RYOBI AR 2007̲表紙̲表

RYOBI ANNUAL REPORT 2007

ANNUAL REPORTFor the year ended March 31, 2007

2007
Head Office

762 Mesaki-cho, Fuchu-shi, Hiroshima-ken 726-8628, Japan
Tel. 81-847-41-1111
http://www.ryobi-group.co.jp/
Printed in Japan
Copyright©2007 Ryobi Limited. All Rights Reserved.

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

表4

2007年 07月 28日 15時 30分

07049-5815

W433×H280（背3）リョウビ AR 2007

初校 F-6000

スミ
M45-Comp-150線

秋山

特茶

RYOBIレッド表1

PROFILE

CORPORATE INFORMATION

Since its establishment as a die casting manufacturer in December 1943, Ryobi Limited has

CORPORATE DATA

accumulated innovative technologies by manufacturing components for automobiles, electronics,

Company NameRYOBI LIMITED

telecommunications and other industries. Ryobi has leveraged these technologies and drawn on its

Established
December 16, 1943

experience to diversify into the manufacture of printing equipment, power tools and builders’

Major Products
Die cast products
Printing equipment(offset printing presses, peripherals, etc.)
Power tools(electric power tools, lawn and garden equipment, etc.)
Builders’ hardware(door closers, hinges, architectural hardware, etc.)

hardware. Ryobi is all around you, making an enjoyable, comfortable daily lifestyle possible.

Head Office
762 Mesaki-cho, Fuchu-shi, Hiroshima-ken 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 Nishishinbashi, Minato-ku, Tokyo 105-0003, Japan
Telephone: 81-3-3927-5541

MANAGEMENT MEMBERS(As of June 26, 2007)

67.7%
DIE CASTINGSNet Salesby Segment
for Fiscal 2007

As a world-leading die casting manufacturer,
Ryobi supplies various industries with die castproducts such as automobile components,
including cylinder blocks and transmission
cases.

CORPORATE AUDITORSStanding Corporate Auditor
Outside Corporate Auditors

12.8%
POWER TOOLS AND
BUILDERS’ HARDWARE
Ryobi provides an extensive range ofpower tools and lawn and garden
equipment for both professional anddo-it-yourself needs, as well as builders’hardware such as our mainstay door
closers that offer enhanced safety andcomfort in homes and offices.

19.5%

Ryobi offers high-precision, multi-functional offset
printing presses and develops total printing systems
for all stages of printing, from prepress to press andpost-press.

CONSOLIDATED FINANCIAL HIGHLIGHTS 1

Corporate Officers

Hiroshi Urakami
Susumu Yoshikawa
Takao Tanaka
Takashi Yokoyama
Mikio Kamura
Shiro Muroya
Koji Ishii
Kenjiro Suzuki
Kuniyuki Ito
Naomichi Honkawa
Kazuaki Danjo
Shoji Osawa
Hideki Domoto

MAJOR CONSOLIDATED SUBSIDIARIES

Ryobi Aluminium Casting (UK), Limited (U.K.)
Ryobi Die Casting Dalian Co., Ltd. (P.R.C.)
Ryobi Dalian Machinery Co., Ltd. (P.R.C.)
Ryobi Finance Corporation (U.S.A.)A MESSAGE FROM THE MANAGEMENT 2
FINANCIAL SECTION 6

Corporate Auditor

CORPORATE OFFICERS
Chief Executive Officer
Chief Operating Officer
Executive Corporate Officers

Shozo Kobayashi
Kunihiro Toyota
Tairo Katoh
Tsuyoshi Mifune

Ryobi Imagix Co. (Japan)
Ryobi Sales Co. (Japan)
Ryobi Mirasaka Co. (Japan)
Ryobi Mitsugi Co. (Japan)
Tokyo Light Alloy Co., Ltd. (Japan)
lkuno Co. (Japan)
Ryobi Power Tool Co. (Japan)
Ryobi Die Casting (USA), Inc. (U.S.A.)
RDCM, S. de R.L. de C.V. (Mexico)

PRINTING EQUIPMENTCONTENTSCORPORATE SOCIAL RESPONSIBILITY 5

BOARD OF DIRECTORS
Chairman and Representative Director
Hiroshi Urakami
President and Representative Director
Susumu Yoshikawa
Directors
Takao Tanaka
Takashi Yokoyama
Mikio Kamura
Shiro Muroya
Koji Ishii
Akira Urakami
Kenjiro Suzuki
Outside Director
Satoshi Ohoka

Printing equipment and related product sales
Power tools and lawn and garden equipment sales
Die casting manufacturing
Die casting manufacturing
Cast aluminum and die casting manufacturing and sales
Secondary aluminum alloy bullion manufacturing and sales
Power tools and lawn and garden equipment manufacturing
Die casting manufacturing and sales
Die casting manufacturing(Founded in April 2007, production operations planned to begin in October 2008)
Die casting manufacturing and sales
Die and die casting manufacturing and sales
Power tools, lawn and garden equipment and builders’ hardware manufacturing and sales
Financial operations

TOPICS 4

CORPORATE INFORMATION 27

SHAREHOLDER INFORMATION
Number of Shares Issued(As of March 31, 2007)

Forward-Looking Statements

171,230,715

Items containing forward-looking statements such as performance forecasts and future policies and strategies are based on the assumptions ofmanagement in light of the information available as of the end of the fiscal year under review and may involve various risks and uncertainties. The Ryobi
Group cautions that its actual actions and performance may differ significantly from these forward-looking statements due to numerous factors outside of the

Listing
Common Stock—Tokyo

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Group’s control such as, but not limited to, general economic conditions, the business environment, trends in market demand and foreign exchange rates.
RYOBI ANNUAL REPORT 2007

27

CONSOLIDATED FINANCIAL HIGHLIGHTS(For the years ended March 31, 2007, 2006 and 2005)

Thousands of
U.S. dollars(Note 2)Millions of yen

2007

2006

2005

2007

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

¥204,672¥171,232¥157,964$1,733,774

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

16,353

13,214

10,834

138,526

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

9,877

8,636

6,581

83,668

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

¥202,529¥177,865¥157,420$1,715,621

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

74,81566,75655,294

633,758

For the fiscal period:

As of fiscal year-end:

U.S. dollars(Note 2)Yen

Per share data:
Net income ...............................................................................

¥Cash dividends ..........................................................................

58.92

¥

12.00

51.31

¥

39.33

10.00

$

0.499

7.50

0.102

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 ¥118.05=US$1, the exchange rate prevailing on March 31, 2007.

NET SALESOPERATING INCOME

NET INCOME

Millions of yen

Millions of yen

Millions of yen

250,000

20,00015,00012,812

16,353

204,672

12,00016,000200,000

171,232

13,214

156,139 156,458 155,251 157,964

9,877
8,636

9,000

12,000150,000

10,347

10,834
6,581

8,452
6,000

8,000

100,000

6,364

4,471
3,000

4,000

50,000

2,081

0

2002

2003

2004

2005

2006

2007

0

2002

2003

2004

2005

2006

RYOBI ANNUAL REPORT 2007

2007

0

2002

2003

2004

2005

2006

2007

1

A MESSAGE FROM THE MANAGEMENT

Hiroshi Urakami

Susumu Yoshikawa

Chairman and CEO

President and COO

CREATE A SOUND AND DYNAMICCORPORATION THROUGH TECHNOLOGY,
TRUST AND CHALLENGE

Guided by its corporate philosophy, “Create a sound and dynamic corporation through technology, trust and challenge,” the Ryobi Group aims to become established as an
indispensable part of society by creating innovative, top-quality products and services thatmeet the needs of customers and society at large. Aiming to be a company of continuous
growth and development maintained by a optimal mix of die castings and finished products,
Ryobi continues to make every effort to reinforce market competitiveness and improve its
earnings power.
From the perspective of corporate social responsibility, the Ryobi Group regards theimplementation of its corporate philosophy as CSR promotion itself. With this in mind, Ryobi
will strive for the thorough implementation of corporate governance, including disclosure of
information, compliance with statutory regulations, risk management, internal control andother related activities.

2

RYOBI ANNUAL REPORT 2007

During fiscal 2007, ended March 31, 2007, the economies of Europe, the U.S. and Asia
remained strong, despite the impact of consistently high crude oil and raw material prices.
The Japanese economy continued on a path toward a gradual recovery, owing to increased
capital expenditure and healthy employment conditions on the back of improved corporate
earnings. Uncertainty regarding future conditions was high, however, given exchange rate
fluctuations and apprehension about a slowdown in the U.S. economy.
Under these circumstances, the Ryobi Group implemented various measures that included advancing aggressive marketing activities, developing new products responsive tocustomer needs, cutting costs and expenses, and increasing operational efficiency.
During the fiscal year under review, Ryobi experienced growth in revenues and earnings.
Consolidated net sales rose 19.5% from the previous fiscal year to ¥204.7 billion. Domestic
net sales increased 14.4% to ¥141.5 billion, while overseas net sales surged 32.9% to ¥63.2
billion. On the earnings front, operating income grew by 23.8% year on year to ¥16.4 billion,
while net income climbed 14.4% to ¥9.9 billion.
Sales in all three business segments—Die Castings, Printing Equipment and Power Tools
and Builders’ Hardware—grew, marking a third consecutive year of growth in revenues.
Sales in the Die Castings Business and Printing Equipment Business were particularly robust
during the fiscal year under review. Furthermore, owing to increased sales and efforts to
reduce costs, Ryobi achieved record-high operating income, a fifth consecutive year of
growth, as well as increased net income for a two straight years.
Looking ahead to fiscal 2008, the year ending March 31, 2008, concerns regarding highcrude oil and raw material prices, trends in the U.S. economy, and fluctuations of exchange
rates and high interest rates continue to linger. In addition, Ryobi anticipates that an increasein depreciation expenses attributable to depreciation system changes in line with tax revisions in Japan will place pressure on profits. Amid these severe operating conditions, theRyobi Group will continue to improve its product development, production and marketing
capabilities. At the same time, Ryobi will strive to boost its market competitiveness and earning power through redoubled efforts to enhance productivity and reduce costs.
As we exert ever-greater efforts to become a sound and dynamic corporation, we ask foryour continued support and understanding.

June 2007

Hiroshi Urakami

Susumu Yoshikawa

Chairman and CEO

President and COO

RYOBI ANNUAL REPORT 2007

3

TOPICSDIE CASTINGS
With the aim of increasing die cast production in the North
American region, Ryobi took steps to augment the production

New York
Washington D.C.

