6-K 1 r6kh15dec12.txt SUMMARY INFORMATION OF SEMI ANNUAL REPORT 12-12-2003 FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of December, 2003 Commission File Number 2 - 68279 RICOH COMPANY, LTD. ----------------------------------------------- (Translation of Registrant's name into English) 15-5, Minami-Aoyama 1-Chome, Minato-ku, Tokyo 107-8544, Japan ------------------------------------------------------------- (Address of Principal Executive Offices) (Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.) Form 20-F X Form 40-F __ (Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): __ ) (Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): __ ) (Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.) Yes __ No X (If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-__ ) -------------------------------------------------------------------------------- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Ricoh Company, Ltd. ------------------------------ (Registrant) By: /S/ Zenji Miura ------------------------------ Zenji Miura Senior Vice President General Manager of Finance & Accounting Division December 12, 2003 -------------------------------------------------------------------------------- RICOH COMPANY, LTD. Interim Consolidated Financial Statements For the six month ended September 30, 2003 This is an English translation of summary information of the semi annual report in Japanese language, which is "Hanki Hokokusyo". Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS September 30, 2002, 2003 and March 31, 2003
Millions of Yen ---------------------------------------------- September 30, September 30, ASSETS 2002 2003 March 31,2003 --------------------------------------------------------------------------------------------------------- Current Assets: Cash and cash equivalents 217,418 225,013 189,243 Time deposits 7,969 1,881 11,087 Marketable securities 2,118 136 107 Trade receivables- Notes 78,150 75,100 76,022 Accounts 346,787 349,618 359,769 Less- Allowance for doubtful receivables (18,358) (17,084) (17,849) Inventories- Finished goods 105,546 105,716 102,164 Work in process and raw materials 43,438 46,438 43,887 Deferred income taxes and other 54,876 58,567 58,083 --------------------------------------------------------------------------------------------------------- Total current assets 837,944 845,385 822,513 --------------------------------------------------------------------------------------------------------- Property, Plant and Equipment, at cost: Land 44,261 42,921 42,990 Buildings 203,344 203,869 204,606 Machinery and equipment 667,510 655,825 660,458 Construction in progress 4,588 7,868 6,540 --------------------------------------------------------------------------------------------------------- 919,703 910,483 914,594 Less- Accumulated depreciation (666,972) (668,225) (665,842) --------------------------------------------------------------------------------------------------------- 252,731 242,258 248,752 --------------------------------------------------------------------------------------------------------- Investments and Other Assets: Finance receivables 463,853 497,109 476,293 Investment securities 44,473 67,726 71,973 Investments in and advances to affiliates 49,069 45,909 45,791 Goodwill 27,528 26,325 28,109 Other intangible assets 39,184 41,992 40,020 Lease deposits and other 111,603 145,458 151,471 --------------------------------------------------------------------------------------------------------- 735,710 824,519 813,657 --------------------------------------------------------------------------------------------------------- 1,826,385 1,912,162 1,884,922 ---------------------------------------------------------------------------------------------------------
F-1
Millions of Yen --------------------------------------------------------------------------------------------------------- September 30, September 30, LIABILITIES AND SHAREHOLDERS' INVESTMENT 2002 2003 March 31, 2003 --------------------------------------------------------------------------------------------------------- Current Liabilities: Short-term borrowings 108,279 111,872 84,478 Current maturities of long-term indebtedness 72,104 88,696 54,235 Trade payables- Notes 33,943 28,876 32,943 Accounts 234,460 244,400 247,855 Accrued income taxes 34,910 37,735 42,393 Accrued expenses and other 119,354 123,688 126,679 --------------------------------------------------------------------------------------------------------- Total current liabilities 603,050 635,267 588,583 --------------------------------------------------------------------------------------------------------- Long-term Liabilities: Long-term indebtedness 362,909 284,392 345,902 Accrued pension and severance costs 116,253 212,756 209,011 Deferred income taxes 26,310 28,219 30,653 --------------------------------------------------------------------------------------------------------- 505,472 525,367 585,566 --------------------------------------------------------------------------------------------------------- Minority Interests 