RYOBI LIMITED ANNUAL REPORT 2004

PROFILE

Since its establishment as a die casting manufacturer in December 1943, Ryobi Limited
has accumulated innovative technologies by making components for automobiles, electronics, telecommunications and other industries. Ryobi has leveraged these technologies
and drawn on its experience to diversify into the manufacture of printing equipment, power
tools and builders’ hardware. Ryobi is all around you, making an enjoyable, comfortabledaily lifestyle possible.

CONTENTSCONSOLIDATED FINANCIAL HIGHLIGHTS

1

A MESSAGE FROM THE MANAGEMENT

2SOUND MANAGEMENT PLAN

4

REVIEW OF OPERATIONS

6

TOGETHER WITH SOCIETY

9

FINANCIAL SECTION

10CORPORATE 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 anduncertainties. The Company’s actual activities and business results could differ significantly from the forward-looking statements due to changes including, but notlimited to, those in the economic environment, business environment, demand and exchange rates.

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 2004, 2003 and 2002)

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

For the fiscal period:
Net sales............................................................................................
Operating income.................................................................................
Net income.........................................................................................
As at fiscal year-end:
Total assets .......................................................................................
Total shareholders’ equity..................................................................

2004

2003

2002

2004

¥155,251
10,347
12,812¥156,458
8,452
4,471

¥156,139
6,364
2,081

$1,468,928
97,900121,222¥160,574
50,040¥165,487
38,366¥165,401
33,379$1,519,292
473,460
U.S. Dollars(Note 2)Yen

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

¥ 76.40
7.50¥ 26.26—¥ 12.19
—

$

0.723
0.071

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 ¥105.69=US$1, the exchange rate prevailing on 31st March 2004.

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

NET INCOME(Millions of yen)

(Millions of yen)

(Millions of yen)

300,000

12,00015,00010,347

10,139250,000

240,074

12,812
12,50010,0008,452
200,000

8,000

184,282

10,0007,303
156,139

156,458

6,364

155,251

150,000

6,000

7,500

100,000

4,000

5,000

4,471
2,831

50,000

2,000

0

2,500

0

00

01

02

03

04

2,907
2,081

0

00

01

02

03

04

00

01

02

03

04

RYOBI LIMITED ANNUAL REPORT 2004

1

A MESSAGE FROM THE MANAGEMENT

Hiroshi Urakami
Chairman and CEO

Susumu Yoshikawa
President and COO

Create a sound and dynamic corporation throughtechnology, trust and challenge
Guided by its corporate philosophy, “Create a sound and dynamic corporation through technology,
trust and challenge,” the Ryobi Group seeks to establish itself as indispensable existence by
responding to the needs of customers and society, through innovative, top-quality products andservices. While developing its die casting business in tandem with its finished products, Ryobi
will continue to make every effort to ensure that its customers, shareholders, business partners
and employees find their association with Ryobi to be a rewarding experience.
During fiscal 2004, ended 31st March 2004, economic indicators in Japan continued to
improve with favorable signs of a moderate recovery. Conditions were boosted by a strong U.S.
economy and growth in Asia. Despite these positive factors, however, consumer spending andother elements of domestic demand were weak, while the yen rose against the U.S. dollar.
Accounting for these mixed conditions, the overall operating environment remained severe.
Under these circumstances, Ryobi is implementing various measures including energetic
marketing activities, developing new products in line with user needs, cutting costs and expenses, and increasing the efficiency of operations.

2

RYOBI LIMITED ANNUAL REPORT 2004

Fiscal 2004 was the last year of our Sound Management Plan, announced in March 2000. In a
persistently adverse business environment, the utmost efforts of all employees allowed a succession of successes in attaining the plan. As a result, we have resumed cash dividends for the firsttime since the fiscal year ended 31st March 1999.
During fiscal 2004, the Company achieved growth in profits despite a decline in revenues.
Consolidated net sales declined 0.8% in comparison with the previous fiscal year, to ¥155.3 billion. Domestic net sales increased 1.7% to ¥111.7 billion but overseas net sales fell 6.5% to¥43.5 billion. Operating income surged 22.4% to ¥10.3 billion, and net income jumped 186.6%
to ¥12.8 billion.
Both domestic and overseas net sales increased in the printing equipment business. However,the die castings business posted a decline in net sales as a result of the translation into yen following the yen’s appreciation, while both domestic and export sales in the power tools business
contracted. Total net sales, accordingly, declined.
As a result of the growth of net sales in the printing equipment business, together with higher
profitability in overseas Group companies, operating income posted a gain for the second consecutive year, while net income also rose to a historic high for two years in succession. The primarycause of the substantial increase in net income was income from the sale of marketable securities.
To strengthen the Company’s management structure and expand the scope of its business ina rapidly and dramatically changing business environment, on 29th June 2004 Ryobi instituted a
new management structure. Hiroshi Urakami was appointed chairman and CEO, and Susumu
Yoshikawa acceded to president and COO. In addition, the Board of Directors structure and number of corporate officers were revised to six and 14, respectively. All Ryobi directors concurrently
hold positions as corporate officers.
With this new management structure, Ryobi will intensify and expand its efforts to be a soundand dynamic corporation, and we ask your continued understanding and support in this effort.
June 2004

Hiroshi Urakami

Susumu Yoshikawa

Chairman and CEO

President and COO

RYOBI LIMITED ANNUAL REPORT 2004

3

SOUND MANAGEMENT PLAN

The fiscal year ended 31st March 2004 was the final year of the Sound Management Plan. This
four-year management plan, which commenced the fiscal year ended 31st March 2001, was formulated to build a high-earnings structure by optimizing the scale and reinforcing the structure ofeach business. Throughout the term of the Sound Management Plan, Ryobi undertook a sweeping
review while restructuring its business. Other measures included efforts to reduce interest-bearing
debt and the number of personnel. The measures implemented for each business and achievements are outlined as follows:

Principal Measures
DIE CASTINGS• Reinforced the tripolar manufacturing structure comprising Japan, the United States and Europe; secured and enhanced our position as aworld-leading die casting manufacturer• Expanded application of die cast products in the automobile industry• Extended beyond the automobile industry, actively expanded sales in fields such as electronics and telecommunications
Through these activities, we are also contributing to energy and resource conservation by leveraging the superior properties of aluminum
die castings such as its lightweight, durability and recyclability
PRINTING EQUIPMENT• Reinforced product development, productivity and marketing capabilities• Strengthened efforts in response to advancements in information technology and digitization• Expanded into and enhanced the medium-size offset printing press market• Continued to enhance total printing system offerings from prepress to press and post-press
POWER TOOLS• Carried out a sweeping review of operations including the sale of unprofitable businesses• Strengthened cross-sectional Group management. Reduced fixed costs by streamlining our organization• Accelerated the shift of production to our China-based manufacturing subsidiary. Established a cost competitive manufacturing structure

Principal Achievements• Sold power tools and lawn and garden equipment businesses in North America• Sold power tool sales subsidiaries in Europe and Oceania• In the power tools business in Japan, strengthened cross-sectional Group management, streamlined organization and reduced personnel.
Transferred production to a manufacturing subsidiary in China. Consolidated and eliminated models• Sold fishing tackle business• Discontinued manufacturing and sales of sporting goods (golf clubs)• Sold assets (Tokyo Head Office, idle real estate, marketable securities)

4

RYOBI LIMITED ANNUAL REPORT 2004

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 )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 )(Billions of yen)(Billions of yen)
180