ChicagoSan Francisco

capacity of Ryobi Die Casting (USA), Inc. by establishingRyobi Die Casting (USA), Inc.

RDCM, S. de R.L. de C.V. in April 2007. Located in Irapuato
City, Guanajuato, Mexico, the new factory site, upon which a
13,000m2 building will be constructed, measures 50,000m2.
Die cast production is scheduled to commence in October

RDCM, S. de R.L. de C.V.

2008, with an expected 20% boost to the region’s current die

Mexico City

cast manufacturing capacity.

PRINTING EQUIPMENT
In October 2006, Ryobi introduced a newly completed second printing equipment facility established at its Hiroshima
East Plant, by hosting an open house event. The occasion
welcomed a diverse crowd that included users and sales distributors, totaling approximately 300 domestic and 150
overseas guests from over 30 countries. Furthermore, toScenes from the open housemeet growing demand for medium-sized offset printingpresses, Ryobi broke ground on construction of a new addition to its second facility in January 2007. Production is
expected to begin in September this year.

Second printing equipment facility

POWER TOOLS AND BUILDERS’ HARDWARE
In the fiscal year under review, Ryobi released two new additions to its lineup of circular saws. The new W-570ED and
W-660ED torque-controlled electric circular saws boast a
powerful output with a lightweight design. Equipped with
Ryobi’s proprietary power transmittance mechanism and anelectronically controlled motor that maintains a fast, efficient
motor speed, the new series delivers superior cutting power.
Compared to older models, this series, which was developed
for professional use, is 20% lighter in weight and hasreceived acclaim as a revolutionary new product.
Ryobi also launched its latest building-use door closer, theTorque-controlled electric circular saw
W-660ED

new B1000, that features a new slimmer design and backcheck function. The back-check function is an enhanced
safety feature that prevents doors from suddenly and quickly
swinging open due to strong winds and other external factors.
Owing to the added safety that door closers provide, particularly given the limitations of doorstoppers, demand for door
closers equipped with back-check functions is increasing.

4

RYOBI ANNUAL REPORT 2007

New B1000 door closer

CORPORATE SOCIAL RESPONSIBILITY
Based on its corporate philosophy, “Create a sound and dynamic corporation through technology, trust and challenge,”
Ryobi carries out its social responsibility in pursuit of the creation of sustainable value and a better society. This is fundamental to the general management of the Ryobi Group.

ENVIRONMENTAL PROTECTION ACTIVITIESed to important matters and supervision of the execution ofWithin the Ryobi Group, 17 facilities in 13 companies

operations. The Corporate Operating Committee, composed

have acquired ISO14001 certification, the international

primarily of corporate officers, reviews the progress of thestandard for environment management systems, as ofexecution of operations. Along with these structures, Ryobi

June 2007. Under the auspices of its environmental man-established the Compensation Committee to make decisions

agement system, each company and facility is taking

regarding the remuneration of directors and the Personnel

action against environmental burden by setting environ-and Organization Committee to nominate directors and cor-mental targets and objectives and exerting efforts toporate officers to optimize the placement and nurturing ofconserve energy and resources, reduce waste, and bol-

personnel and the functionality of the organization.

ster recycling.
Compliance Structure

SOCIAL CONTRIBUTION ACTIVITIESRyobi established the Ryobi Compliance Committee to

The Ryobi Social Contribution Foundation, a nonprofit

assure that corporate activities are conducted equitably, ethi-organization, undertakes social welfare activities such as

cally, and in compliance with statutory regulations, according

the donation of goods to social welfare facilities and pro-to Ryobi’s Code of Conduct and corresponding Standards ofvision of funding to aid the activities of volunteer groups.

Conduct.

As such, in fiscal 2007, the Foundation donated cars,
wheelchairs, and nursing-care goods to 11 regional

Risk Management Structure

Council of Social Welfare organizations throughout Japan.

Ryobi has drawn up risk management regulations and a man-

In addition, it provided funding to eight volunteer groups.

ual for management of individual risks in order to prevent theoccurrence of risk and to ensure a rapid response to such

CORPORATE GOVERNANCE STRUCTURE

occurrences. In addition, Ryobi established the Risk

Management StructureManagement Office and the Risk Countermeasure

Ryobi adopts a corporate auditor system and a corporate

Headquarters to formulate countermeasures when risks

officer system. Under the corporate officer system, intro-

occur and to respond in a timely and appropriate manner.

duced in June 2000, there are now eight directors that
concurrently hold positions as corporate officers. Ryobi

Ryobi continues its efforts to establish a better corporate

appointed its first outside director in June 2006.

structure with an eye on social trends, complying with rele-

The Board of Directors implements decision-making relat-vant rules and regulations.

General Meeting of Shareholders

Board of Directors(10 Directors
one of which is an outside director)

Compensation Committee
Personnel andOrganization Committee

Audit

Board of Corporate Auditors

Independent Auditors(Four Corporate Auditors
two of which are outside auditors)

Direction andSupervision
Accounting Audit

Corporate Operating Committee(13 Corporate Officers)

Ryobi Compliance Committee
Risk Countermeasure
Headquarters (as needed)
Risk Management Office(permanent)

Legal and Audit Section(for internal auditing)Operational Audit

Each Business Division
and Group Companies

RYOBI ANNUAL REPORT 2007

5

FINANCIAL SECTIONFISCAL PERIOD COMPARATIVE SUMMARY
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended March 31)

Millions of yen

2007

2006

2005

2004

2003

2002

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

¥204,672¥171,232¥157,964¥155,251¥156,458¥156,139

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

164,520

135,088

125,157

123,749

126,536

126,113Gross profit ..........................................

40,15236,14432,80731,50229,92230,026

expenses.............................................

23,79922,93021,973

21,155

21,47023,662For the fiscal period:

Selling, general and administrative
Operating income ...............................

16,353

13,214

10,834

10,347

8,452

6,364

Income taxes .......................................

6,353

4,206

3,902

3,608

1,504

2,188

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

9,877

8,636

6,581

12,812

4,471

2,081

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

¥202,529¥177,865¥157,420¥160,574¥165,487¥165,401

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

74,81566,75655,29450,04038,36633,379Interest-bearing debt ..........................

38,331

39,82344,502

53,63869,731

77,763As of fiscal year-end:

Yen

Per share data:
Net income ..........................................

¥ 58.9239.33¥ 76.40¥ 26.26¥ 12.19

Shareholders’ equity ...........................

445.93398.35330.62299.05227.84195.55

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

12.00

10.00

7.50

7.50

—

—

¥

51.31

¥

%

Other data:
Operating income margin ..................

8.0

7.7

6.9

6.7

5.4

4.1

Net income margin .............................

4.8

5.0

4.2

8.3

2.9

1.3

Return on assets (ROA) ......................

5.2

5.2

4.1

7.9

2.7

1.2

Return on equity (ROE).......................

14.0

14.2

12.5

29.0

12.5

6.6

Shareholders’ equity ratio...................

36.9

37.5

35.1

31.2

23.2

20.2

Asset turnover ratio (times) ................

1.08

1.02

0.99

0.95

0.95

0.87

Millions of yen

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

¥20,385¥ 11,232

7,595¥ 5,773

Depreciation and amortization ...........

8,196

6,067

¥

5,439

5,201

¥

5,631

6,198

Free cash flow .....................................

4,418

7,196

8,076

15,773

12,027

12,584

Number of employees (persons) .......

5,625

5,464

5,334

5,364

5,669

6,090

Notes: 1. Net income 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.

6

RYOBI ANNUAL REPORT 2007

4,117

¥

3,943

MANAGEMENT’S DISCUSSION AND ANALYSISANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS(1) Summary of Significant Accounting Policies
The consolidated financial statements of the Ryobi Group have been prepared in conformity with accounting principles generally accepted in Japan. The financial statements of overseas subsidiaries have been prepared in conformity with accounting
principles generally accepted in each country, respectively.
(2) Analysis of Operating Results for the Fiscal Year Ended March 31, 2007
Net Sales
Ryobi’s net sales increased across all business categories, namely the Die Castings, Printing Equipment, and Power Tools andBuilders’ Hardware Businesses.
Ryobi’s Die Castings Business experienced an increase in revenues owing to strong demand from American and domestic
automobile manufacturers. In the Printing Equipment Business, revenues increased owing to healthy sales in exports of medium-size offset printing presses (for B2, A2 and B3 paper sizes) and digital printing presses. In the Power Tools and Builders’Hardware Business, sales of both power tools and builders’ hardware contributed to a modest increase in revenues.
As a result, consolidated net sales for the current fiscal year increased 19.5%, compared to the previous fiscal year, to¥204,672 million.
Operating Income
Ryobi’s increase in net sales, coupled with efforts to reduce input costs, translated into growth in operating income, bringing
the ratio of operating income to net sales to 8.0% in the fiscal year under review.
By business segment, earnings rose in the Die Castings Business on account of efforts to reduce costs and expand sales,
helping to offset a severe environment of falling prices and high raw material costs. In the Printing Equipment Business earnings were also up, specifically owing to robust sales growth and redoubled efforts to reduce costs. However earnings in thePower Tools and Builders’ Hardware Business slumped owing to inflated raw material prices, despite showing an increase insales.
As a result, operating income increased 23.8% year on year, to ¥16,353 million, marking a fifth year of consecutive growth
and a new record-high in profits for the Ryobi Group.

NET SALESOPERATING INCOME

Millions of yen

Millions of yen

240,000

18,000NET INCOME

Millions of yen

15,00016,353
12,812

204,672
15,000200,000

12,00013,214

171,232
160,000 156,139

156,458

155,251

157,9649

12,00010,3479,000

120,000

10,834

9,000

8,452

6,581
6,000

6,364
80,0006,000

40,000

3,000

8,636

4,471
3,000

0

2002

2003

2004

2005

2006

2007

0

2,081

2002

2003

2004

RYOBI ANNUAL REPORT 2007

2005

2006

2007

0

2002

2003

2004

2005

2006

7

2

56,458

2003

NET SALESNet Income

OPERATING INCOME

NET INCOME

Although other income overall expanded due to an increase inMillions of yen
gain on the sale of investment
securities, other expenses from

Millions of yen

18,00024000015,000retirement benefit payments to directors also increased.