54,198 48,453 53,259 --------------------------------------------------------------------------------------------------------- Commitments and Contingent Liabilities (Note 6) Shareholders' Investment: Common stock; Authorized - 1,000,000,000 as of September 30, 2002 and 993,000,000 as of September 30, 2003 and March 31, 2003 Issued - 727,324,532 shares as of September 30, 2002 and 744,912,078 shares as of September 30, 2003 and March 31, 2003 120,489 135,364 135,364 Additional paid-in capital 171,656 186,600 186,521 Retained earnings 414,176 471,815 434,748 Accumulated other comprehensive income (loss) (41,762) (86,531) (94,733) Treasury stock at cost; 405,422 shares, 2,005,815 shares and 2,303,443 shares as of September 30, 2002, 2003 and March 31, 2003 (894) (4,173) (4,386) --------------------------------------------------------------------------------------------------------- Total shareholders' investment 663,665 703,075 657,514 --------------------------------------------------------------------------------------------------------- 1,826,385 1,912,162 1,884,922 ---------------------------------------------------------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. F-2 Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF INCOME For the Half Years Ended September 30, 2002, 2003 and Year Ended March 31, 2003
Millions of Yen ------------------------------------------------------ Half year ended Half year ended September 30, September 30, Year ended 2002 2003 March 31, 2003 -------------------------------------------------------------------------------------------------------------- Net Sales 856,821 888,090 1,738,358 Cost of Sales 496,176 499,983 993,009 -------------------------------------------------------------------------------------------------------------- Gross profit 360,645 388,107 745,349 Selling, General and Administrative Expenses 299,317 310,852 611,695 -------------------------------------------------------------------------------------------------------------- Operating income 61,328 77,255 133,654 -------------------------------------------------------------------------------------------------------------- Other (Income) Expenses: Interest and dividend income (2,035) (1,313) (3,772) Interest expense 4,030 2,863 6,853 Foreign currency exchange (gain) loss, net (225) 3,991 566 Other, net 3,885 298 6,537 -------------------------------------------------------------------------------------------------------------- Total 5,655 5,839 10,184 -------------------------------------------------------------------------------------------------------------- Income before Income Taxes, Minority Interests and Equity in Earnings of Affiliates 55,673 71,416 123,470 Provision for Income Taxes: Current 29,050 29,681 63,183 Deferred (5,030) (1,257) (11,199) -------------------------------------------------------------------------------------------------------------- Total 24,020 28,424 51,984 -------------------------------------------------------------------------------------------------------------- Income before Minority Interests and Equity in Earnings of Affiliates 31,653 42,992 71,486 Minority Interests (264) 1,699 1,376 Equity in Earnings of Affiliates 1,608 972 2,403 -------------------------------------------------------------------------------------------------------------- Net Income 33,525 42,265 72,513 -------------------------------------------------------------------------------------------------------------- Yen ------------------------------------------------------ Per Share of Common Stock: -------------------------------------------------------------------------------------------------------------- Net income: Basic (Yen) 46.11 (Yen) 56.79 (Yen) 99.79 Diluted 44.68 - 96.81 -------------------------------------------------------------------------------------------------------------- Cash dividends paid (Yen) 7.00 (Yen) 7.00 (Yen) 14.00 -------------------------------------------------------------------------------------------------------------- Per American Depositary Share, each representing 5 shares of common stock: -------------------------------------------------------------------------------------------------------------- Net income: Basic (Yen) 230.55 (Yen) 283.95 (Yen) 498.95 Diluted 223.40 - 484.05 -------------------------------------------------------------------------------------------------------------- Cash dividends paid (Yen) 35.00 (Yen) 35.00 (Yen) 70.00 --------------------------------------------------------------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these statements. F-3 Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT For the Half Years Ended September 30, 2002, 2003 and Year Ended March 31, 2003