18

150

15
126.8

120

12
96.9

90

8.7

9

77.8

9.5
7.0

69.7
53.6

60

6

30

6.2

4.5

3.9

5.6

5.8 5.2

03

04

4.1

3

0

00

01

02

03

Capital Expenditures
Depreciation and Amortisation

0

04

00

01

02

ROE & ROANET INCOME PER SHARENET ASSETS PER SHARE(%)( Ye n )( Ye n )

90

300

30

29.0

76.40

299.05

250

25

75

20

60

200

15

45

150

227.84195.55

195.51172.81

12.5
10

8.6

30

9.2

16.59 17.04

6.6

5

100

26.26

7.9
15

50

12.19

2.7
1.2

1.3

1.2

00

01

02

0

0

0

03

00

04

01

02

03

00

04

01

02

03

04

ROE
ROA

RETURN ON SALESASSET TURNOVER

FINANCIAL LEVERAGE(%)(Times)(Times)

12

1.2

7.5

10

1.1

7.0

7.2

8

1.0

6.5
0.95

6

0.95

0.9

4

6.9

1.02

8.3

6.0
0.85

0.8

5.7

0.87
5.5

2.9
2

1.2

1.6

0.7

1.3

5.0

0

0

00

3.7
4.6

01

02

03

04

0

00

01

02

03

04

00

01

02

03

04

Fiscal 2004 was the final year of Ryobi’s four-year Sound Management Plan, and a year in which the Company reported significant
improvement in its financial position and management indicators compared with levels in fiscal 2000, the fiscal year prior to theinauguration of the plan.
As of 31st March 2000, the balance of interest-bearing debt was ¥126.8 billion. As of 31st March 2004, this balance had fallen
to ¥53.6 billion, substantially exceeding initial targets. Net income per share for fiscal 2004 improved to ¥76.40, compared with
¥16.59 in fiscal 2000, and return on equity grew to 29.0% from 8.6% over the same period. In addition, financial leverage was nearly
halved, falling to 3.7 times as of 31st March 2004 from 7.2 times as of 31st March 2000.
While the Company identified a target for both return on assets and return on sales of 3.2% in its Sound Management Plan,
actual results significantly exceeded targets at 7.9% and 8.3%, respectively, as of 31st March 2004.

Based on the experience gained in implementing the Sound Management Plan and the results
achieved to date, Ryobi will redouble efforts to secure continued growth and development bystrengthening its competitiveness and improving earnings power.
RYOBI LIMITED ANNUAL REPORT 2004

5

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

DIE CASTINGS

TRANSMISSION CASE FOR DELIVERY TRUCKS

MOTORCYCLE FRAME

BUSINESSOVERVIEW

As one of the world’s top-class die casting manufacturers, Ryobi supplies products that are utilized in a diverse
number of fields, including automobiles, home appliances, office equipment, industrial machinery and builders’hardware. Ryobi makes over 2,000 types of die cast products for use in over 100 types of vehicle. The Company’s
aluminum die castings are lightweight, have excellent durability and are superior in terms of recyclability. These die
castings have also attracted attention as an effective technology for the protection of the environment, including theconservation of energy and resources. They are used in an expanding range of applications.
Ryobi’s die castings are highly regarded for their technological capabilities and high quality. These are theresult of Ryobi’s proprietary vertically integrated system, from die design and fabrication through casting, machining and final assembly; the Company’s original, tripolar global structure, comprising Japan, the United States, andEurope; and Ryobi’s quality assurance systems, which have been certified as conforming to ISO 9001 international
standards. These systems and structures enable Ryobi to accurately respond to customer demands in a prompt andspeedy manner. The Company is engaged in the development of many high-quality die cast components for diverse
functions using proprietary technologies, and a die casting production system that allows the manufacture of highstrength, high-quality die cast products.

PERFORMANCEIn the fiscal year ended 31st March 2004, net sales of die castings declined 1.3% to ¥106.3 billion, operating
income increased 8.4% to ¥6.1 billion, and the ratio of operating income to net sales rose to 5.8% from 5.3% in fiscal 2003.
Although domestic and overseas sales to the automobile industry were healthy, the negative impact oftranslation into yen caused by the rise of the yen against the U.S. dollar saw revenues decline. Falling prices also
made their effects felt, but the Company achieved profit growth through cost reductions and operational reforms.
NET SALESO P E R AT I N G I N C O M E(Millions of yen)

(Millions of yen)
9,000

110,000

107,762

107,7548,099

106,309
105,000

7,500

103,284

6,149
99,099100,000

6,000

95,0004,500

90,0003,000

85,000

1,500

00
RYOBI LIMITED ANNUAL REPORT 2004

5,509 5,670

0

0

6

5,736

01

02

03

04

00

01

02

03

04

PRINTING EQUIPMENT

HIGH-SPEED MULTICOLOR OFFSET PRINTING PRESSRYOBI 755 (TYPE 5-D)

DIGITAL OFFSET PRINTING PRESSRYOBI 3404X-DI

BUSINESSOVERVIEW

Ryobi is a comprehensive manufacturer of printing equipment. In response to digitization and advances in the information domain, the Company has developed total printing systems that encompass all stages of printing, fromprepress to press and post-press. Ryobi has established itself as one of the world’s top manufacturers of small offset printing presses. From this base, the Company is developing high-precision, medium-size offset printing presses
and digital offset printing presses in pursuit of enhanced productivity and functionality.
Ryobi is making advances in the speed of operation, automation, and energy conservation of printingpresses. Based on this, and an uncompromising quality control system, the Company offers high-quality, ease-touse products that are highly regarded both in Japan and overseas. In the prepress stage, Ryobi has developed
professional-use, high-performance, multi-functional page layout software and fonts to meet the needs of the printing industry.
Product quality is not the only benchmark for Ryobi’s printing equipment, as we are also developing products that take environmental impact fully into consideration. Ryobi’s products require less ink and organic solvents,
water and trial paper for print tests during the printing process, in addition to offering automation and energy-saving features.

PERFORMANCEIn the fiscal year ended 31st March 2004, net sales of printing equipment increased 7.1% to ¥24.3 billion, and operating income shot up 76.2% to ¥2.3 billion. The ratio of operating income to net sales rose to 9.3% from 5.7% in
fiscal 2003.
Both domestic sales and exports increased. Medium-size offset printing presses showed particularly substantial growth. The large increase in income resulted from the increase in net sales, as well as from reductions in
manufacturing lead time and other measures to reduce costs.
NET SALESO P E R AT I N G I N C O M E(Millions of yen)

(Millions of yen)

30,0003,000

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

24,349

2,500

2,272

20,0002,000

15,0001,500

10,000

1,000

5,000

500

1,778

1,289

743

638

0

0

00

01

02

03

04

00

01

02

03

04

RYOBI LIMITED ANNUAL REPORT 2004

7

POWER TOOLSDOOR CLOSER D-1650

BLOWER VACUUM RESV-2000

BUSINESSOVERVIEW

Ryobi boasts a comprehensive lineup of power tools powered by electricity from outlets, batteries, engines, and compressed air. The Company’s products are widely used and appreciated by professionals and DIY enthusiasts alike.
Ryobi is vigorously engaged in the development of products that meet the needs of the era. We create safe, easy-touse products that are highly functional and durable, products that are light and compact to minimize physicalexertion, and products that support ecology.
Builders’ hardware is another of this segment’s operations. We are offering door closers for a wide range ofresidential and office buildings as well as hinges and a broad array of other architectural hardware. Beginning withfunctionality and safety, Ryobi supports the comfort and safety of residential and office areas by developing products that adhere to barrier-free and other universal design principles, as well as products that consider
environmental protection.
Ryobi has power tool production sites in Japan and China, and builders’ hardware manufacturing facilities
in Japan, China, and Taiwan. This structure allows the Company to offer products that satisfy user requirements for
quality, functionality, and price.