16,353
12,812

204,672
As a result,consolidated
net income for the period rose
15,00014.4%,171,232
to ¥9,877 million.
155,251

157,964

20000012,00013,214
9,877

12,000Operating Results by Business Segment
9,000

Die Castings

10,347

10,8349,000

1600008,636
120000

8,452

6,581
6,000

6,364
rose 21.3% year on year, toSales in the Die Castings Business
6,000

80000

4,471

¥138,623 million, while operating income climbed 22.4% to¥8,768 million. The ratio3,000of operating income to net sales

3,000

40000

2,081

remained on par with the previous fiscal year at 6.3%.
2004

0
Ryobi’s Die Castings Businessexperienced robust sales to

2005

2006

2007

2002

2004

2003

2005

2006

0

2007

0

2003

2002

2004

2005

2006

2007

American and domestic automobile manufacturers in the fiscal
year under review. On the earnings front, despite ongoingstruggles against price drops and inflated raw material prices,
overall operating income increased due to cost-cutting measures and a rise in sales.

NET SALES BY BUSINESS SEGMENT
DIE CASTINGSPRINTING EQUIPMENT

Millions of yen

POWER TOOLS AND
BUILDERS’ HARDWARE

Millions of yen

Millions of yen

150,000

150,000

120,000

120,000

90,00090,00090,00060,00060,00060,00030,00030,000 22,693 22,741 24,349 27,694

150,000

1500

138,623

1200

120,000

114,320
99,099107,762 106,309 105,491

900

600

39,829

2002

2003

2004

2005

2006

2007

25,046 23,799 24,779 24,605 26,220

30,000

0

0

0

300

32,77832,307

2002

2003

2004

2005

2006

2002

2007

2003

2004

2005

2006

2007

OPERATING INCOME BY BUSINESS SEGMENT
DIE CASTINGS

POWER TOOLS AND
BUILDERS’ HARDWARE

PRINTING EQUIPMENT

Millions of yen

Millions of yen

Millions of yen

10,00010,00010,000

8,000

8,000

8,768
8,000

7,162
6,149

6,000

5,509

5,670

5,669

5,869

6,000

6,000

4,285
4,000

4,000

4,000

3,051
2,272
2,000

2,000

2,000

1,289
638

0

8

2003

2004

2005

2006

2007

2,113

2004

2005

1,767

1,716

2006

2007

555
0

0

2002

2,024
1,581

2002

2003

2004

2005

2006

2007

RYOBI ANNUAL REPORT 2007

2002

2003

Printing Equipment
Sales in the Printing Equipment Business surged 23.3% year on year, to ¥39,829 million. Operating income also rose, increasing 37.0% to ¥5,869 million, resulting in a ratio of operating income to net sales of 14.7%, up from 13.3% in the previous fiscal
year.
Sales in this segment grew on account of steady exports of medium-size offset printing presses (for B2, A2 and B3 sizes)
and digital printing presses mainly to Europe, the U.S. and Asia. Accordingly, this growth in sales, along with further promotionof cost-reduction efforts, contributed to an increase in profits.
Power Tools and Builders’ Hardware
Sales climbed 6.6% year on year, to ¥26,220 million, while operating income edged down 2.9%, to ¥1,716 million and resulted
in a decrease in the ratio of operating income to net sales from 7.2% to 6.5%.
Under pressures from intensifying competition, profits waned, despite growth in sales of both power tools and builders’hardware.
(3) Analysis of Capital Resources and Liquidity
Total Assets, Liabilities and Equity
Total assets as of March 31, 2007, increased ¥24,664 million compared with the previous fiscal year, to ¥202,529 million. Major
factors contributing to this increase were increases in current assets, specifically notes and accounts receivable and inventories, and, in the fixed assets category, property, plant and equipment.
Total liabilities rose ¥16,603 million, year on year, to ¥126,771 million, owing to an increase in notes and accounts payable.
Interest-bearing debt, excluding discounted notes receivable, declined ¥1,492 million compared with the same period a year
earlier, to ¥38,331 million as of the end of the March 31, 2007.
Equity amounted to ¥75,758 million, reflecting a boost from net income of ¥9,877 million and decrease in line with the payment of dividends. After the deduction of minority interests from equity, total shareholders’ equity came to ¥74,815 million,
bringing the shareholders’ equity ratio to 36.9%.

TOTAL ASSETS &TOTAL SHAREHOLDERS’ EQUITYOPERATING INCOME MARGIN &NET INCOME MARGIN

ROE & ROA

Millions of yen%%

250,000

10

30

29.0
8.3

202,5298.0

8200,000

177,865
165,401 165,487

6.9

160,574 157,420

25

7.7
20

6.7
6

150,000

4.8

5.4

15

5.0
4

100,000

66,75650,04050,00033,379

12.5

14.0

5.2

5.2

2006

2007

10

74,8157.9

2.9

55,2946.6

238,366

14.2
12.5

4.2

4.1

5

1.3

2.7

4.1

1.2
0

2002

2003

2004

2005

2006

2007

0

2002

2003

2004

TOTAL ASSETSOPERATING INCOME MARGIN

TOTAL SHAREHOLDERS’ EQUITYNET INCOME MARGIN

2005

RYOBI ANNUAL REPORT 2007

2006

2007

0

2002

2003

ROE

ROA

2004

2005

9

Liquidity
The Ryobi Group’s free cash flow (the sum of net cash from operating activities and net cash from investing activities)
decreased ¥2,778 million, from ¥7,196 million in the previous fiscal year to ¥4,418 million. This was largely the result of a significant increase in capital expenditure attributed to a ¥10,475 million increase in payment for the acquisition of property, plantand equipment, despite a ¥6,955 million increase in net cash provided by operating activities as a reflection of the increase innotes and accounts payable.
In net cash used in financing activities, repayment of interest-bearing debt decreased ¥3,620 million year on year, owing toincreased capital expenditure.
The Ryobi Group promotes a financial strategy focused on the adequate positioning of its cash flows, while also taking
into consideration overall investment efficiency. As such, Ryobi maintains a fundamental policy of utilizing cash generated fromoperating activities as the primary source of its capital expenditure.
Major cash flow indicators and trends are summarized in the following table:
2007

2006

Shareholders’ equity ratio (%)....................................................................................

36.9

37.5

Shareholders’ equity ratio at fair market value (%) ...................................................

78.6

81.5

Interest-bearing debt—repayment years ..................................................................

1.7

2.6

Interest coverage ratio (times) ...................................................................................

28.5

22.5

Notes:

Shareholders’ equity ratio: Shareholders’ equity / total assets
Shareholders’ equity ratio at fair market value: Shareholders’ equity at fair market value / total assets
Interest-bearing debt—repayment years: Interest-bearing debt / net cash from operating activities
Interest coverage ratio: Net cash from operating activities / interest payment
1. Each of the indicators identified in the preceding table is calculated based on figures from Ryobi’s consolidated financial statements.
2. Fair market value is calculated using the closing market price of Ryobi’s publicly listed shares as of the fiscal year-end multiplied by the number of common sharesissued and outstanding (excluding treasury stock).
3. Interest-bearing debt includes all liabilities, which incur interest in connection with liabilities listed on Ryobi’s consolidated balance sheet.
4. Net cash from operating activities is taken from Ryobi’s consolidated statements of cash flows.
5. Interest payment is the amount of interest paid and is taken from Ryobi’s consolidated statements of cash flows.

CASH FLOWCAPITAL EXPENDITURE &DEPRECIATION AND AMORTIZATIONSHAREHOLDERS’ EQUITY RATIO &INTEREST-BEARING DEBT

Millions of yen

Millions of yen

Millions of yen

25,00025,000120,000%

37.5

22,12020,00020,38515,000

40
36.9

35.1
15,15913,137

14,187

15,16531.2

20,00090,00011,66030

77,763

10,00069,731

15,000

23.2

4,113

5,000

60,000

11,2320(553)(6,483)(8,024)-10,000

44,502(3,121)
6,198(7,969)(10,399)

5,000

5,631

3,943

4,117

2002

2003

5,773
5,201

39,823

8,196

7,595

(6,111)

20

53,63810,000(3,132)-5,000

20.2

6,067

5,439

38,331
10

30,000-15,000(15,990)-20,000(17,670)
2002(17,702)
2003

2004

2005

2006

2007

0

2004

2005

2006

0

2002

2003

2004

CAPITAL EXPENDITURE

SHAREHOLDERS’ EQUITY RATIOCASH FROM INVESTING ACTIVITIESDEPRECIATION AND AMORTIZATIONINTEREST-BEARING DEBT

CASH FROM FINANCING ACTIVITIES

10

2007

CASH FROM OPERATING ACTIVITIESRYOBI ANNUAL REPORT 2007

2005

2006

0
2007

(4) Business Segment Strategy
Die Castings
Ryobi is making concerted efforts to expand orders and sales in the Die Castings Business by further developing high-quality,
high-value-added products, reinforcing its technology development capabilities and maximizing the application of its manufacturing systems in Japan, the U.S., Europe and China. Additional efforts to reinforce its global strategic structure were realized in
April 2007, with the establishment of a new production site in Mexico. Furthermore, Ryobi will unite manufacturing and sales
divisions at home and overseas to curtail costs and enhance productivity.
In the automobile-related sector, Ryobi will strengthen its technical capabilities in response to demands for lighter-weightvehicles by making aluminum die-casting power train components and frames. Simultaneously, Ryobi will reinforce its responsiveness to large-scale orders and production that requires machining.
Ryobi will likewise work to uncover new opportunities and cultivate demand in fields unrelated to the automobile sector,
including the electronics and communications industries and fields with requirements for advanced recyclability.
Printing Equipment
Pursuing high-precision, multicolor rendering and increasingly advanced functionality, Ryobi continues to enhance its development, production and marketing capabilities for new products in order to further consolidate its standing in the global market.
Furthermore, Ryobi strives to expand its product lines to satisfy market needs through the development of environment-friendly products, as well as products that respond to advancements in information technology and digitization.
Also, in order to meet increasing demand for medium-size offset printing presses (for B2, A2 and B3 paper sizes), Ryobi
augmented production at its Hiroshima East Plant by establishing a second on-site factory, which began full-scale operations in
October 2006. Moreover, with the completion of the new addition to its second factory, scheduled for July 2007, Ryobi willreinforce and expand its manufacturing capacity as it aims to increase sales.
Power Tools and Builders’ Hardware
In the power tools business, which includes electric power tools, lawn and garden and other equipment, Ryobi offers productsthat meet a variety of demands from professionals to DIY enthusiasts. Ryobi will enhance its productivity by utilizing manufacturing systems in Japan and Dalian, China, as well as its product development system based on the concept of “small,lightweight and compact.” In addition, Ryobi aims to enhance its competitiveness through efforts to foster product planningand market capabilities, as well as productivity.
In the builders’ hardware business, our mainstay door closers are manufactured mainly at the subsidiary in Dalian, China,
and an affiliated company in Taiwan. By developing distinct products, promoting cost reduction through productivity enhancement and reinforcing price competitiveness, Ryobi is aiming for higher profitability.

