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Imaging Index: <i>A Financial Wrap-Up of this Month's Document Technology Market</i>

21 Apr, 2004 By: Mike Dudek imageSource

Imaging Index: A Financial Wrap-Up of this Month's Document Technology Market

month we track changes in stock values of major public players in the imaging
industry. The following chart depicts most recent month-end prices compared to
September 30, 2003.


of the high points to note is that Danka, one of four public mega-dealers in the
industry, has doubled in the last five months. IKON has also continued to grow,
increasing 61 percent since September.

Important Dealer News

Ricoh-Ricoh has completed their current branch expansion. They are now located
in 20 major U.S. markets enabling customers to buy products and services
directly from Ricoh. Current branch locations include: New York metro, New
Jersey metro, southern California, San Francisco, Philadelphia, western
Pennsylvania, Hartford, Atlanta, Wilmington, Detroit, Minneapolis, Tampa,
Sarasota, Chicago, Boston, Washington D.C., Houston, Dallas, Lenexa (KS),
Portland and Seattle.

Opinion: As manufacturers expand their direct operations it becomes more
difficult for independent dealers to thrive in the same marketplace.
Manufacturers can win deals on price when they choose, and they also have
extensive capital to invest to grow their operations. Independent dealers in
markets competing against manufacturer branch operations find it very
challenging to grow revenue.

Ricoh pointed toward in its news release that they have completed the “current”
branch expansion, we expect Ricoh and other manufacturers to continue to expand
direct operations throughout major markets as they diversify their risk and
channels of distribution.

-Effective April 1, Lang Lowrey’s role as chairman has been expanded to
include strategic advancement of the company. In addition, Todd Mavis, the U.S.
Group president and COO, has been promoted to CEO and a director. Danka is being
reorganized into two groups-an Americas Group with Mike Popielec as the CEO and
a European/Australian Group with Peter Williams as CEO.

-Xerox continues the comeback theme. The company has been emphasizing
strategic relationships with major technology providers such as Dell and Intel.
Meanwhile, after four consecutive quarters of rising sales, profit and cash,
while lowering their debt, the New York Times reported that Xerox’s stock has
been re-instated to several broker “buy” lists.

Hewlett Packard
-Do you want to compete in the imaging business? HP recently
announced a deal with TIME to digitally archive every article ever published for
the last 80 years to serve as online resource for consumers and subscribers.

-Canon announced its retention as the No.1 brand in B&W and color
copiers, according to Gartner Dataquest. For the second consecutive year, Canon
claimed No.1 in every segment. For the 21st time in 22 years, Canon was the U.S.
B&W leader with 33 percent market-share, and for the 17th consecutive year, the
U.S color laser copier leader with a 27 percent share. While Canon was claiming
the No.1 U.S. color market-share leadership position, Ricoh announced they were
No.1 in U.S. color copier shipments during 2003 with a 33 percent share,
according to Gartner Dataquest.

-EFI announced the acquisition of ADS Communications, a leading provider
of service automation software in the office products industry. EFI intends to
combine their IDM (Intelligent Device Management) remote engine tracking and
diagnostics with ADS’ automatic service dispatch to offer dealers a faster, more
efficient and productive solution, and customers faster service responses and
more up-time. ADS has relationships with a number of equipment manufacturers and
mega-dealers including IKON, Canon, Ricoh and Imagistics.

: Look for EFI to leverage ADS’ technology throughout the equipment
manufacturer and dealer community. EFI will seek to insert the ADS technology
throughout the manufacturer direct operations and in all the mega-dealers, as
well as in the large and medium-sized dealerships. It will be interesting to
watch how EFI segments the market and whether they will work in conjunction with
the manufacturers to get to their dealer channel, go direct or both. We believe
that EFI has terrific growth opportunities associated with this acquisition.

Zygoquest’s Financial Advice for Non-Financial Managers

Account Reconciliations. These should be routinely performed and reviewed by
management to lower the probability that your financial statements are
misstated. One of the most important, fundamental and effective internal
controls for all companies maintaining books and records and generating
financial statements is the periodic reconciliation of general ledger accounts,
especially balance sheet accounts.

well controlled companies routinely (monthly) reconcile accounts while most
poorly controlled companies do not. The lack of proper account reconciliations
could result in (materially) misstated financial statements. Bear in mind that
if your balance sheet accounts are misstated, then your profit and loss
statements are likewise misstated. Many companies with (unintentional) misstated
financial statements can discover these errors by employing this fundamental
internal control.

many current financial software packages are designed to self-reconcile by
“integrating” recorded detailed transactions directly with general ledger and/or
trial balance that feeds the financial statements, these systems promote more
effective control, but are hardly full-proof. Even most integrated systems are
adjusted by temporary accruals and other adjusting entries that must be modified
and reversed in subsequent periods.

need for reconciliations, even within “fully” integrated systems, remains
important. In addition, the most effective reconciliations cross-reference
internally generated information with information obtained from outside the
financial system including from third parties. Information from external
sources, such as bank account and vendor statements, is used to confirm the
validity of the underlying transactions.

Owners and non-financial managers of companies should understand basic
reconciliation procedures. Account reconciliations should include analysis;
formal reconciliation of the subsidiary records supporting the account to
amounts recorded in the general ledger; and investigation and explanation for
any variances. The senior accounting manager, controller or CFO should review
these reconciliations with owners.

Reconciliations should be performed by an individual(s) not responsible for
recording underlying transactions to promote and adhere to another fundamental
control feature, namely the adequate separation of duties. The probability and
risk that a company’s financial statements are misstated increases dramatically
if reconciliations: 1) are not routinely performed periodically; 2) contain
large unexplained variances; and 3) are not performed and reviewed by
independent persons.


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