PERFORMANCEIn the fiscal year ended 31st March 2004, net sales of power tools dropped 5.0% to ¥23.8 billion, but operating
income jumped 28.0% to ¥2.0 billion. The ratio of operating income to net sales rose to 8.5% from 6.3% in the previous fiscal year.
Although fiscal 2004 saw an increase in domestic housing construction, this figure remained at a low
level. Sales of builders’ hardware increased slightly, but domestic sales and exports of power tools both contracted.
The increase in income resulted from the development of products that have high profit margins and efforts toenhance the efficiency of manufacturing.
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

104,094
100,000

2,500

80,000

2,000

2,024
1,866
1,581

60,0001,500

50,834
1,154
40,0001,000

32,77825,046 23,799

20,000

0

0

00

8

RYOBI LIMITED ANNUAL REPORT 2004

555
500

01

02

03

04

00

01

02

03

04

TOGETHER WITH SOCIETY

Ryobi’s corporate philosophy, “Create a sound and dynamic corporation through technology,
trust and challenge,” has implications not only for manufacturing and service operations, butalso for compliance, disclosure of information, concern for the environment, and social contribution activities. Ryobi is fulfilling its social responsibility with a view toward creating real
quality of life.

Ryobi Established Compliance Committee
Recognizing the importance of compliance as a management issue, the Company established the Ryobi Compliance Committee in August
2003 as the core of its compliance promotion structure. Ryobi’s code of corporate ethics is covered thoroughly in the Ryobi Code of Conduct.

ISO 14001 Certification Received
Within the Ryobi Group, 17 facilities in 13 companies have acquired ISO 14001 certification of their environment management systems (as ofJune 2004). Each company and facility reduces its environmental impact by setting environmental targets and objectives, then working toconserve energy and resources, reduce waste, and promote recycling.

Community Service Activity Selected as 60th Anniversary Commemorative Project
Ryobi marked the 60th anniversary of its founding in December 2003. In addition to an annual campaign to clean up the banks of the riverthat runs near the Company’s Head Office, Ryobi also planted trees in the vicinity of its facilities, and donated wheelchairs and exercise
equipment to local welfare facilities as one part of the commenorative activities.

Ryobi Social Contribution Foundation Established
In July 2004 Ryobi established a nonprofit organization (NPO), the Ryobi Social Contribution Foundation, to expand the scope and scale of its
social contribution activities in which the Ryobi Environmental Preservation Committee had been involved.

Nurturing the Younger Generation
Ryobi established the Urakami Foundation in 1970 to assist motivated, promising students, producing many outstanding individuals for society. The Foundation also provides scholarships to universities and researchers, and promotes academic exchange through funding assistance.

RYOBI LIMITED ANNUAL REPORT 2004

9

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 and administrative
expenses ...........................................
Operating income .............................
Income taxes .....................................
Net income (loss) ..............................
As at fiscal year-end:
Total assets ........................................
Total shareholders’ equity ...............

2004

2003

2002

2001

2000

1999

¥ 155,251
123,749
31,502¥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
42,28021,155
10,347
3,608
12,812

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)¥ 160,574
50,040¥165,487
38,366¥165,401
33,379¥193,001
29,501¥238,080
33,360¥233,654
32,540¥¥¥ (18.02)
3.75

Yen

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

¥

76.40
7.50

¥

26.26
—

¥

12.19
—

17.04
—

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.

10

RYOBI LIMITED ANNUAL REPORT 2004

16.59
—

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
ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS
The Ryobi Group management is exerting to establish management policy based on the information available under thecurrent business circumstances. The Ryobi Group believes that the business conditions surrounding us are foreseen to
be severe, in consideration of the changes of business circumstances experienced at each business segment during
past few years.
Guided by its corporate philosophy, “Create a sound and dynamic corporation through technology, trust and challenge,” The Ryobi Group seeks to respond to the needs of its customers and society at large with innovative, top-quality
products and services, and to become an indispensable company.
The following is a summary of analysis of Ryobi consolidated financial position and operating results for the fiscal
year ended 31st March 2004.
(1) Summary of significant accounting policies
The consolidated financial statements of Ryobi Group have been prepared in conformity with accounting principles
generally accepted in Japan, while the financial statements of overseas subsidiaries have been prepared in conformity
with accounting principles generally accepted in each of the countries.
The Ryobi Group early adopted the new accounting standard for impairment of fixed assets from fiscal year ended
31st March 2004 and thereby impairment loss on fixed assets of ¥689 million has been appropriated as extraordinary
charges during this fiscal year.
(2) Analysis of operating results for the period ending 31st March 2004
Net sales
Ryobi consolidated net sales slightly decreased in the aggregate during this period, due to the decline of sales in the
Die Castings and the Power Tools segments, while the Printing Equipment segment was strong this year.
Die Castings sales for automobile industry kept firm both in the domestic and overseas markets, however, sales
amount in Yen decreased due to a rise in the exchange rate against U.S. dollar. Printing Equipment sales continued to
exhibit strong growth both in domestic and overseas markets, as a result of a successful expansion of medium-size
offset printing presses. Power Tools sales was slipped both in domestic and overseas, despite of slight increase in the
Builders’ Hardware sales.
Ryobi consolidated net sales were adversely affected by approximately ¥1,700 million from foreign currency exchange rates applied to the consolidation, as compared with prior year. The Japanese Yen was strong against U.S.
dollar by 7.2% and week against pound sterling by 1.2% during this year. Consequently, Ryobi consolidated net sales
decreased to ¥155,251 million, with 0.8% decline from prior year.

NET SALES(Millions of yen)

300,000

250,000

242,774 240,074

200,000

184,282
156,139 156,458 155,251

150,000

100,000

50,000

0

99

00

01

02

03

04

RYOBI LIMITED ANNUAL REPORT 2004

11

Operating income
Strong growth of sales and profits in the Printing Equipment segment and profitability improvement on the whole group
including overseas subsidiaries led the increase of operating income. The cost of sales ratio for this year was 79.7%,
1.2% improvement from prior year, resulted in approximately ¥1,800 million favorable affect on the profitability. Selling,
general and administrative expenses were reduced by ¥315 million from prior year.
Net income
Interest expense was ¥478 million less than the prior year, due to the reduction of interest-bearing debt by ¥16,092
million from the prior year. The consolidated interest-bearing debt excluding discounted notes receivable as at the endof this fiscal year were reduced to ¥53,638 million as a result of the repayment of bank borrowings, which came fromproceeds from the sales of available-for-sale securities during this year.
Gains on sales of available-for-sale securities of ¥8,236 million have been appropriated as extraordinary income
during this year.
A decrease in valuation allowance of deferred tax assets has resulted in an increase net income with ¥3,012 million,
consolidated net income of Ryobi Group for this year jumped to the highest on record of ¥12,812 million, 186.6% increase from prior year.
(3) Strategies and outlook
Although there appears to be signs of a slight recovery in the Japanese economy, there remains concern with respect
to business conditions including currency exchange fluctuations, rise in raw material prices, the Middle East issue,
and others.
With the experience and confidence gained by implementation of the Sound Management Plan, the Ryobi Group willcontinue to make further efforts to reinforce its global competitiveness and profitability for our future growth. Below isa summary of discussions on the direction and some measures planned by each of business segments.