Forward-Looking Statements
Items containing forward-looking statements such as performance forecasts and future policies and strategies are based on the assumptions of management inlight of information available as of the end of the fiscal year under review and may involve various risks and uncertainties. The Ryobi Group cautions that its actual
actions and performance may differ significantly from these forward-looking statements due to numerous factors outside of the Group’s control such as, but notlimited to, general economic conditions, business environment, trends in market demand and foreign exchange rates.

RYOBI ANNUAL REPORT 2007

11

CONSOLIDATED BALANCE SHEETSRYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(As of March 31, 2007 and 2006)

Thousands of
U.S. dollars(Note 1)Millions of yen

ASSETS

2007

2006

2007

Cash and cash equivalents ..................................................................

¥ 17,612¥ 16,097$ 149,191

Time deposits (Note 6) ........................................................................

2,301

2,402

19,492

47,13042,691

399,238

Current assets

Notes and accounts receivable
Trade .................................................................................................
Unconsolidated subsidiaries and affiliates .....................................

129

125

1,093

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

2,608

2,148

22,092

Allowance for doubtful accounts ....................................................

(54)

(65)

(458)

Inventories (Note 4) .............................................................................

38,39831,919325,269

Deferred tax assets (Note 9) ...............................................................

2,161

1,386

18,306

Prepaid expenses and other ...............................................................

289

189

2,448

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

110,574

96,892

936,671

Land ......................................................................................................

21,326

19,577

180,652

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

44,40240,548376,129

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

97,89685,407829,276

Construction in progress .....................................................................

2,227

2,435

18,865

Property, plant and equipment (Notes 5 and 6)

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

165,851

147,967

1,404,922

Accumulated depreciation ..................................................................

(92,822)(87,661)(786,294)

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

73,02960,306

618,628

12,897

14,856109,250

Investments and other assets
Investments in securities (Note 3) ......................................................
Investments in and advances tounconsolidated subsidiaries and affiliates ........................................

360

408

3,050

Intangible fixed assets .........................................................................

1,990

1,828

16,857

Deferred tax assets (Note 9) ...............................................................

1,472

1,312

12,469Other ....................................................................................................

2,253

2,348

19,085

Allowance for doubtful accounts ........................................................

(46)

(85)

(389)

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

18,926

20,667160,322

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

¥202,529¥177,865$1,715,621

See notes to consolidated financial statements.

12

RYOBI ANNUAL REPORT 2007

Thousands of
U.S. dollars(Note 1)Millions of yen

LIABILITIES AND EQUITY

2007

2006

2007

Short-term borrowings (Note 6) ..........................................................

¥ 19,751¥ 19,841$ 167,310

Current portion of long-term debt (Note 6) ........................................

4,363

6,584

36,95949,63435,400420,449

Current liabilities

Notes and accounts payable
Trade .................................................................................................
Unconsolidated subsidiaries and affiliates .....................................

346

425

2,931

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

11,302

8,873

95,739Accrued expenses ...............................................................................

4,946

4,589

41,898

Income taxes payable .........................................................................

5,093

3,374

43,143

Other current liabilities (Note 9) ..........................................................

3,623

4,503

30,690Total current liabilities ......................................................................

99,05883,589839,119

Long-term debt (Note 6) .....................................................................

14,217

13,398120,432

Accrued severance indemnities (Note 7) ...........................................

6,549

6,906

55,476Long-term liabilities

Other long-term liabilities (Note 9) ......................................................

6,947

6,275

58,848

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

27,713

26,579234,756

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

—

941

—

Commitments and contingent liabilities (Notes 11,12 and 13)
Equity (Notes 8 and 15)
Common stock
Authorized: 500,000,000 shares
Issued: 171,230,715 shares ............................................................

18,472

18,472

156,476

Capital surplus .....................................................................................

23,75023,681

201,186

Retained earnings ...............................................................................

34,04425,885288,386

Unrealized gain on available-for-sale securities .................................

5,144

6,229

43,575

Deferred loss on derivatives under hedge accounting .....................

(25)

—

(212)

Land revaluation reserve (Note 5) .......................................................

626

626

5,303

Foreign currency translation adjustments .........................................

(6,464)(7,370)(54,756)

Treasury stock (3,457,735 shares in 2007;
3,648,152 shares in 2006) ..................................................................

(732)

(767)

(6,200)Total ................................................................................................

74,81566,756

633,758

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

943

—

7,988

Total equity .....................................................................................

75,75866,756

641,746

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

¥202,529¥177,865$1,715,621

RYOBI ANNUAL REPORT 2007

13

CONSOLIDATED STATEMENTS OF INCOME
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended March 31, 2007 and 2006)

Thousands of
U.S. dollars(Note 1)Millions of yen

2007

2006

2007

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

¥204,672¥171,232$1,733,774

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

164,520

135,088

1,393,647

Gross profit .......................................................................................

40,15236,144340,127

Selling, general and administrative expenses ...................................

23,79922,930201,601

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

16,353

13,214

138,526

194

177

1,643

Other income
Interest and dividends .........................................................................
Gain on sales of investments in securities .........................................

772

0

6,540

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

1,529

1,525

12,952

Total other income ...........................................................................

2,495

1,702

21,135Interest .................................................................................................

815

679

6,904

Loss on disposal of property, plant and equipment ..........................

347

411

2,939

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

1,432

769

12,131

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

2,594

1,859

21,974

Income before income taxes and minority interests .........................

16,254

13,057

137,687

Other expenses

Income taxes (Note 9)
Current ..................................................................................................

6,651

3,677

56,340

Deferred ...............................................................................................

(298)

529

(2,524)

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

6,353

4,206

53,816

Minority interests in net income ..........................................................
Net income .............................................................................................

24
¥

215

9,877

¥

8,636

203
$

83,668
U.S. dollars(Note 1)Yen

Per share of common stock (Note 2(p))
Net income ...........................................................................................
Cash dividends applicable to the year (Note 15) ................................
See notes to consolidated financial statements.

14

RYOBI ANNUAL REPORT 2007

¥

58.92
12.00

¥

51.31
10.00

$

0.499
0.102

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYRYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended March 31, 2007 and 2006)
Thousands

Balance at April 1, 2005 ...........................................................
Net income ............................................................................
Cash dividends, ¥7.50 per share ..........................................
Bonuses to directors and corporate auditors ......................
Unrealized gain on available-for-sale securities decrease ...
Foreign currency translation adjustments ............................
Disposal of treasury stock (344,950 shares) ........................
Purchase of treasury stock (8,830 shares) ...........................
Other net decrease in treasury stock (1,900 shares) ..........
Balance at March 31, 2006 ......................................................
Reclassified balance as of March 31, 2006 .........................
Net income ............................................................................
Cash dividends, ¥10.00 per share ........................................
Bonuses to directors and corporate auditors ......................
Disposal of treasury stock (198,660 shares) ........................
Purchase of treasury stock (8,243 shares) ...........................
Net change in the year ..........................................................
Balance at March 31, 2007 ......................................................

Millions of yen

Issuednumber ofshares ofcommon stock

Commonstock

Capitalsurplus171,231
—
—
—
—
—
—
—
—
171,231
—
—
—
—
—
—
—
171,231¥ 18,472
—
—
—
—
—
—
—
—
18,472
—
—
—
—
—
—
—
¥ 18,472¥ 23,588
—
—
—
—
—
93
—
—
23,681
—
—
—
—
69
—
—
¥ 23,750$156,476
—
—
—
—
—
—
—
$156,476$200,601
—
—
—
—
585
—
—
$201,186

Retainedearnings

Unrealized
gain onavailable-for-sale securities

Deferredloss onderivatives
under hedge
accounting¥ 18,503
8,636(1,254)——————25,885—
9,877(1,675)(43)———¥ 34,044¥ 3,029
—
—
—
3,200
—
—
—
—
6,229
—
—
—
—
—
—
(1,085)¥ 5,144

¥ —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(25)
¥ (25)

Thousands of U.S. dollars (Note 1)

Balance at March 31, 2006 ......................................................
Reclassified balance as of March 31,2006...........................
Net income ............................................................................
Cash dividends, ¥10.00 per share ........................................
Bonuses to directors and corporate auditors ......................
Disposal of treasury stock (198,660 shares) ........................
Purchase of treasury stock (8,243 shares) ...........................
Net change in the year ..........................................................
Balance at March 31, 2007 ......................................................

$219,271—
83,668(14,189)
(364)
—
—
—
$288,386$52,766——————(9,191)$43,575

$ —
—
—
—
—
—
—
(212)
$(212)

Minority
interests

Total
equityMillions of yen

Landrevaluation
reserve

Foreigncurrencytranslation
adjustments

Treasury
stock

Total

Balance at April 1, 2005 ...........................................................
Net income ............................................................................
Cash dividends, ¥7.50 per share ..........................................
Bonuses to directors and corporate auditors ......................
Unrealized gain on available-for-sale securities decrease ...
Foreign currency translation adjustments ............................
Disposal of treasury stock (344,950 shares) ........................
Purchase of treasury stock (8,830 shares) ...........................
Other net decrease in treasury stock (1,900 shares) ..........
Balance at March 31, 2006 ......................................................
Reclassified balance as of March 31, 2006 .........................
Net income ............................................................................
Cash dividends, ¥10.00 per share ........................................
Bonuses to directors and corporate auditors ......................
Disposal of treasury stock (198,660 shares) ........................
Purchase of treasury stock (8,243 shares) ...........................
Net change in the year ..........................................................
Balance at March 31, 2007 ......................................................

¥ 626
—
—
—
—
—
—
—
—
626
—
—
—
—
—
—
—
¥ 626

¥ (8,094)
—
—
—
—
724
—
—
—
(7,370)
—
—
—
—
—
—
906
¥ (6,464)¥ (830)
—
—
—
—
—
69
(6)
0
(767)
—
—
—
—
42
(7)
—
¥ (732)¥ 55,294
8,636(1,254)
—
3,200
724
162
(6)
0
66,756—
9,877(1,675)
(43)
111
(7)
(204)
¥ 74,815

Balance at March 31, 2006 ......................................................
Reclassified balance as of March 31,2006...........................
Net income ............................................................................
Cash dividends, ¥10.00 per share ........................................
Bonuses to directors and corporate auditors ......................
Disposal of treasury stock (198,660 shares) ........................
Purchase of treasury stock (8,243 shares) ...........................
Net change in the year ..........................................................
Balance at March 31, 2007 ......................................................