Millions of Yen --------------------------------------------------- Half year ended Half year ended September 30, September 30, Year ended 2002 2003 March 31, 2003 -------------------------------------------------------------------------------------------------------- Common Stock: Beginning balance 120,461 135,364 120,461 Conversion of convertible bonds 28 - 14,903 -------------------------------------------------------------------------------------------------------- Ending balance 120,489 135,364 135,364 -------------------------------------------------------------------------------------------------------- Additional Paid-in Capital: Beginning balance 171,628 186,521 171,628 Conversion of convertible bonds 28 - 14,893 Gains on share exchange - 79 - -------------------------------------------------------------------------------------------------------- Ending balance 171,656 186,600 186,521 -------------------------------------------------------------------------------------------------------- Retained Earnings: Beginning balance 385,741 434,748 385,741 Net income for the period 33,525 42,265 72,513 Dividends declared and approved (5,090) (5,198) (10,178) Retirement of treasury stock - - (13,328) -------------------------------------------------------------------------------------------------------- Ending balance 414,176 471,815 434,748 -------------------------------------------------------------------------------------------------------- Accumulated other comprehensive income (loss): Beginning balance (44,376) (94,733) (44,376) Foreign currency translation adjustments (835) (425) 1,007 Unrealized gains (losses) on securities, net of reclassification adjustment (1,100) 2,799 (1,984) Unrealized gains (losses) on derivatives, net of reclassification adjustment 24 120 29 Minimum pension liability adjustments 4,525 5,708 (49,409) -------------------------------------------------------------------------------------------------------- Ending balance (41,762) (86,531) (94,733) -------------------------------------------------------------------------------------------------------- Treasury stock: Beginning balance (434) (4,386) (434) Purchase of treasury stock (460) (4,056) (17,280) Retirement of treasury stock - - 13,328 Share exchange - 4,269 - -------------------------------------------------------------------------------------------------------- Ending balance (894) (4,173) (4,386) -------------------------------------------------------------------------------------------------------- Comprehensive income: Net income for the period 33,525 42,265 72,513 Other comprehensive income (loss) for the period, net of tax 2,614 8,202 (50,357) -------------------------------------------------------------------------------------------------------- Total comprehensive income for the period 36,139 50,467 22,156 --------------------------------------------------------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these statements. F-4 Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the Half Years Ended September 30, 2002, 2003 and Year Ended March 31, 2003
Millions of Yen ----------------------------------------------------- Half year ended Half year ended Year ended September 30, 2002 September 30, 2003 March 31, 2003 ------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income 33,525 42,265 72,513 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 36,782 37,827 76,551 Equity in earnings of affiliates, net of dividends received (670) (230) (1,167) Deferred income taxes (5,030) (1,257) (9,289) Losses on disposals and sales of property, plant and equipment 777 837 1,975 Changes in assets and liabilities- Decrease in trade receivables 30,129 7,935 22,176 (Increase) decrease in inventories 9,521 (7,979) 14,983 Increase in finance receivables (20,230) (21,723) (33,109) (Decrease) increase in trade payables (5,339) (6,773) 5,632 (Decrease) increase in accrued income taxes and accrued expenses and other (2,004) (5,069) 11,173 Increase in accrued pension and severance costs 5,354 9,806 7,806 Other, net 16,304 6,017 16,498 ------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 99,119 61,656 185,742 ------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of property, plant and equipment 174 134 245 Expenditures for property, plant and equipment (36,576) (36,282) (71,984) Payments for purchases of available-for-sale securities (22,019) (25,103) (52,219) Proceeds from sales of available-for-sale securities 22,133 33,514 24,513 Decrease in time deposits 3,815 9,159 944 Other, net (922) (1,419) 302 ------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (33,395) (19,997) (98,199) ------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term loans 51,032 1,125 58,194 Repayment of long-term loans (11,559) (15,970) (23,133) Increase (Decrease) in short-term borrowings, net (48,641) 30,244 (73,393) Proceeds from issuance of long-term debt securities 10,000 1,000 11,000 Repayment of long-term debt securities (11,553) (14,000) (11,723) Dividend payments (5,089) (5,181) (10,176) Payment for purchase of treasury stock (460) (3,643) (17,281) Other, net (292) (218) (631) ------------------------------------------------------------------------------------------------------------------ Net cash used in financing activities (16,562) (6,643) (67,143) ------------------------------------------------------------------------------------------------------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1,916) 