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

NET INCOME (LOSS)(Millions of yen)

(Millions of yen)

12,00016,00010,347

10,13912,812

10,00012,000

8,452
8,000

7,303
6,817

8,000

6,364
6,000

4,471
4,000

2,831

2,907
2,081

4,000

0

2,000

0

-4,000

99

12

00

01

02

03

RYOBI LIMITED ANNUAL REPORT 2004

04

(3,086)

99

00

01

02

03

04

Die Castings
The Die Castings division continues to aim sales growth by increasing orders from customers through top quality andhighly value-added product development, enhancing technology innovation, and the three-region production structureof Japan, the United States and Europe. In addition, the Die Castings division promotes low costs through productivity
improvement activities by the collaboration of domestic and overseas manufacturing and the sales team.
In the automobile-related field, the technology innovation on aluminum Die Castings includes research and development on manufacturing lighter vehicles through decreasing the weight of the vehicle’s frame and other components, inaddition to the enhancement of the capability to respond to customer needs of high volume orders and machined
products.
The Die Castings division is also making concerted efforts to expand sales in non-automobile industry such as electronics and communications (plasma television frames and mobile phones, for examples) and to make inroads into
other fields with requirements for high recyclability.
Printing Equipment
The Printing Equipment division strengthens product research and development and product mix strategy to respond to
demands in the printing industry, with extremely precise, multi-colored, and highly-functional products, mainly for medium-size offset printing presses (B2, A2, B3 sizes) which Ryobi started to participate in the market in the past few
years.
The Printing Equipment division also initiated cost reductions by making improvements on productivity and operating
efficiency, such as shorter product lead time and operating betterment.
Power Tools
The Power Tools business (power tools and garden equipment) concentrated efforts on boosting marketing in thedevelopment and sales of products and strengthens price competitiveness by increasing productivity at a manufacturing subsidiary in Dalian, China.
The Builders’ Hardware business, another business field engaged in this segment, aims to develop highly valueadded products and explore related new businesses, while focusing on the enhancement of price competitiveness byincreasing productivity both at a manufacturing subsidiary in Dalian, China and at an affiliate company in Taiwan.
Ryobi forecasts that its consolidated sales and profits during the year ending 31st March 2005 shall decline, ascompared with prior year results.
Overall, Ryobi consolidated sales are projected to decrease from the prior year, mainly due to a slow down in production at domestic automobile manufacturers, production volume decreases at Ryobi overseas subsidiaries, and aforecasted influence from currency exchange translation at the Die Casting division, while Printing Equipment andPower Tools sales are projected to increase from prior year. Ryobi consolidated profit is projected to decrease from theprior year, due to a decline of projected sales and extraordinary profit that occurred during the period ended 31st
March 2004.
Fiscal year ending 31st March 2005
Millions of Yen
Net Sales ....................................................................................................................

¥150,000 (3.4% decrease)

Operating Income .....................................................................................................

8,900 (14.0% decrease)

Net Income ................................................................................................................

5,200 (59.4% decrease)

Note: Numbers in parentheses are comparison data from prior year.

RYOBI LIMITED ANNUAL REPORT 200413

(4) Analysis of capital resources and liquidity
Total assets, total liabilities and shareholders’ equity
With inventory reduction and the decrease of deferred tax assets during this year, Ryobi consolidated total assets
decreased to ¥160,574 million by ¥4,913 million from prior year. Ryobi consolidated total liabilities decreased to ¥109,788
million by ¥16,699 million with the reduction of interest-bearing debt and other factors. The consolidated interest-bearing debt excluding discounted notes receivable as at this year-end is ¥53,638 million, 23.1% decrease from the prioryear. The consolidated total shareholders’ equity increased to ¥50,040 million by ¥11,674 million, with improvement on
the equity ratio of 31.2% thanks mainly to the net income earned during this year.
Liquidity
Net free cash flow generated from operating activities plus investing activities increased ¥3,746 million from ¥12,027
million to ¥15,773 million. The major factors of this are the proceeds of ¥8,536 million from sale of a portion of availablefor-sale securities and the decrease by ¥4,981 million as a result of not performing the securitisation of non-consolidated trade receivables that were carried during the prior year. The Ryobi Group believes the securitisation of nonconsolidated trade receivables is one of the methods of sourcing required funds and will be utilized for future capitalrequirements when necessary.
The Ryobi Group regards their cash flow position as important in its financial strategy. In principle, for those funds
required for investment in plant and equipment, the Ryobi Group continues to use cash from the proceeds provided byoperating activities, with careful review of investment efficiencies. The Ryobi Group also continues to plan reducing its
interest-bearing debt with the remaining cash available for the reduction of interest-bearing debt.

T O TA L A S S E T S

T O TA L S H A R E H O L D E R S ’ E Q U I T Y(Millions of yen)

(Millions of yen)

250,000

75,000233,654 238,080

193,001

200,000

60,000165,401 165,487

50,040160,574

150,000

45,00038,36633,37932,540 33,360
100,000

30,00050,00015,000

0

0

99

14

29,501

00

01

02

03

RYOBI LIMITED ANNUAL REPORT 2004

04

99

00

01

02

03

04

The following is the trend of the cash flow position at Ryobi:
This year-end

Prior year-end

Equity ratio (%) ..........................................................................................................

31.2

23.2

Equity ratio at fair market value (%) .....................................................................

42.7

20.7

Interest-bearing debts - Repayment years .........................................................

4.6

4.6

Interest coverage ratio (%) ....................................................................................

11.2

10.1

Notes: Equity ratio: Total equity / total assets
Equity ratio at fair market value: Total equity at fair market value / total assets
Interest-bearing debts - Repayment years: Interest-bearing debt / cash provided from operating activities
Interest coverage ratio: Cash from operating activities / interest payment
1. Each of the indexes above is calculated based on the consolidated financial position.
2. Fair market value is calculated by the closing market price of shares as of year-end multiplied by the number of issued shares excluding treasury stock.
3. Interest-bearing debt includes all liabilities incurred with interest payable among all of the liabilities shown on the consolidated balance statement.
4. Net cash provided by operating activities used for the calculation is the cash flow shown on operating activities in the consolidated
statements of cash flows.
5. Interest payments used for the calculation is the amount shown in the consolidated statements of cash flows.

(5) Ryobi Group’s forecasts
Information on this statement with respect to the Ryobi Group’s forecasts on its future performances, policies, strategies contains our forward-looking statements, based on management’s assumptions and beliefs in light of the information available as of this year-end and thereby, there may exist various risks and uncertainties on these forward-looking
statements. The Ryobi Group cautions that its actual operations and results may materially differ from these forwardlooking statements as a result of numerous factors outside of the Ryobi Group’s control, including general economic
condition, business environment, market trend, and foreign exchange rates, and other factors.

RYOBI LIMITED ANNUAL REPORT 2004

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 2004 and 2003)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2004

2003

2004

¥ 17,595
2,738¥ 17,845
2,636$ 166,477
25,906

37,713
136
1,213
(133)
27,2672,896
263
89,68833,933
63
1,598
(116)
29,1693,424
634
89,186356,827
1,287
11,477(1,258)257,990
27,401
2,488
848,595

Property, plant and equipment (Notes 5, 6 and 7)
Land ................................................................................................................................
Buildings and structures ............................................................................................
Machinery and equipment .........................................................................................
Construction in progress ............................................................................................
Total .......................................................................................................................
Accumulated depreciation .........................................................................................
Net property, plant and equipment ..................................................................

19,407
38,23980,539775
138,960(85,254)
53,706

20,111
38,74482,608450
141,913(86,134)
55,779183,622361,803
762,030
7,333
1,314,788(806,642)
508,146

Investments and other assets
Investments in securities (Note 3) ............................................................................
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 ................................................................................................................................

9,615
320
1,607
3,214
2,756
(332)
17,180¥160,574

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

90,974
3,028
15,20530,40926,076(3,141)
162,551$1,519,292

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 4) .....................................................................................................
Deferred tax assets (Note 10) ....................................................................................
Prepaid expenses and other ......................................................................................
Total current assets ............................................................................................