$5,303
—
—
—
—
—
—
—
$5,303$(62,431)
—
—
—
—
—
—
7,675
$(54,756)

¥

—
—
—
—
—
—
—
—
—
—
941
—
—
—
—
—
2
¥ 943

¥ 55,294
8,636(1,254)
—
3,200
724
162
(6)
0
66,756941
9,877(1,675)
(43)
111
(7)
(202)
¥ 75,758

$ —
7,971
—
—
—
—
—
17
$7,988$565,489
7,971
83,668(14,189)
(364)
941
(59)
(1,711)$641,746

Thousands of U.S. dollars (Note 1)$(6,497)
—
—
—
—
356
(59)
—
$(6,200)$565,489—
83,668(14,189)
(364)
941
(59)
(1,728)$633,758

See notes to consolidated financial statements.
RYOBI ANNUAL REPORT 200715

CONSOLIDATED STATEMENTS OF CASH FLOWSRYOBI LIMITED AND CONSOLIDATED SUBSIDIARIES(For the years ended March 31, 2007 and 2006)

Thousands of
U.S. dollars(Note 1)Millions of yen

2007

2006

2007

¥16,254¥ 13,057$ 137,687

Operating activities
Income before income taxes and minority interests ..........................
Adjustments for:
Income taxes - paid ...........................................................................

(5,054)(674)(42,812)

Depreciation and amortization ..........................................................

8,196

6,072

69,428Loss on sales or disposals of property, plant and equipment ........

340

395

2,880

Changes in assets and liabilities
Increase in notes and accounts receivable ..................................

(4,720)(4,689)(39,983)

Increase in inventories ...................................................................

(6,368)(4,025)(53,943)

Increase in notes and accounts payable ......................................

14,996

5,536

127,031

Increase (decrease) in accrued expenses ....................................

89

(132)

754

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

(1,613)(375)(13,664)

Net cash provided by operating activities ................................

22,12015,165

187,378(18,672)(8,197)(158,170)

Investing activities
Purchase of property, plant and equipment ........................................
Proceeds from sale of property, plant and equipment .......................

38

64

322

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

932

164

7,895

Net cash used in investing activities .........................................

(17,702)(7,969)(149,953)

Financing activities
Proceeds from long-term debt .........................................................

5,218

6,347

44,202

Repayments of long-term debt ........................................................

(6,713)(11,142)(56,866)

Decrease in short-term borrowings, net ..........................................

(123)

(443)

(1,042)Acquisition of treasury stock ............................................................

(7)

(6)

(59)

Cash dividends paid ..........................................................................

(1,676)(1,254)(14,197)

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

180

15

1,524

Net cash used in financing activities .........................................

(3,121)(6,483)(26,438)and cash equivalents ............................................................................

218

81

1,847

Net increase in cash and cash equivalents ..........................................

1,515

794

12,834

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

16,09715,303

136,357

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

¥17,612¥ 16,097$ 149,191¥¥$

Foreign currency translation adjustments on cash

Additional cash flow information
Interest paid .......................................................................................
See notes to consolidated financial statements.

16

RYOBI ANNUAL REPORT 2007

775

673

6,565

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RYOBI LIMITED AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2007 and 2006

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forthin the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan, which
are different in certain respects as to application and disclosure requirements of International Financial ReportingStandards.
On December 27, 2005, the Accounting Standards Boardof Japan (the “ASBJ”) published a new accounting standard for the statement of changes in equity, which iseffective for fiscal years ending on or after May 1, 2006.
The consolidated statement of shareholders’ equity, which
was previously voluntarily prepared in line with the international accounting practices, is now required undergenerally accepted accounting principles in Japan and has
been renamed “the consolidated statement of changes inequity” in the current fiscal year.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is more familiar
to readers outside Japan. In addition, certain reclassifications have been made in the 2006 consolidated financial
statements to conform to the classifications used in 2007.
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 inJapanese 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 of readers
outside Japan and have been made at the rate of ¥118.05
to $1, the approximate rate of exchange at March 31, 2007.
Such translations should not be construed as representations that the Japanese yen amounts could be converted
into U.S. dollars at that or any other rate.
2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accountsof the Company and its significant subsidiaries (“the Ryobi
Group”). Under the control or influence concept, thosecompanies in which the Company, directly or indirectly, isable 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 (USA), Inc.
Ryobi Die Casting (USA), Inc.
(ii) Affiliates
The major affiliate accounted for by the equity method is
Ryobi-Tech Corporation (Taiwan).
The number of consolidated subsidiaries and affiliates
accounted for by the equity method as of March 31, 2007

and 2006 was as follows:
Consolidated subsidiaries ....................................
Affiliates .................................................................

2007

2006

15
3

15
3

The number of unconsolidated subsidiaries and affiliates
not accounted for by the equity method as of March 31,
2007 and 2006 was as follows:

Unconsolidated subsidiaries ................................
Affiliates .................................................................

2007

2006

3
0

3
1

The investments in such unconsolidated subsidiaries arestated at cost. If the equity method of accounting had been
applied to the investments in these companies, the effecton the accompanying consolidated financial statements
would not be material.
All significant inter-company transactions, account balances and unrealized profits among the companies havebeen eliminated.
The excess of the cost of an acquisition over the fairvalue of the net assets of the acquired subsidiary at thedate of acquisition is being amortized over a period of 5
years except for such excess recorded in a US subsidiary
which is treated in accordance with FAS142.
(b) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand,deposits with banks and financial institutions which are
unrestricted as to withdrawal or use, and which have original maturities of three months or less.
(c) Inventories
Inventories are valued at cost for the Company and domestic subsidiaries and the lower of cost or market for foreignsubsidiaries. Cost is determined 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 pricemethodForeign subsidiaries mainly adopt the first-in first-out
method.
(d) Marketable and investment securities
Marketable and investment securities are classified andaccounted for, depending on management’s intent, as follows:i) trading securities, which are held for the purpose of earning capital gains in the near term are reported at fair value,
and the related unrealized gains and losses are included inincome, ii) held-to-maturity debt securities, which are
expected to be held to maturity with the positive intent andability to hold to maturity are reported at amortized cost,and iii) available-for-sale securities, which are not classified
as either of the aforementioned securities, are reported atfair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at

RYOBI ANNUAL REPORT 200717

cost determined by the moving-average method.
For other than temporary declines in fair value, investment securities are reduced to net realizable value by acharge to income.
(e) Property, plant and equipment
Property, plant and equipment are stated at cost.
Depreciation of property, plant and equipment of theCompany and its consolidated domestic subsidiaries is primarily computed by the declining-balance method at rates
based on the estimated useful lives of the assets, while thestraight-line method is principally applied to the property,
plant and equipment of consolidated foreign subsidiaries.
The range of useful lives is from 3 to 50 years for buildings
and structures, and from 2 to 20 years for machinery andequipment.
(f) Long-lived assets
The Ryobi Group adopted the new accounting standard for
impairment of fixed assets from the year ended March 31,
2004. The Ryobi Group reviews its long-lived assets for
impairment whenever events or changes in circumstanceindicate the carrying amount of an asset or asset group
may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment
loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the
net selling price at disposition.
No impairment losses were recognized for the years
ended March 31, 2007 and 2006.
(g) Accrued severance indemnities and pension plan
The Company and domestic consolidated subsidiaries havea contributory or a non-contributory funded pension planand unfunded pension plans, which cover substantially allof their employees. Certain foreign consolidated subsidiaries have defined benefit pension plans.
Effective April 1, 2000, the Ryobi Group adopted a new
accounting standard for employees’ retirement benefits
and accounted for the liability for retirement benefits basedon the projected benefit obligations and plan assets at thebalance sheet date. The amount of the transitional obligation of ¥9,092 million ($77,018 thousand), determined as of
the beginning of this fiscal year, is amortized over ten
years. Unrecognized prior service cost is amortized at the
beginning of this fiscal year by using straight-line method
over employees’ remaining service period or shorter period(primarily 14 years). Unrecognized net actuarial loss isamortized from the next fiscal year by using the straightline method over the employees’ remaining service period
or less (primarily 14 years). The Company changed its period of amortization of unrecognized prior service cost andunrecognized net actuarial loss from primarily 15 years to
14 years in fiscal 2007 as the employees’ remaining service
period was shortened. The effect of this change was
immaterial.
(h) Presentation of equity
On December 9, 2005, the ASBJ published a new accounting standard for presentation of equity. Under thisaccounting standard, certain items which were previously
presented as liabilities are now presented as components

18

of equity. Such items include stock acquisition rights,
minority interests, and any deferred gain or loss on derivatives accounted for under hedge accounting. This standard
is effective for fiscal years ending on or after May 1, 2006.
The consolidated balance sheet as of March 31, 2007 ispresented in line with this new accounting standard.
(i) 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 capitalized, while other finance leases
are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed
in the notes to the lessee’s financial statements.
(j) Bonuses to directors and corporate auditors
Prior to the fiscal year ended March 31, 2005, bonuses todirectors and corporate auditors were accounted for as a
reduction of retained earnings in the fiscal year following
approval at the general shareholders meeting. The ASBJ
issued ASBJ Practical Issues Task Force (PITF) No.13,“Accounting Treatment for Bonuses to Directors andCorporate Auditors,” which encouraged companies torecord bonuses to directors and corporate auditors on theaccrual basis with a related charge to income, but still permitted the direct reduction of such bonuses from retained
earnings after approval of the appropriation of retained
earnings.
The ASBJ replaced the above accounting pronouncement by issuing a new accounting standard for bonuses todirectors and corporate auditors on November 29, 2005.
Under the new accounting standard, bonuses to directors
and corporate auditors must be expensed and are nolonger allowed to be directly charged to retained earnings.
This accounting standard is effective for fiscal years ending
on or after May 1, 2006. The companies must accrue
bonuses to directors and corporate auditors at the year end
to which such bonuses are attributable.
The Company adopted the new accounting standard forbonuses to directors and corporate auditors in the year
ended March 31, 2007. The effect of adoption of thisaccounting standard was to decrease income before
income taxes and minority interests for the year ended
March 31, 2007 by ¥43 million ($364 thousand).
(k) Income taxes
The Ryobi Group adopted an accounting method for interperiod allocation of income taxes based on the asset andliability method.
Deferred income taxes are recorded to reflect the impact
of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts
recognized for tax purposes. These deferred taxes aremeasured by applying currently enacted tax laws to thetemporary differences.
(l) Appropriation of retained earnings
Appropriations of retained earnings at each year end arereflected in the financial statements for the following year
upon shareholder’s approval.
(m) Translation of foreign currency accounts
All current and non-current receivables and payables
denominated in foreign currencies are translated into
Japanese yen at the exchange rates at the balance sheet
date. The foreign exchange gains and losses from translations are recognized in the income statement to the extent