754 (1,329) ------------------------------------------------------------------------------------------------------------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 47,246 35,770 19,071 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 170,172 189,243 170,172 ------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD 217,418 225,013 189,243 ------------------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: CASH PAID DURING THE PERIOD FOR- Interest 4,618 3,689 7,300 Income taxes 25,670 33,569 52,154 ------------------------------------------------------------------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these statements. F-5 Ricoh Company, Ltd. and Consolidated Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES According to the article 81 of the "Regulations Regarding Terms, Forms and Preparation of Interim Consolidated Financial Statements"(Ministry of Finance Ordinance No.24, 1999), the accompanying consolidated financial statements of Ricoh (Ricoh Company, Ltd. and its consolidated subsidiaries) have been prepared in conformity with accounting principles generally accepted in the United States of America. Significant accounting and reporting policies are summarized below: The accompanying consolidated financial statements for the half years ended September 30, 2002, 2003 and year ended March 31, 2003 are presented in Japanese yen, the functional currency of the Company and its domestic subsidiaries. The books of the Company and its domestic subsidiaries are maintained in conformity with Japanese accounting principles and practices, while foreign subsidiaries maintain their books in conformity with the standards of their country of domicile. The accompanying consolidated financial statements reflect necessary adjustments, not recorded in the books, to present them in conformity with accounting principles generally accepted in the United States of America. (A) PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of Ricoh. Investments in entities in which Ricoh has the ability to exercise significant influence over the entities' operating and financial policies (generally 20 to 50 percent ownership) are accounted for on an equity basis. All significant intercompany balances and transactions have been eliminated in consolidation. The accounts of certain consolidated subsidiaries have been included on the basis of fiscal periods ended within three months prior to September 30 or March 31. (B) REVENUE RECOGNITION Ricoh generates revenue principally through the sale of equipment, supplies and related services under separate contractual arrangements for each. Generally, Ricoh recognizes revenue when (1) it has a firm contract, (2) the product has been shipped to and accepted by the customer or the service has been provided, (3) the sales price is fixed or determinable and (4) amounts are reasonably assured of collection. Most equipment sales require that Ricoh install the product. As such, revenue is recognized at the time of delivery and installation at the customer location. Equipment revenues are based on established prices by product type and model and are net of discounts and trade-in allowances. A sales return is accepted only when the equipment is defective and does not meet Ricoh's product performance specifications. Other than installation, there are no customer acceptance clauses in the sales contract. Service revenues result primarily from maintenance contracts that are normally entered into at the time the equipment is sold. Standard service fee prices are established depending on equipment classification and include a cost value for the estimated services to be performed based on historical experience plus a profit margin thereon. As a matter of policy, Ricoh does not discount such prices. On a monthly basis, maintenance service revenues are earned and recognized by Ricoh and billed to the customer in accordance with the contract and include a fixed monthly fee plus a variable amount based on usage. The length of the contract ranges up to five-years, however, most contracts are cancelable at any time by the customer upon a short notice period. F-6 (C) FOREIGN CURRENCY TRANSLATION For foreign operations with functional currencies other than the Japanese yen, assets and liabilities are translated at the exchange rates in effect at each end of the period, and income and expenses are translated at the average rates of exchange prevailing during each period. The resulting translation adjustments are included as a part of accumulated other comprehensive income (loss) in shareholders' investment. All foreign currency transaction gains and losses are included in other income and expense in the period incurred. (D) CASH EQUIVALENTS Cash and cash equivalents include highly liquid investments with maturities of three months or less at the date of purchase. (E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES As discussed further in Note 4, Ricoh manages its exposure to certain market risks, primarily foreign currency