See notes to consolidated financial statements.

16

RYOBI LIMITED ANNUAL REPORT 2004

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

LIABILITIES AND SHAREHOLDERS’ EQUITY

2004

2003

2004

¥ 22,222
10,428¥ 28,088
13,505$ 210,256
98,66629,565
353
4,539
4,800
498
5,604
78,00930,737
334
4,213
4,145
658
6,509
88,189279,733
3,340
42,94745,416
4,712
53,023738,093Long-term liabilities
Long-term debt (Note 7) ..............................................................................................
Accrued severance indemnities (Note 8) ................................................................
Other long-term liabilities (Note 10) ..........................................................................
Total long-term liabilities ........................................................................................

21,0986,921
3,760
31,77928,5195,912
3,867
38,298

199,622
65,48435,575
300,681

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

746

634

7,058

18,472
23,524
13,176626
3,125(8,205)(678)
50,040¥160,574

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

174,775
222,575
124,666
5,923
29,568(77,632)(6,415)473,460$1,519,292

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 (Note 10) ..............................................................................
Total current liabilities ............................................................................................

Commitments and contingent liabilities (Notes 12, 13 and 14)
Shareholders’ equity (Notes 9 and 16)
Common stock
Authorised: 500,000,000 shares
Issued: 171,230,715 shares ................................................................................
Capital surplus ..............................................................................................................
Retained earnings ........................................................................................................
Land revaluation reserve (Note 6) ............................................................................
Unrealised gain on available-for-sale securities ...................................................
Foreign currency translation adjustments ..............................................................
Treasury stock (3,898,652 shares in 2004, 2,844,418 shares in 2003) ....................
Total shareholders’ equity ......................................................................................
Total ................................................................................................................................

RYOBI LIMITED ANNUAL REPORT 2004

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 2004 and 2003)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2004

2003

2004

Net sales ...........................................................................................................................
Cost of sales .....................................................................................................................
Gross profit ..........................................................................................................
Selling, general and administrative expenses .........................................................
Operating income ...............................................................................................
Other income
Interest and dividends ................................................................................................
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 ...............................................
Impairment loss on fixed assets (Note 5) ................................................................
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 ..............................................................................................

¥155,251
123,749
31,502
21,155
10,347¥156,458
126,536
29,922
21,4708,452$1,468,928
1,170,868
298,060
200,160
97,900

247
8,236
—
1,280
9,763

224
3
619
1,682
2,528

2,337
77,926—
12,111
92,374

1,002
624
689
—
199
1,067
3,581
16,529

1,480
369
—
1,762
570
786
4,967
6,013

9,481
5,904
6,519
—
1,883
10,09633,883
156,391

917
2,691
3,608

831
673
1,504

8,676
25,462
34,138

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

109¥ 12,81238¥ 4,471

1,031$ 121,222
U.S. Dollars(Note 1)Yen

Per share of common stock (Note 2(n))
Net income ....................................................................................................................
Cash dividends applicable to the year .....................................................................
See notes to consolidated financial statements.

18

RYOBI LIMITED ANNUAL REPORT 2004

¥ 76.40
7.50¥ 26.26
—

$

0.723
0.071

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 2004 and 2003)
Millions of Yen

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 ......................
Net income ................................................
Bonuses to directors and statutory
auditors .....................................................
Unrealised gain on available-for-salesecurities decrease ................................
Foreign currency translation
adjustments .............................................
Disposal of treasury stock(18,410 shares) .........................................
Other net increase in treasury stock(1,072,644 shares) ....................................
Balance at 31st March 2004 ......................

IssuedNumber of
Shares ofCommon Stock(Thousands)

CommonStockCapitalSurplusRetained
Earnings(Deficits)

Land
Revaluation
Reserve

Unrealised
Gain onAvailable-for-Sale Securities

Foreign
Currency
Translation
Adjustments

TreasuryStock

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

¥610
—

¥2,641—¥(7,689)—¥ (66)
—

—

—

—

—

16

—

—

—

—

—

—

—

—

1,025

—

—

—

—

—

—

—

—

(154)

—

—
171,231——
18,472——
23,517——365
12,812

—
626
—

—
3,666
—

—
(7,843)
—

(371)
(437)
—

—

—

—

(1)

—

—

—

—

—

—

—

—

—

(541)

—

—

—

—

—

—

—

—

(362)

—

—

—

7

—

—

—

—

6

—
171,231—¥18,472—¥23,524—¥13,176—¥626—¥3,125—¥(8,205)(247)¥(678)$174,775—$222,509—$ 3,453
121,222$5,923—$34,686—$(74,207)—$(4,135)
—

—

—

(9)

—

—

—

—

—

—

—

—

(5,118)

—

—

—

—

—

—

—

(3,425)

—

—

66

—

—

—

—

57

—
$174,775—$222,575—$124,666—$5,923—$29,568—$(77,632)(2,337)$(6,415)

Thousands of U.S. Dollars (Note 1)

Balance at 31st March 2003 ......................
Net income ................................................
Bonuses to directors and statutory
auditors .....................................................
Unrealised gain on available-for-salesecurities decrease ................................
Foreign currency translation
adjustments .............................................
Disposal of treasury stock(18,410 shares) .........................................
Other net increase in treasury stock(1,072,644 shares) ....................................
Balance at 31st March 2004 ......................
See notes to consolidated financial statements.

RYOBI LIMITED ANNUAL REPORT 2004

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 2004 and 2003)
Thousands of
U.S. Dollars(Note 1)Millions of Yen

2004

2003

2004

¥ 16,529¥ 6,013$ 156,391(1,087)
5,231
689
615
(8,236)

(375)
5,721
—
243
(3)

(10,285)
49,494
6,519
5,819(77,926)(3,787)
1,690(1,335)440
911
11,660(2,727)667
3,752(1,230)3,098
15,159(35,831)
15,990(12,631)
4,163
8,619
110,322

Investing activities
Purchase of property, plant and equipment ............................................................
Proceeds from sale of property, plant and equipment ..........................................
Proceeds from sale of investments in securities ...................................................
Other ..............................................................................................................................
Net cash provided by (used in) investing activities ......................................

(4,917)
388
8,536
106
4,113

(3,857)545
33
147(3,132)(46,523)
3,671
80,765
1,003
38,916

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 ..............................................................

5,059(15,265)(5,287)(243)(254)(15,990)

15,041(22,119)
(234)
(399)
(313)
(8,024)47,866(144,432)(50,024)(2,299)(2,403)(151,292)

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

(33)

(37)

(312)

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

(250)

3,966

(2,366)

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

17,845

13,879168,843

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

¥ 17,595¥ 17,845$ 166,477

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

¥ 1,039¥ 1,507$

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

20

RYOBI LIMITED ANNUAL REPORT 2004

9,831

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 2004 and 2003

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Securities and Exchange Law and its related accounting regulations, andin conformity with accounting principles 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, certain reclassifications have been made in the 2003 consolidated financial statements to conform to the classifications used in 2004.
The notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented herein as additional information.
The consolidated financial statements are stated in Japanese yen,
the currency 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 ofreaders outside Japan and have been made at the rate of ¥105.69 to$1, the approximate rate of exchange at 31st March 2004. Such translations should not be construed as representations that the Japanese
yen amounts could be converted into U.S. dollars at that or any otherrate.
2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts of theCompany 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 Holdings (U.S.A.), Inc.
Ryobi Die Casting (U.S.A.), Inc.
(ii) Affiliate
The major affiliate accounted for by the equity method is listed below:
Ryobi-Tech Corporation (Taiwan)
The number of consolidated subsidiaries and affiliates accounted
for by the equity method as at 31st March 2004 and 2003 was as follows:

2004

2003

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

15

15

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

3

3

The number of unconsolidated subsidiaries and affiliates not accounted for by the equity method as at 31st March 2004 and 2003 was
as follows:
2004

2003

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

3

3

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

00

The investments in such unconsolidated subsidiaries are stated atcost. If the equity method of accounting had been applied to the investments in these 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 isdetermined by 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 the 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 the first-in first-out method.
Effective 1st April 2002, the Company and certain domestic subsidiaries in the Die casting segment changed their cost determination
method of inventories to the average cost method, which formerly wasdetermined by the retail method and last purchase invoice method.
(d) Marketable and investment 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 either

RYOBI LIMITED ANNUAL REPORT 200421

of the aforementioned securities, are reported at fair value, withunrealised gains and losses, net of applicable taxes, reported in a separate 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 straightline method is principally applied to the property, plant and equipmentof consolidated foreign subsidiaries. The range of useful lives is from 3
to 50 years for buildings and structures, and from 2 to 20 years formachinery and equipment.
Effective 1st April 2002, foreign subsidiaries in North America
adopted Statement of Financial Accounting Standards No. 142 (SFAS
142) “Goodwill and Intangible Assets” and terminated to amortise goodwill. 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 change that would more likely
than not reduce the fair value below its carrying amount. Prior to theadoption 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 recognised for the years ended
31st March 2004 and 2003.
(f) Long-lived assets
In August 2002, the Business Accounting Council issued a Statementof Opinion, Accounting for Impairment of Fixed Assets, and in October2003 the Accounting Standards Board of Japan (ASB) issued ASB
Guidance No. 6, Guidance for Accounting Standard for Impairment of
Fixed Assets. These new pronouncements are effective for fiscal years
beginning on or after 1st April 2005 with early adoption permitted forfiscal years ending on or after 31st March 2004.
The Ryobi Group adopted the new accounting standard for impairment of fixed assets from the year ended 31st March 2004. The Ryobi
Group reviews our long-lived assets for impairment whenever eventsor changes in circumstance indicate the carrying amount of an asset
or asset group may not be recoverable. An impairment loss would berecognised if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result fromthe continued use and eventual disposition of the asset or asset group.
The impairment loss would be measured as the amount by which thecarrying amount of the asset exceeds its recoverable amount, whichis the higher of the discounted cash flows from the continued use andeventual disposition of the asset or the net selling price at disposition.
(g) 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
22

RYOBI LIMITED ANNUAL REPORT 2004

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 ($86,025 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 15 years).
Unrecognised net actuarial loss is amortised from the next fiscal year
by using the straight-line method over the employees’ remaining service period or less (ranging from 11 to 15 years).
(h) 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.
(i) 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.
(j) Appropriation of retained earnings
Appropriations of retained earnings at each year end are reflected in
the financial statements for the following year upon shareholder’s approval.
(k) 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.
(l) 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.
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. For-eign exchange forward contracts and interest rate swaps are utilisedby the Ryobi Group to reduce foreign currency exchange and interest
rate risks. The Ryobi Group does not enter into derivatives for tradingor speculative purposes.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows: a) all derivatives berecognised as either assets or liabilities and measured at fair value,and gains or losses on derivative translations are recognised in theincome statement and b) for derivatives used for hedging purposes, if
derivatives qualify for hedge accounting because of high correlationand 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.
(n) 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 is not calculated because no dilutive
instruments were issued and outstanding for the years ended 31st
March 2004 and 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. 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 2004 and 2003
was as follows:
Millions of Yen

Thousands of U.S. Dollars

2004

2003

Cost

Unrealised
Gain

Unrealised
Loss

Fair
value

Corporate shares ....

¥3,119¥5,323¥ (62)

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

10

—

(0)

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

¥ 3,129¥ 5,323¥ (62)

2004

Cost

Unrealised
Gain

Unrealised
Loss

Fair
value

Cost

Unrealised
Gain

Unrealised
Loss

Fair
value

¥8,380¥3,366¥6,264¥(159)

10

10

1

—

¥9,471$29,510$50,364$ (586)$79,288

11

95

—

(0)

¥ 8,390¥ 3,376¥ 6,265¥(159)

95¥ 9,482$29,605$ 50,364$ (586)$79,383

Available-for-sale

Available-for-sale securities whose fair value was not readily determinable as at 31st March 2004 and 2003 was as follows:

Millions of Yen

Thousands of
U.S. Dollars

Millions of Yen

2004

2003

2004

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

¥—

¥—

$—

Thousands of
U.S. Dollars

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

1

1

10

¥ 1

¥ 1

$ 10

2004

2003

2004

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

4. Inventories
Inventories as at 31st March 2004 and 2003 consisted of the following:

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

¥1,224¥1,226$11,581Bonds ......................................................

1

1

10

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

¥1,225¥1,227$11,591

Proceeds from sales of available-for-sale securities for the years
ended 31st March 2004 and 2003 were ¥8,536 million ($80,765 thousand) and ¥33 million, respectively. Gross realised gains and losses onthese sales, computed on the moving-average cost basis, were ¥8,236
million ($77,926 thousand) and ¥0 million ($0 thousand), respectively,
for the year ended 31st March 2004 and ¥3 million and ¥4 million, respectively, for the year ended 31st March 2003.
The book value of bonds by contractual maturity for securities classified as available-for-sale as at 31st March 2004 and 2003 are as follows:

Millions of Yen

Thousands of
U.S. Dollars

2004

2003

2004

Finished products and purchased goods .

¥12,711¥13,785$120,267

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

9,475

10,18189,649Raw materials and supplies .......................

5,081

5,203

48,074

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

¥27,267¥29,169$257,990

5. Long-lived Assets
The Ryobi Group reviewed its long-lived assets for impairment as at
the year ended 31st March 2004 and, as a result, recognised an impairment loss of ¥689 million ($6,519 thousand) as other expense forunoccupied lands due to a decline of market value, and the carrying
amount of these lands was written down to the recoverable amount.

RYOBI LIMITED ANNUAL REPORT 2004

23

The recoverable amount of these lands was measured at net selling
price determined based on the tax purpose valuation, and considering
their materiality
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 consolidated statementof income. Continuous readjustment is not permitted unless the land
value subsequently declines significantly such that the amount of thedecline in value should be removed from the land revaluation excess
account and related deferred tax liabilities.
The details of the one-time revaluation as at 31st March 2002 wereas follows:

The aggregate annual maturities of long-term debt at 31st March
2004 were as follows:

Millions of Yen

Thousands of
U.S. Dollars

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

¥10,428$ 98,666

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

10,955

103,652

2007 ...................................................................

6,228

58,9272008 ...................................................................

3,496

33,0782009 ...................................................................

266

2,517

2010 and thereafter .......................................

153

1,448

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

¥31,526$298,288

Years Ending 31st March

The assets of the Ryobi Group pledged as collateral for short-termborrowings and long-term debt with banks and other financial institutions at 31st March 2004 and 2003 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
Millions of Yen

Thousands of
U.S. Dollars

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

¥ 275$ 2,602

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

1,981

18,743

Land revaluation reserve, net of income
taxes of ¥675 million ($6,386 thousand)and attribution of minority interest of¥405 million ($3,832 thousand) ...................