RYOBI ANNUAL REPORT 2007

that they are not hedged by forward exchange contracts.
(n) Translation of foreign currency financial
statements (accounts of foreign subsidiaries)
The balance sheet accounts of the consolidated overseas
subsidiaries are translated into yen at the current exchange
rates as of the balance sheet date except for 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 ofequity.
Revenue and expense accounts of the consolidated
overseas subsidiaries are translated into yen at the averageexchange rate.
(o) Derivative and hedging activities
The Ryobi Group uses derivative financial instruments tomanage its exposure to fluctuations in foreign exchange
and interest rates. Foreign exchange forward contracts andinterest rate swaps are utilized by 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 currencytransactions are classified and accounted for as follows: a)
all derivatives be recognized as either assets or liabilities
and measured at fair value, and gains or losses on derivative translations are recognized in the income statement
and b) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of highcorrelation and effectiveness between the hedging instruments and the hedged items, gains or losses onderivatives are deferred until of maturity of the hedgedtransaction.
The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured
at market value but the differential paid or received under
the swap agreements are recognized and included in interest expense or income.
(p) Per share information
Basic net income per share is computed by dividing net
income available to common shareholders, by the weighted-average number of common shares outstanding for theperiod, retroactively for stock splits.
Diluted net income per share is not calculated because
no dilutive instruments were issued and outstanding forthe years ended March 31, 2007 and 2006.
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.
(q) New accounting pronouncements
a. Measurement of Inventories
Under generally accepted accounting principles in Japan(“Japanese GAAP”), inventories are currently measured
either by the cost method, or at the lower of cost or market. On July 5, 2006, the ASBJ issued ASBJ Statement
No.9, “Accounting Standard for Measurement of
Inventories,” which is effective for fiscal years beginning on
or after April 1, 2008 with early adoption permitted. This
standard requires that inventories held for sale in the ordinary course of business be measured at the lower of costor net selling value, which is defined as the selling priceless additional estimated manufacturing costs and estimated direct selling expenses. The replacement cost may be

used in place of the net selling value, if appropriate. The
standard also requires that inventories held for trading purposes be measured at the market price.
b. Lease Accounting
On March 30, 2007, the ASBJ issued ASBJ Statement
No.13, “Accounting Standard for Lease Transactions,”
which revised the existing accounting standard for leasetransactions issued on June 17, 1993.
Under the existing accounting standard, finance leases
that deem to transfer ownership of the leased property to
the lessee are to be capitalized, however, other financeleases are permitted to be accounted for as operatinglease transactions if certain “as if capitalized” information isdisclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all financelease transactions should be capitalized. The revised
accounting standard for lease transactions is effective forfiscal years beginning on or after April 1, 2008 with early
adoption permitted for fiscal years beginning on or after
April 1, 2007.
c. Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements
Under Japanese GAAP, a company currently can use thefinancial statements of foreign subsidiaries which are prepared in accordance with generally accepted accounting
principles in their respective jurisdictions for its consolidation process unless they are clearly unreasonable. On May
17, 2006, the ASBJ issued ASBJ Practical Issues Task
Force (PITF) No.18, “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for theConsolidated Financial Statements.” The new task forceprescribes: 1) the accounting policies and procedures
applied to a parent company and its subsidiaries for similartransactions and events under similar circumstances
should in principle be unified for the preparation of the consolidated financial statements, 2) financial statements
prepared by foreign subsidiaries in accordance with either
International Financial Reporting Standards or the generally
accepted accounting principles in the United States tentatively may be used for the consolidation process, 3)
however, the following items should be adjusted in the
consolidation process so that net income is accounted forin accordance with Japanese GAAP unless they are notmaterial;(1) Amortization of goodwill(2) Actuarial gains and losses of defined benefit plans recognized outside profit or loss
(3) Capitalization of intangible assets arising from development phases(4) Fair value measurement of investment properties, andthe revaluation model for property, plant and equipment,
and intangible assets(5) Retrospective application when accounting policies arechanged(6) Accounting for net income attributable to a minority
interest
The new task force is effective for fiscal years beginning on
or after April 1, 2008 with early adoption permitted.
3. Marketable Securities and Investments in Securities
Information regarding each category of the securities classified as trading, held-to-maturity and available-for-sale atMarch 31, 2007 and 2006 was as follows:

RYOBI ANNUAL REPORT 2007

19

Millions of yen

2007

Available-for-sale:
Corporate shares ...
Bonds ......................
Others .....................
Total .............................

Cost

Unrealized
gain

Unrealized
loss

Fair value¥2,929100¥8,629
—

¥(11)
(1)

¥11,547
99

—

—

—

—

¥3,029¥8,629¥(12)¥11,646

Millions of yen

4. Inventories
Inventories at March 31, 2007 and 2006 consisted of thefollowing:
Millions of yen

2007

Finished products
and purchased goods ................
Work in process ..........................
Raw materials and supplies .......
Total ..............................................

2006¥15,658 ¥13,512
13,909 11,741
8,831
6,666
¥38,398 ¥31,919

Thousands of
U.S. dollars

2007$132,639
117,823
74,807$325,269

2006

Available-for-sale:
Corporate shares ...
Bonds ......................
Others .....................
Total .............................

Cost

Unrealized
gain

Unrealized
loss

Fair value¥3,076100
10¥3,186¥10,454——¥10,454

¥(10)
(4)
(0)
¥(14)

¥13,52096
10¥13,626

Thousands of U.S. dollars

2007

Available-for-sale:
Corporate shares ...
Bonds ......................
Others .....................
Total .............................

Cost

Unrealized
gain

Unrealized
loss

Fair value$24,812847—$25,659$73,096——$73,096$ (93)(8)—$(101)$97,814839—$98,653

Available-for-sale securities whose fair value was notreadily determinable as of March 31, 2007 and 2006 was
as follows:
Millions of yen

Available-for-sale:
Corporate shares .......................

Thousands of
U.S. dollars

2007

2006

2007

¥1,251¥1,230$10,597

The book value of available-for-sale securities by contractual maturity for securities classified as available-for-sale atMarch 31, 2007 and 2006 are as follows:
Millions of yen

Due in one year or less ..................
Due after one year
through five years ........................
Due after five years
through ten years .........................
Total .................................................

20

Thousands of
U.S. dollars

2007

2006

¥ —

¥ —

2007

$ —

100

100

847

5. Land Revaluation
Under the “Law of Land Revaluation” a subsidiary elected a
one-time revaluation of its own-use land to a value basedon real estate appraisal information as of March 31, 2002.
The resulting land revaluation excess represents unrealized appreciation of land and is stated, net of income taxes,
as a component of equity. There is no effect on the consolidated statement of income. Continuous readjustment is
not permitted unless the land value subsequently declines
significantly such that the amount of the decline in value
should be removed from the land revaluation excess
account and related deferred tax liabilities.
The details of the one-time revaluation as of March 31,
2002 were as follows:

Land before revaluation .......................
Land after revaluation ..........................
Land revaluation reserve, net ofincome taxes of ¥675 million($5,718 thousand) and attribution ofminority interest of ¥405 million($3,431 thousand) ..............................

Millions of yen

Thousands of
U.S. dollars

¥ 275
1,981

$ 2,329
16,781¥ 626$ 5,303

As of March 31, 2007, the carrying amount of the land
after the above one-time revaluation exceeded the market
value by ¥695 million ($5,887 thousand).
6. Short-term Borrowings and Long-term Debt
The annual weighted average interest rates applicable toshort-term borrowings were 2.2% and 1.7%, at March 31,
2007 and 2006, respectively.
Long-term debt at March 31, 2007 and 2006 consisted of
the following:
Millions of yen

—
¥100

10
¥110

—
$847

2007

Loans principally frombanks and insurancecompanies with interest
rates ranging from
1.38% to 6.31%:
Secured.........................................
Unsecured ...................................
Total ..............................................
Less: Current portion ..................
Long-term debt
less current portion ...................

RYOBI ANNUAL REPORT 2007

2006

Thousands of
U.S. dollars

2007¥ 1,237 ¥ 1,458
17,343
18,524
18,58019,982(4,363)(6,584)$ 10,479
146,912
157,391(36,959)¥14,217$120,432¥13,398

The aggregate annual maturities of long-term debt at
March 31, 2007 were as follows:
Years ending March 31

2008 ......................................................
2009 ......................................................
2010 ......................................................
2011 ......................................................
2012 ......................................................
2013 and thereafter .............................
Total .....................................................

Millions of yen

Thousands of
U.S. dollars¥ 4,363
3,957
3,218
3,939
3,103
—
¥18,580$ 36,959
33,52027,26033,36726,285—$157,391

The assets of the Ryobi Group pledged as collateral for
short-term borrowings and long-term debt with banks andother financial institutions at March 31, 2007 and 2006
were as follows:
Millions of yen

2007

2006

Thousands of
U.S. dollars

2007

Net book value of property:
Buildings and structures ................. ¥ 4,682 ¥4,145 $ 39,661
Machinery and equipment .............. 5,149
2,279
43,617
Land .................................................. 2,884
2,869
24,430Time deposit ....................................
4
4
34
Total ...................................................... ¥12,719 ¥9,297 $107,742

7. Accrued Severance Indemnities and Pension Plan
The Company and its certain consolidated subsidiaries
have severance payment plans for employees. Under mostcircumstances, employees terminating their employment
are entitled to retirement benefits determined based on therate of pay at the time of termination, years of service andcertain other factors. Such retirement benefits are made in
the form of a lump-sum severance payment from theCompany or from certain consolidated subsidiaries andannuity payments from a trustee. Employees are entitled tolarger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or byvoluntary retirement at certain specific ages prior to the
mandatory retirement age.
The liabilities for employees’ retirement benefits at
March 31, 2007 and 2006 consisted of the following:
Millions of yen

2007

2006

Thousands of
U.S. dollars

2007

Projected benefit obligation ................ ¥32,415 ¥31,065 $274,587
Fair value of plan assets ...................... (23,840) (22,818) (201,948)
Unrecognized prior service cost ......... 2,432
2,664
20,601
Unrecognized actuarial loss ................ (2,596) (1,527) (21,991)
Unrecognized transitional obligation .. (1,862) (2,482) (15,773)
Prepaid pension cost ...........................
0
4
0
Net liabilities ......................................... ¥ 6,549 ¥ 6,906 $ 55,476