and interest rate risks, through the use of derivative instruments. As a matter of policy, Ricoh does not enter into derivative contracts for trading or speculative purposes. Ricoh adopted SFAS No.133 "Accounting for Derivative Instruments and Hedging Activities", and SFAS No.138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" which require that all derivative instruments be recorded on the balance sheet at their respective fair values. In accordance with SFAS 133, Ricoh, when it enters into a derivative contract, makes a determination as to whether or not for accounting purposes the derivative is part of a hedging relationship. In general, a derivative may be designated as either (1) a hedge of the fair value of a recognized asset or liability or an unrecognized firm commitment ("fair value hedge"), (2) a hedge of the variability of the expected cash flows associated with an existing asset or liability or a forecasted transaction ("cash flow hedge"), or (3) a foreign currency fair value or cash flow hedge ("foreign currency hedge"). Ricoh formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair values, cash flow, or foreign currency hedges to specific assets and liabilities on the consolidated balance sheet or to specific firm commitments or forecasted transactions. For derivative contracts that are designated and qualify as fair value hedges including foreign currency fair value hedges, the derivative instrument is marked-to-market with gains and losses recognized in current period earnings to offset the respective losses and gains recognized on the underlying exposure. For derivative contracts that are designated and qualify as cash flow hedges including foreign currency cash flow hedges, the effective portion of gains and losses on these contracts is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period the hedged item or transaction affects earnings. Any hedge ineffectiveness on cash flow hedges is immediately recognized in earnings. For all derivative instruments that are not designated as part of a hedging relationship and for designated derivative instruments that do not qualify for hedge accounting, the contracts are recorded at fair value with the gain or loss recognized in current period earnings. F-7 (F) ALLOWANCE FOR DOUBTFUL TRADE RECEIVABLES AND FINANCE RECEIVABLES Ricoh records allowances for doubtful receivables that are based upon historical experience and specific customer collection issues. The estimated amount of probable credit losses in its existing receivables is determined from write-off history adjusted to reflect current economic conditions and specific allowances for receivables including nonperforming leases, impaired loans or other accounts of which Ricoh has concluded it will be unable to collect all amounts due according to original terms of the lease or loan agreement. Account balances are charged-off against the allowances when collection is considered remote. (G) SECURITIES Ricoh conforms with SFAS No.115, "Accounting for Certain Investments in Debt and Equity Securities" which requires all investments in debt and marketable equity securities to be classified as either held-to-maturity, trading, or available-for-sale securities. As of September 30, 2002, March 31, 2003 and September 30, 2003, all of Ricoh's investments in debt and marketable equity securities are classified as available-for-sale securities. Those available-for-sale securities are reported at fair value with unrealized gains and losses, net of related taxes, excluded from earnings and reported in accumulated other comprehensive income (loss). Available-for-sale securities, which mature or are expected to be sold in one year, are classified as current assets. Individual securities classified as available-for-sale securities are reduced to their then fair value for any declines in market value determined to be other than temporary. These impairment losses are charged against earnings at the time that a decline has been determined to be other than temporary based primarily on the financial condition of the issuer and the extent and length of time of the decline. Investments whose market values have declined below cost that extends for nine months are automatically written-down to their then fair value in all cases. The cost of the securities sold is computed based on the average cost of each security held at the time of sale. Non-marketable equity securities owned by Ricoh primarily relate to less than 20% owned companies and are stated at cost. (H) INVENTORIES Inventories are mainly stated at the lower of average cost or net realizable values. Inventory costs include raw materials, labor and manufacturing overheads. (I) PROPERTY, PLANT AND EQUIPMENT For the Company and its domestic subsidiaries, depreciation of property, plant and equipment is computed principally by using the declining-balance method over the estimated useful lives. Most of the foreign subsidiaries have adopted the straight-line method for computing depreciation, which currently accounts for approximately 42% of the consolidated depreciation expense. The depreciation period generally ranges from 5 years to 50 years for buildings and 2 years to 12 years for machinery and equipment. Effective rates of depreciation for the half years ended September 30, 2002, 2003 and year ended March 31, 2003 are summarized below: F-8
