A N N U A L R E P O R T 1 9 9 9

MANAGEMENT‘S DISCUSSION AND ANALYSIS
50
40
30
20
10
0
Net Income
(Billion ¥) (¥)
’95 ’96 ’97 ’98 ’99
Net Income per Share
(right scale)
70
60
50
40
30
20
10
0
(%)
8
6
4
2
0
Return on Sales
’95
’96 ’97 ’98 ’99
Operating Income as % of Sales
Net Income as % of Sales
In the fiscal year ended March 31,
1999, Japan’s economic slump lengthened
and Toppan’s operating environment
was extremely challenging.
Consolidated net sales declined 4.7%,
to ¥1,223.4 billion (US$10,111.1 million);
operating income decreased
30.9%, to ¥65.2 billion (US$539.0 million);
and net income fell 43.6%, to
¥26.7 billion (US$220.7 million). Net
income per share declined 43.1%, to
¥37.29 (US$0.31), and return on equity
was 4.0%, compared with 7.4% in
the previous fiscal year. Dividends per
share were maintained at ¥15.00
(US$0.12). In the year under review,
the Company continued to build a
foundation for future expansion by
strengthening its operations in
growth fields and further rationalizing
management practices.
Income and Expense Analysis
Consolidated net sales, which were significantly
affected by sluggish demand in
the stagnant domestic economy and by
the resulting decline in order prices,
decreased 4.7%, to ¥1,223.4 billion
(US$10,111.1 million). Business forms
was the only field in which we recorded
an increase in sales.
The cost of sales declined 2.8%, to
¥1,030.3 billion (US$8,514.8 million).
We worked to reduce costs throughout
the Group, but due to lower prices in all
fields, especially electronics and publications
printing, we were unable to offset
the decline in sales. The cost of sales as
a percentage of net sales increased 1.7
percentage points, to 84.2%. Gross profit
declined 14.0%, to ¥193.1 billion
(US$1,596.2 million). The Company is
implementing a range of restructuring
measures to reduce the cost of sales,
such as thorough laborsaving and cost
control efforts, reduced capital investment,
and the consolidation of subsidiaries
in Japan and overseas.
Selling, general and administrative
(SG&A) expenses declined 1.8%, to
¥127.9 billion (US$1,057.2 million).
As a result of the decrease in net sales,
however, the ratio of SG&A expenses
to net sales rose to 10.5%, from 10.1%
in the previous year.
Operating income declined 30.9%,
to ¥65.2 billion (US$539.0 million), and
the operating income margin was 5.3%,
compared with 7.3% in the previous year.
In other income and expenses, net other
expenses of ¥7.7 billion (US$63.7 million)
was recorded, compared with net other
income of ¥11.4 billion in the previous
year. During the previous year, we registered
¥20.9 billion in profit on the sale of
stock when subsidiary Toppan Forms Co.,
Ltd., listed on the First Section of the
Tokyo Stock Exchange, and during the
year under review we recorded ¥2.0 billion
(US$16.8 million) in foreign currency
exchange losses and ¥2.8 billion (US$23.0
million) in additional pension expenses
associated with early retirements.
Income before income taxes
decreased 45.6%, to ¥57.5 billion
(US$475.3 million). Provision for income
taxes was down 52.8%, to ¥27.9 billion
(US$231.0 million), while the effective
tax rate declined to 48.6%, from 56.0%
in the previous year, due to revisions in
tax regulations implemented in the fiscal
year ended March 31, 1998. The
Company also recorded ¥3.1 billion
(US$25.9 million) in minority interests in
net income of consolidated subsidiaries
Return on Equity and Assets
(%)
8
6
4
2
0
’95 ’96 ’97
’98’99
Return on Average Equity
Return on Average Assets
20