The components of net periodic retirement benefit costs
for the years ended March 31, 2007 and 2006 were as follows:
Millions of yen

2007

2006

Thousands of
U.S. dollars

2007

Service cost ............................................. ¥1,074 ¥1,175 $ 9,098
Interest cost ............................................
718
717
6,082
Expected return on plan assets .............
(804)
(658)
(6,811)
Amortization of prior service cost .........
(232)
(219)
(1,965)
Recognized actuarial loss ......................
294
511
2,490
Amortization of transitional obligation ..
621
621
5,261
Net periodic retirement benefit costs ... ¥1,671 ¥2,147 $14,155

Assumptions used for the years ended March 31, 2007
and 2006 were set forth as follows:
2007

2006

Discount rate ........................................... 2.0%~2.5% 2.0%~2.5%
Expected rate of return onplan assets ............................................
3.5%
3.5%
Amortization of prior service cost ......... Primarily
Primarily
14 years
15 years
Recognition period of actuarial
gain / loss .............................................. Primarily
Primarily
14 years
15 years
Amortization of transitional obligation .. 10 years
10 years

8. Equity
On and after May 1, 2006, Japanese companies are subject
to a new corporate law of Japan (the “Corporate Law”),
which reformed and replaced the Commercial Code ofJapan (the “Code”) with various revisions that are, for themost part, applicable to events or transactions which occur
on or after May 1, 2006 and for the fiscal years ending on
or after May 1, 2006. The significant changes in the
Corporate Law that affect financial and accounting matters
are summarized below;(a) Dividends
Under the Corporate Law, companies can pay dividends
at any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders meeting. For
companies that meet certain criteria such as; (1) having theBoard of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term ofservice of the directors is prescribed as one year rather
than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except
for dividends in kind) at any time during the fiscal year if thecompany has prescribed so in its articles of incorporation.
However, the Company cannot do so because it does notmeet all the above criteria.
The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject toa certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a
year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The
Corporate Law provides certain limitations on the amounts
available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets
after dividends must be maintained at no less than ¥3 million.

RYOBI ANNUAL REPORT 200721

(b) Increases/decreases and transfer of common stock,reserve and surplus
The Corporate Law requires that an amount equal to
10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in
capital (a component of capital surplus) depending on theequity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common
stock. Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed
without limitation. The Corporate Law also provides that
common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon
resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by
specific formula.
Under the Corporate Law, stock acquisition rights, whichwere previously presented as a liability, are now presented
as a separate component of equity.
The Corporate Law also provides that companies canpurchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights arepresented as a separate component of equity or deducted
directly from stock acquisition rights.
9. Income Taxes
The Company and its domestic subsidiaries are subject toJapanese national and local income taxes which, in theaggregate, resulted in normal effective statutory tax rates
of 39.5% for the years ended March 31, 2007 and 2006.
The tax effects of significant temporary differences andtax loss carryforwards which resulted in deferred tax assets
and liabilities at March 31, 2007 and 2006 were as follows:
Millions of yen

2007

2006

Thousands of
U.S. dollars

Normal effective statutory tax rate ............
Valuation allowance ....................................
Other, net ....................................................
Actual effective tax rate ..............................

2007

2006

39.5%
(0.3)
(0.1)
39.1%

39.5%
(5.8)
(1.5)
32.2%

10. Research and Development Costs
Research and development costs were ¥1,883 million($15,951 thousand) and ¥1,740 million for the years ended
March 31, 2007 and 2006, respectively.
11. Leases
Lease expenses on such finance lease contracts withoutownership transfer amounted to ¥698 million ($5,913 thousand) and ¥882 million, for the years ended March 31, 2007
and 2006, respectively.
Pro forma information of leased property such as acquisition cost, accumulated depreciation, depreciation expense,
interest expense, future minimum lease payments offinance leases that do not transfer ownership of the leased
property to the lessee on a “as if capitalized” basis for theyears ended March 31, 2007 and 2006 was as follows:
Millions of yen

2007

Machinery and equipment ........
Other assets ...............................
Total ............................................

Acquisition
cost

Accumulated
depreciation

Net leased
property¥4,54298¥4,640¥2,43574¥2,509¥2,10724¥2,131Millions of yen

2006

Machinery and equipment ........
Other assets ...............................
Total ............................................

Acquisition
cost

Accumulated
depreciation

Net leased
property¥4,611
1,391¥6,002¥2,0391,219¥3,258¥2,572172¥2,7442007

Deferred tax assets:
Accrued severance cost ................ ¥ 2,530 ¥ 2,658 $ 21,432
Tax loss carryforwards ................... 16,696
16,563
141,431
Other ...............................................
3,746
3,499
31,732
Valuation allowance ....................... (17,196) (17,287) (145,667)
Deferred tax assets ........................ ¥ 5,776 ¥ 5,433 $ 48,928
Deferred tax liabilities:
Unrealized gain on available-for-sale securities ........................ ¥ (3,408) ¥ (4,129) $ (28,869)
Other ...............................................
(2,122)(1,973)(17,975)
Deferred tax liabilities .................... ¥ (5,530) ¥ (6,102) $ (46,844)
Net deferred tax assets (liabilities).. ¥ 246 ¥ (669) $ 2,084

22

The reconciliation between the normal effective statutory
tax rate for the years ended March 31, 2007 and 2006 andthe actual effective tax rates reflected in the accompanying
consolidated statements of income was as follows:

Thousands of U.S. dollars

2007

Machinery and equipment ........
Other assets ...............................
Total ............................................

Acquisition
cost

Accumulated
depreciation

Net leased
property$38,475
830$39,305$20,626627$21,253$17,849203$18,052

Depreciation expense and interest expense, which are
not reflected in the accompanying statements of income,computed by the straight-line method and the interest
method were ¥698 million ($5,913 thousand) and ¥882 million for the years ended March 31, 2007 and 2006,
respectively.

RYOBI ANNUAL REPORT 2007

Future minimum lease payments:
Millions of yen

Current .........................................
Non-current ..................................
Total ..............................................

Thousands of
U.S. dollars

2007

2006

2007

¥ 525
1,606
¥2,131¥ 687
2,057¥2,744$ 4,447
13,605$18,052

Future minimum lease payments of the Ryobi Group asof March 31, 2007 and 2006 under noncancelable operating leases are as follows:
Millions of yen

Current .........................................
Non-current ..................................
Total ..............................................

Thousands of
U.S. dollars

2007

2006

2007

¥114
75
¥189

¥471
146
¥617

$ 966
635
$1,601

12. Contingent Liabilities
The Ryobi Group had the following contingent liabilities at
March 31, 2007 and 2006.
Millions of yen

Trade notes discounted ..............
Guarantees and similar items
Bank loans ...............................
Leases ......................................
Total ..............................................

Thousands of
U.S. dollars

2007

2006

2007

¥ 606

¥ 810

$ 5,133

151
2,037¥2,794170
2,119¥3,0991,279
17,255$23,667

13. Derivatives
The Ryobi Group enters into foreign exchange forward contracts and interest rate swaps to hedge risk and reduce
exposure to fluctuations in market values of foreignexchange rates and interest rates associated with certain
assets and liabilities.
All derivative transactions are related to qualified hedges
of interest and foreign currency exposures incorporated
with its business. Market risk of 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 foreignexchange 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 Divisionof consolidated subsidiaries. Derivative transactions havebeen made in accordance with internal policies which regulate the authorization and credit limit amounts.
The Ryobi Group had the following derivatives contracts
outstanding as of March 31, 2007 and 2006.
Millions of yen

2007

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

Contract
amountFair value

Unrealized
gain (loss)

¥100

¥(0)

¥(0)

Millions of yen

2006

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

Contract
amountFair value

Unrealized
gain (loss)

¥100

¥(0)

¥(0)

Thousands of U.S. dollars

2007

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

Contract
amountFair value

Unrealized
gain (loss)

$847

$(0)

$(0)

Note: Derivatives which qualify for hedge accounting were excluded from themarket value information in 2007 and 2006.

RYOBI ANNUAL REPORT 200723

14. Segment Information
The segment information classified by industry and geographical market area is presented below with respect to the years
ended March 31, 2007 and 2006.
(1) Industry segment information
The Ryobi Group operates in three industry segments according to the product groups which are:—Die castings (“Die castings”)—Printing equipment (“Printing equipment”)—Electric power tools, lawn and garden equipment and builders’ hardware (“Power tools and builders’ hardware”)
Millions of yen

2007

Net sales:
Unaffiliated customer ...................................................
Intersegment ................................................................
Total .................................................................................
Operating costs and expenses ........................................
Operating income ............................................................
Total assets ......................................................................
Depreciation and amortization .........................................
Capital expenditure ..........................................................

Die castings

Printing equipment¥ 138,623
266
138,889
130,121¥ 8,768¥ 118,535
6,779¥ 17,836¥ 39,829

Power tools andbuilders’ hardware¥ 26,2202
26,222
24,506¥ 1,716¥ 25,763
724
¥ 733

—
39,82933,960¥ 5,869¥ 31,066
693¥ 1,816

Eliminations /corporate

Consolidated—¥ 204,672

¥

(268)
(268)
(268)
¥
0
¥ 27,165———

204,672
188,319¥ 16,353¥ 202,529
8,196¥ 20,385

Eliminations /corporate

Consolidated¥

Millions of yen

2006

Net sales:
Unaffiliated customer ...................................................
Intersegment ................................................................
Total .................................................................................
Operating costs and expenses ........................................
Operating income ............................................................
Total assets ......................................................................
Depreciation and amortization .........................................
Capital expenditure ..........................................................

Die castings

Printing equipment

Power tools andbuilders’ hardware¥ 114,320
212
114,532
107,370¥ 7,162¥ 98,259
4,865¥ 9,626¥ 32,307—
32,30728,022¥ 4,285¥ 26,509
453¥ 1,104¥ 24,605
3
24,60822,841¥ 1,767¥ 24,498
749
¥
502

¥

—
(215)
(215)
(215)
¥
0
¥ 28,599—¥—¥ 171,232—
171,232
158,018¥ 13,214¥ 177,865
6,067¥ 11,232

Eliminations /corporate

Consolidated—$ 1,733,774

Thousands of U.S. dollars

2007

Net sales:
Unaffiliated customer ...................................................
Intersegment ................................................................
Total .................................................................................
Operating costs and expenses ........................................
Operating income ............................................................
Total assets ......................................................................
Depreciation and amortization .........................................
Capital expenditure ..........................................................