¥ 626$ 5,923

As at 31st March 2004, the carrying amount of the land after theabove one-time revaluation exceeded the market value by ¥392 million($3,709 thousand).
7. Short-term Borrowings and Long-term Debt
The annual weighted average interest rates applicable to short-termborrowings were 1.1% and 1.3%, as at 31st March 2004 and 2003, respectively.
Commercial paper included short-term borrowings totaling ¥2,024
million ($19,150 thousand) and ¥2,263 million, as at 31st March 2004
and 2003, respectively.
Long-term debt at 31st March 2004 and 2003 consisted of the following:

2003

2004

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

¥ 3,662¥ 3,434$ 34,649

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

1,395

1,465

13,199Land .........................................................

2,858

2,859

27,041Time deposit ............................................

108

108

1,022

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

2,546

3,815

24,089Total ..............................................................

¥10,569¥11,681$100,000

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 form of a lump-sum severance payment from the Company or from certain consolidated subsidiaries and annuity paymentsfrom 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 tothe mandatory retirement age.
The liabilities for employees’ retirement benefits at 31st March 2004
and 2003 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2004

2004
Net book value of property:

2003

2004

insurance companies with interest rates
ranging from 0.78% to 7.26%:

24

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

¥ 1,583¥ 1,665$ 14,978Unsecured ...................................................

29,83339,977282,269

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

110

382

1,041

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

31,52642,024298,288

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

(10,428)(13,505)(98,666)

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

¥ 21,098¥ 28,519$ 199,622

RYOBI LIMITED ANNUAL REPORT 2004

Thousands of
U.S. Dollars

Millions of Yen

Loans principally from banks and

2004

2003

2004

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

¥ 29,923¥ 34,946$ 283,120

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

(17,197)(14,484)(162,712)

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

3,101

212

29,341

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

(5,152)(10,274)(48,746)

Unrecognised transitional obligation ........

(3,754)(4,488)(35,519)

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

¥ 6,921¥ 5,912$ 65,484

The components of net periodic retirement benefit costs for the years
ended 31st March 2004 and 2003 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

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

2004

2003

2004

¥ 1,289¥ 1,631$12,196

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

821

1,495

7,768

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

(492)(1,036)(4,655)

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

(20)

(111)

(189)

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

747

787

7,067

Amortisation of transitional obligation ......

641

869

6,065

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

—

(619)

—

Net periodic retirement benefit costs .......

¥ 2,986¥ 3,016$28,252

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, Labour and Welfare on 1st
March 2003. As a result of this exemption, the Company and certain
subsidiaries recognised a gain on exemption from future pension obligation of the governmental program in the net amount of ¥619 million
in accordance with a transitional measurement of the accounting standard for employees’ retirement benefits for the year ended 31st March
2003.
Assumptions used for the years ended 31st March 2004 and 2003
were set forth as follows:
2004

2003

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

2.5%

2.5%

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

3.5%

3.5%

Amortisation of prior service cost ......................... 11~15 years 11~16 years
Recognition period of actuarial gain / loss .......... 11~15 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 from1st
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 dividends plus the amount of common stock, additional paid-in
capital or 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 ¥13,274 million ($125,594 thousand) as
at 31st March 2004, 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 2004 and 2003.
The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities at
31st March 2004 and 2003 were as follows:

RYOBI LIMITED ANNUAL REPORT 200425

Thousands of
U.S. Dollars

Millions of Yen

2004

2003

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

2004

2004

2003

40.9%

40.9%

Expenses not deductible for income tax

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

¥ 2,350¥ 1,647$ 22,235

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

20,56730,483

194,597

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

2,828

2,742

26,758Valuation allowance ...................................
Deferred tax assets ....................................

(16,404)¥ 9,341(23,015)¥ 11,857(155,209)$ 88,381

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

0.8

2.1

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

(18.2)(28.1)

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

—

3.7

Undistributed earnings of foreign subsidiaries ...

0.4

3.2

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

(2.1)

3.2

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

21.8%

25.0%

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

¥ (2,083)¥ (2,417)

11. Research and Development Costs
Research and development costs were ¥1,505 million ($14,240 thousand) and ¥1,589 million for the years ended 31st March 2004 and 2003,
respectively.

$ (19,709)

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

(2,095)(1,882)(19,822)

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

¥ (4,178)¥ (4,299)$ (39,531)

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

¥ 5,163¥ 7,558$ 48,850

12. Leases
Lease expenses on such finance lease contracts without ownershiptransfer amounted to ¥923 million ($8,733 thousand) and ¥789 million,
for the years ended 31st March 2004 and 2003, respectively.

The reconciliation between the normal effective statutory tax rate
for the years ended 31st March 2004 and 2003 and the actual effective
tax rates reflected in the accompanying consolidated statements ofincome was as follows:

As at 31st March 2004 and 2003, the summarised information showing the assumed figures of acquisition cost, accumulated depreciation andnet book value, which include the portion interest thereon, of the leased properties and other assets under finance leases without ownershiptransfer were as follows:
Millions of Yen

Thousands of U.S. Dollars

2004

2003

Accumulated
Depreciation

Net leased
property

Acquisition
Cost

Accumulated
Depreciation

Net leased
property

Acquisition
Cost

Accumulated
Depreciation

Net leased
property

Machinery and equipment ........

¥4,876¥1,731¥3,145¥3,991¥1,281¥2,710$46,135$16,378$29,757

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

1,686

864

822

1,685

535

1,150

15,952

8,175

7,777

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

¥6,562¥2,595¥3,967¥5,676¥1,816¥3,860$62,087$24,553$37,534

Depreciation expense and interest expense, which are not reflectedin the accompanying statements of income, computed by the straightline method and the interest method were ¥923 million ($8,733 thousand) and ¥789 million for the years ended 31st March 2004 and 2003,
respectively.
Future minimum lease payments of the Ryobi Group as at 31st March
2004 and 2003 under noncancelable finance leases that do not transfer ownership of leased assets to the lessee were as follows:

Millions of Yen

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

26

2004

Acquisition
Cost

Thousands of
U.S. Dollars

2004

2003

2004

¥ 986

¥ 841

$ 9,329

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

2,981

3,019

28,205

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

¥3,967¥3,860$37,534

RYOBI LIMITED ANNUAL REPORT 2004

Future minimum lease payments of the Ryobi Group as at 31st March
2004 and 2003 under noncancelable operating leases are as follows:

Millions of Yen

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

Thousands of
U.S. Dollars

2004

2003

2004

¥ 553

¥ 722

$ 5,232

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

1,012

1,648

9,575

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

¥1,565¥2,370$14,807

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 Department of the Company, and by the Finance Division of consolidated subsidiaries. Derivative transactions have been made in accordance withinternal policies which regulate the authorisation and credit limit
amounts.
The Ryobi Group had the following derivatives contracts outstanding as at 31st March 2004 and 2003.

13. Contingent Liabilities
The Ryobi Group had the following contingent liabilities as at 31st March
2004 and 2003.
Thousands of
U.S. Dollars

Millions of Yen

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

2004

2003

2004

¥ 577

¥ 840

$ 5,459

Guarantees and similar items
bank loans ...............................................

209

228

1,978

leases ......................................................

2,548

1,853

24,108

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

¥3,334¥2,921$31,545

14. Derivatives
The Ryobi Group enters into foreign exchange forward contracts andinterest 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.

Million of Yen

Thousands of U.S. Dollars

2004
Contract ornotional amount

¥100

2003
Fair value

Contract ornotional amount

¥(2)

¥100

2004
Fair value

Contract ornotional amount

Fair value

¥(5)

$946

$(19)

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

Note: Derivatives which qualify for hedge accounting were excluded from the market value information in 2004 and 2003.

15. Segment Information
The segment information classified by industry and geographical market area is presented below with respect to the years ended 31st March
2004 and 2003.

