales

Ryobi Europe S.A. (France)

Power tool and lawn and garden equipment sales

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

Power tool and lawn and garden equipment sales

CORPORATE DATAHead Office762, Mesaki-cho, Fuchu,
Hiroshima 726-8628, Japan
Telephone: 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
Listings
Common Stock—Tokyo, Osaka
Continental Depositary Receipts—Frankfurt
Transfer Agent
The Mitsubishi Trust and Banking Corporation
11-1, Nagata-cho, 2-chome, Chiyoda-ku,
Tokyo 100-8212, Japan

RYOBI LIMITED ANNUAL REPORT 2001

27

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

RYOBI LIMITED ANNUAL REPORT 2001

PRINTED IN JAPAN©RYOBI LIMITED 2001