Die castings

Printing equipment$1,174,274
2,253
1,176,527
1,102,253$ 74,274$1,004,109
57,425$ 151,089$ 337,391—
337,391
287,675$ 49,716$ 263,160
5,870$ 15,383

Power tools andbuilders’ hardware$ 222,109
17
222,126
207,590$ 14,536$ 218,238
6,133$ 6,209$(2,270)(2,270)(2,270)$0$230,114$———
1,733,774
1,595,248$ 138,526$ 1,715,621
69,428$ 172,681

The amounts of corporate assets as of March 31, 2007 and 2006 included in the “Eliminations or corporate assets” were¥27,183 million ($230,267 thousand) and ¥28,613 million, respectively, which mainly consist of cash, securities and longterm investment assets (investments in securities).
The effect of the change in the accounting for bonuses to directors and corporate auditors described in Note 2.(j) was todecrease operating income of Die castings, Printing equipment and Power tools and builders’ hardware for the year ended
March 31, 2007, by ¥27 million ($229 thousand), ¥9 million ($76 thousand) and ¥7 million ($59 thousand), respectively, fromsuch segments in the prior year.

24

RYOBI ANNUAL REPORT 2007

(2) Geographical segment information
Millions of yen

2007

Net sales:
Unaffiliated customer ...................................................
Intersegment ................................................................
Total .................................................................................
Operating costs and expenses ........................................
Operating income ............................................................
Total assets ......................................................................

Japan

North
AmericaOtheroverseas

Eliminations /corporate

Consolidated¥ 173,830
3,748
177,578
163,330¥ 14,248¥ 142,856¥ 23,147
800
23,94722,651¥ 1,296¥ 18,909¥ 7,695
6,242
13,937
13,245¥ 692¥ 16,457¥—(10,790)(10,790)(10,907)¥ 117¥ 24,307¥ 204,672—
204,672
188,319¥ 16,353¥ 202,529

Eliminations /corporate

Consolidated

Millions of yen

2006

Net sales:
Unaffiliated customer ...................................................
Intersegment ................................................................
Total .................................................................................
Operating costs and expenses ........................................
Operating income ............................................................
Total assets ......................................................................

Japan

North
AmericaOtheroverseas¥ 147,296
2,290
149,586
138,680¥ 10,906¥ 121,737¥ 17,229
184
17,413
16,111¥ 1,302¥ 15,150¥ 6,707
5,225
11,932
10,970¥962¥ 14,111¥—(7,699)(7,699)(7,743)¥44¥ 26,867¥ 171,232—
171,232
158,018¥ 13,214¥ 177,865

Thousands of U.S. dollars

2007

Net sales:
Unaffiliated customer ...................................................
Intersegment ................................................................
Total .................................................................................
Operating costs and expenses ........................................
Operating income ............................................................
Total assets ......................................................................

Japan

North
AmericaOtheroverseas

Eliminations /corporate

Consolidated$ 1,472,512
31,7491,504,261
1,383,566$ 120,695$ 1,210,132$196,078
6,777
202,855
191,877$ 10,978$160,178$ 65,184
52,876
118,060
112,198$ 5,862$139,407$—$ 1,733,774(91,402)(91,402)(92,393)$991$205,904

1,733,774
1,595,248$ 138,526$ 1,715,621—

The amounts of corporate assets as of March 31, 2007 and 2006 included in the “Eliminations or corporate assets” were¥27,183 million ($230,267 thousand) and ¥28,613 million, respectively, which mainly consist of cash, securities and longterm investment assets (investments in securities).
The effect of the change in the accounting for bonuses to directors and corporate auditors described in Note 2.(j) was todecrease operating income of Japan for the year ended March 31, 2007, by ¥43 million ($364 thousand) from such segmentsin the prior year.
(3) Export sales and sales by overseas subsidiaries
Export sales of the companies (i.e., export amounts madeby the Company and its domestic subsidiaries) plus thesales by overseas consolidated subsidiaries for the years
ended March 31, 2007 and 2006 are presented below:
Millions of yen

2007

2006

Export sales and sales byoverseas subsidiaries:
North America ............................. ¥29,079 ¥22,997
Europe .......................................... 21,955 15,685
Other ............................................ 12,180
8,878
Total .................................................. ¥63,214 ¥47,560
Percentage of such sales against
consolidated net sales:
North America ............................. 14.2% 13.4%
Europe .......................................... 10.7
9.2
Other ............................................
6.0
5.2
Total .................................................. 30.9% 27.8%

Thousands of
U.S. dollars

15. Subsequent Event
On June 26, 2007, the shareholders of the Company authorized the following appropriation of retained earnings forthe year ended March 31, 2007.

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

Millions of yen

Thousands of
U.S. dollars¥ 2,013$ 17,052

2007$246,328
185,980
103,177$535,485

RYOBI ANNUAL REPORT 2007

25

26

RYOBI ANNUAL REPORT 2007

PROFILE

CORPORATE INFORMATION

Since its establishment as a die casting manufacturer in December 1943, Ryobi Limited has

CORPORATE DATA

accumulated innovative technologies by manufacturing components for automobiles, electronics,

Company NameRYOBI LIMITED

telecommunications and other industries. Ryobi has leveraged these technologies and drawn on its

Established
December 16, 1943

experience to diversify into the manufacture of printing equipment, power tools and builders’

Major Products
Die cast products
Printing equipment(offset printing presses, peripherals, etc.)
Power tools(electric power tools, lawn and garden equipment, etc.)
Builders’ hardware(door closers, hinges, architectural hardware, etc.)

hardware. Ryobi is all around you, making an enjoyable, comfortable daily lifestyle possible.

Head Office
762 Mesaki-cho, Fuchu-shi, Hiroshima-ken 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 Nishishinbashi, Minato-ku, Tokyo 105-0003, Japan
Telephone: 81-3-3927-5541

MANAGEMENT MEMBERS(As of June 26, 2007)

67.7%
DIE CASTINGSNet Salesby Segment
for Fiscal 2007

As a world-leading die casting manufacturer,
Ryobi supplies various industries with die castproducts such as automobile components,
including cylinder blocks and transmission
cases.

CORPORATE AUDITORSStanding Corporate Auditor
Outside Corporate Auditors

12.8%
POWER TOOLS AND
BUILDERS’ HARDWARE
Ryobi provides an extensive range ofpower tools and lawn and garden
equipment for both professional anddo-it-yourself needs, as well as builders’hardware such as our mainstay door
closers that offer enhanced safety andcomfort in homes and offices.

19.5%

Ryobi offers high-precision, multi-functional offset
printing presses and develops total printing systems
for all stages of printing, from prepress to press andpost-press.

CONSOLIDATED FINANCIAL HIGHLIGHTS 1

Corporate Officers

Hiroshi Urakami
Susumu Yoshikawa
Takao Tanaka
Takashi Yokoyama
Mikio Kamura
Shiro Muroya
Koji Ishii
Kenjiro Suzuki
Kuniyuki Ito
Naomichi Honkawa
Kazuaki Danjo
Shoji Osawa
Hideki Domoto

MAJOR CONSOLIDATED SUBSIDIARIES

Ryobi Aluminium Casting (UK), Limited (U.K.)
Ryobi Die Casting Dalian Co., Ltd. (P.R.C.)
Ryobi Dalian Machinery Co., Ltd. (P.R.C.)
Ryobi Finance Corporation (U.S.A.)A MESSAGE FROM THE MANAGEMENT 2
FINANCIAL SECTION 6

Corporate Auditor

CORPORATE OFFICERS
Chief Executive Officer
Chief Operating Officer
Executive Corporate Officers

Shozo Kobayashi
Kunihiro Toyota
Tairo Katoh
Tsuyoshi Mifune

Ryobi Imagix Co. (Japan)
Ryobi Sales Co. (Japan)
Ryobi Mirasaka Co. (Japan)
Ryobi Mitsugi Co. (Japan)
Tokyo Light Alloy Co., Ltd. (Japan)
lkuno Co. (Japan)
Ryobi Power Tool Co. (Japan)
Ryobi Die Casting (USA), Inc. (U.S.A.)
RDCM, S. de R.L. de C.V. (Mexico)

PRINTING EQUIPMENTCONTENTSCORPORATE SOCIAL RESPONSIBILITY 5

BOARD OF DIRECTORS
Chairman and Representative Director
Hiroshi Urakami
President and Representative Director
Susumu Yoshikawa
Directors
Takao Tanaka
Takashi Yokoyama
Mikio Kamura
Shiro Muroya
Koji Ishii
Akira Urakami
Kenjiro Suzuki
Outside Director
Satoshi Ohoka

Printing equipment and related product sales
Power tools and lawn and garden equipment sales
Die casting manufacturing
Die casting manufacturing
Cast aluminum and die casting manufacturing and sales
Secondary aluminum alloy bullion manufacturing and sales
Power tools and lawn and garden equipment manufacturing
Die casting manufacturing and sales
Die casting manufacturing(Founded in April 2007, production operations planned to begin in October 2008)
Die casting manufacturing and sales
Die and die casting manufacturing and sales
Power tools, lawn and garden equipment and builders’ hardware manufacturing and sales
Financial operations

TOPICS 4

CORPORATE INFORMATION 27

SHAREHOLDER INFORMATION
Number of Shares Issued(As of March 31, 2007)

Forward-Looking Statements

171,230,715

Items containing forward-looking statements such as performance forecasts and future policies and strategies are based on the assumptions ofmanagement in light of the information available as of the end of the fiscal year under review and may involve various risks and uncertainties. The Ryobi
Group cautions that its actual actions and performance may differ significantly from these forward-looking statements due to numerous factors outside of the

Listing
Common Stock—Tokyo

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Group’s control such as, but not limited to, general economic conditions, the business environment, trends in market demand and foreign exchange rates.
RYOBI ANNUAL REPORT 2007

27

RYOBI AR 2007̲表紙̲表

RYOBI ANNUAL REPORT 2007

ANNUAL REPORTFor the year ended March 31, 2007

2007
Head Office

762 Mesaki-cho, Fuchu-shi, Hiroshima-ken 726-8628, Japan
Tel. 81-847-41-1111
http://www.ryobi-group.co.jp/
Printed in Japan
Copyright©2007 Ryobi Limited. All Rights Reserved.

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

表4

2007年 07月 28日 15時 30分

07049-5815

W433×H280（背3）リョウビ AR 2007

初校 F-6000

スミ
M45-Comp-150線

秋山

特茶

RYOBIレッド

表1