(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

2004
Die castings

Printing equipment

Power tools

Other

Eliminations /corporate

Consolidated¥¥155,251

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

¥106,309¥24,349¥23,799¥ 794

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

271

—

10

—

(281)

—

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

106,580

24,34923,809794(281)

155,251

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

100,431

22,077

21,785892

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

¥ 6,149¥ 2,272¥ 2,024¥ (98)

¥

—

(281)

144,9040¥ 10,347

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

¥ 81,214¥23,794¥24,408¥ 869¥30,289¥160,574

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

3,905

501

782

13

—

5,201

Impairment loss on fixed assets .........................

—

—

—

—

689

689

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

5,017

499

226

31

—

5,773

RYOBI LIMITED ANNUAL REPORT 2004

27

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 .......................................................................

108,010

22,741

25,059909(262)

156,458

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

102,341

21,452

23,478998

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

¥ 5,670¥ 1,289¥ 1,581¥ (89)

¥

—

(263)

148,0061¥ 8,452¥165,487

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

¥ 83,813¥24,547¥26,527¥ 926¥29,674

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

4,068

627

912

24

—

5,631

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

3,369

401

344

3

—

4,117

Thousands of U.S. Dollars

2004
Die castings

Printing equipment

Power tools

Other

Eliminations /corporate

Consolidated$—$1,468,928(2,659)—Net sales
Unaffiliated customer ......................................

$1,005,857$230,381$225,177$ 7,513Intersegment ....................................................

2,564

—

95

—

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

1,008,421

230,381

225,272

7,513(2,659)1,468,928

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

950,241

208,884

206,1228,440(2,659)1,371,028

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

$

58,180$ 21,497$ 19,150$ (927)$

0$97,900Total assets ...........................................................

$ 768,417$225,130$230,940$ 8,222$286,583$1,519,292

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

36,948

4,740

7,399

123

—

49,210

Impairment loss on fixed assets .........................

—

—

—

—

6,519

6,519

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

47,469

4,722

2,138

293

—

54,622

The amounts of corporate assets as at 31st March 2004 and 2003 included in the “Eliminations or corporate assets” were, respectively, ¥30,324
million ($286,915 thousand) and ¥29,708 million, which mainly consist of cash, securities and long-term investment assets (investments in securities).

(2) Geographical segment information
Millions of Yen

2004
Japan

North America

Other overseas

Eliminations /corporate

Consolidated

Net sales:

28

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

¥127,415¥20,940¥ 6,896—¥155,251

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

2,247

—

4,532

(6,779)—Total .........................................................................................................

129,662

20,94011,428(6,779)155,251

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

121,984

19,691

10,027(6,798)144,904

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

¥ 7,678¥ 1,249¥ 1,401¥19¥ 10,347

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

¥105,654¥13,838¥12,225¥28,857¥160,574

RYOBI LIMITED ANNUAL REPORT 2004¥

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¥

Thousands of U.S. Dollars

2004
Japan

North America

Other overseas

Eliminations /corporate

Consolidated$$1,468,928

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

$1,205,554$198,127$ 65,247

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

21,260—42,880(64,140)—

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

1,226,814

198,127

108,127(64,140)

1,468,928

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

—

1,154,168

186,309

94,871

72,646$ 11,818$ 13,256$$ 999,659$130,930$115,669$273,034

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

$

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

(64,320)180

1,371,028$

97,900$1,519,292

The amounts of corporate assets as at 31st March 2004 and 2003 included in the “Eliminations or corporate assets” were ¥30,324 million($286,915 thousand) and ¥29,708 million, respectively, which mainly comprise cash, securities and long-term investment assets (investments insecurities).

(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 2004 and 2003 are presented below:
Thousands of
U.S. Dollars

Millions of Yen

2004

2003

2004

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

¥25,333¥29,156$239,691

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

13,19912,625

124,884

Export sales and sales by overseas
subsidiaries

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

4,975

4,766

47,072

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

¥43,507¥46,547$411,647

16. Subsequent Event
On 29th June 2004, the shareholders of the Company authorised thefollowing appropriation of retained earnings for the year ended 31st
March 2004.

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

Millions of Yen

Thousands of
U.S. Dollars¥1,258$11,902

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

16.3%

18.6%

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

8.5

8.1

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

3.2

3.1

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

28.0%

29.8%

RYOBI LIMITED ANNUAL REPORT 2004

29

Deloitte Touche Tohmatsu
MS Shibaura Building
4-13-23 Shibaura
Minato-ku, Tokyo 108-8530
Japan
Tel: +81 (3) 3457 7321
Fax: +81 (3) 3457 1694
www.deloitte.com/jp

INDEPENDENT AUDITORS’ REPORTTo the Board of Directors of
Ryobi Limited:
We have audited the accompanying consolidated balance sheets of Ryobi Limited and consolidated
subsidiaries as of March 31, 2004 and 2003, and the related consolidated statements of income,shareholders’ equity, and cash 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 generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance 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
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Ryobi Limited and consolidated subsidiaries as ofMarch 31, 2004 and 2003, and the consolidated results of their operations and their cash flows forthe years then ended in conformity with accounting principles generally accepted in Japan.
As discussed in Note 2(c) to the consolidated financial statements, the Company and certain
domestic consolidated subsidiaries changed their method of accounting for inventories as of April 1,
2002.
As discussed in Note 2(f) to the consolidated financial statements, the Company and consolidated
subsidiaries also adopted the new accounting standard for impairment of fixed assets from the year
ended March 31, 2004.
Our audits 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 29, 2004

Member of
Deloitte Touche Tohmatsu

30

RYOBI LIMITED ANNUAL REPORT 2004

C O R P O R AT E I N F O R M AT I O N

DIRECTORS,CORPORATE AUDITORS,AND CORPORATE OFFICERSCORPORATE DIRECTORY
Company Name (Country)

Principal Business(As of 29th June 2004)

Major Consolidated Subsidiaries
Chairman and CEO
Hiroshi Urakami

Ryobi Imagix Co. (Japan)

Printing equipment and related product sales

Ryobi Sales Co. (Japan)

Power tools and lawn and garden equipment
sales

President and COO
Susumu Yoshikawa
Director and Corporate Officers
Takao Tanaka
Takashi Yokoyama
Mikio Kamura
Shiro Muroya

Ryobi Mirasaka Co. (Japan)

Die casting manufacturing

Ryobi Mitsugi Co. (Japan)

Die casting manufacturing

Tokyo Light Alloy Co., Ltd. (Japan)

Cast aluminum and die casting manufacturing

lkuno Co. (Japan)

Secondary aluminum alloy bullion manufacturing

Ryobi Power Tool Co. (Japan)

Power tools and lawn and garden equipment

and salesand sales
manufacturing

Standing Corporate Auditor
Shozo Kobayashi
Corporate Auditors
Satoshi Ohoka
Hiroaki Takahashi
Kunihiro Toyota
Corporate Officers
Koji Ishii
Kuniyuki Ito
Kenjiro Suzuki
Akira Urakami
Naomichi Honkawa
Kazuaki Danjo
Shoji Osawa
Hideki Domoto

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

Die casting manufacturing and sales

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

Die casting manufacturing and sales

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

Power tools, lawn and garden equipment andbuilders’ hardware manufacturing

Ryobi Finance Corporation (U.S.A.)

Financial operations

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
Toranomon Office
Toranomon Central Building
1-7-1, Nishi-shinbashi, Minato-ku,
Tokyo 105-0003, Japan
Telephone: 81-3-3927-5541

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 2004

31

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

RYOBI LIMITED ANNUAL REPORT 2004

This annual report was printed by a Ryobi printing press using 100% recycled paper and soybean ink.

PRINTED IN JAPAN©RYOBI LIMITED 2004