Half year ended Half year ended Year ended September 30, 2002 September 30, 2003 March 31, 2003 ------------------------------------------------------------------------------------------------------------------- Buildings 4.0% 4.0% 8.1% Machinery and equipment 22.1 23.4 41.0 -------------------------------------------------------------------------------------------------------------------
Ordinary maintenance and repairs are charged to expense as incurred. Major replacements and improvements are capitalized. When properties are retired or otherwise disposed of, the property and related accumulated depreciation accounts are relieved of the applicable amounts, and any differences are included in earnings. (J) GOODWILL AND OTHER INTANGIBLE ASSETS Ricoh fully adopted the provision of SFAS No.141, "Business Combinations", and SFAS No.142, "Goodwill and Other Intangible Assets". SFAS 141 requires the use of only the purchase method of accounting for business combinations and refines the definition of intangible assets acquired in a purchase business combination. SFAS 142 eliminates the amortization of goodwill and instead requires annual impairment testing thereof. SFAS 142 also requires acquired intangible assets with a definite useful life to be amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS 144. Any acquired intangible asset determined to have an indefinite useful life is not amortized, but instead is tested for impairment based on its fair value until its life would be determined to no longer be indefinite. Goodwill acquired in business combinations completed before July 1, 2001, was amortized until March 31, 2002. In connection with the transitional impairment evaluation, SFAS 142 required Ricoh to perform an assessment of whether there was an indication that goodwill was impaired as of April 1, 2002. To accomplish this, Ricoh (1) identified its reporting units, (2) determined the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units, and (3) determined the fair value of each reporting unit. As the result of the transitional assessment, Ricoh determined there was no indication that goodwill had been impaired as of April 1, 2002. Prior to the adoption of SFAS 142, Ricoh classified the cost in excess of fair value of the net assets of companies acquired in purchase transactions as goodwill, and the goodwill was being amortized on a straight-line method over the estimated periods benefited, not to exceed 20 years. (K) PENSION AND RETIREMENT ALLOWANCES PLANS The measurement of pension costs and liabilities is determined in accordance with SFAS No.87, "Employers' Accounting for Pensions." Under SFAS 87, changes in the amount of either the projected benefit obligation or plan assets resulting from actual results different from that assumed and from changes in assumptions can result in gains and losses not yet recognized in the consolidated financial statements. Amortization of an unrecognized net gain or loss is included as a component of the net periodic benefit plan cost for a year if, as of the beginning of the year, that unrecognized net gain or loss exceeds 10 percent of the greater of (1) the projected benefit obligation or (2) the fair value of that plan's assets. In such case, the amount of amortization recognized is the resulting excess divided by the average remaining service period of active employees expected to receive benefits under the plan. The expected long-term rate of return on plan assets used for pension accounting is determined based on the historical long-term rate of return on plan assets. The discount rate is determined based on the rates of return of high-quality fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits. F-9 In June 2001, the Japanese pension law was amended to permit an employer to elect to transfer the entire substitutional portion benefit obligation from the domestic employer pension fund (EPF) plan to the government together with a specified amount of plan assets pursuant to a government formula. After such transfer, the employer would be required to make periodic contributions to Japanese Pension Insurance (JPI) program, and the Japanese government would be responsible for all benefit payments. The corporate portion of the EPF would continue to exist exclusively as a corporate defined benefit pension plan. In this regard, Ricoh has elected to transfer the substitutional portion of its EPF to the government. The process of separating the substitutional portion from the corporate portion includes several phases. In January 2003, Ricoh received government approval of exemption from the obligation for benefits related to future employee service with respect to the substitutional portion of its EPF and is proceeding with the remaining steps to effectuate the transfer. Ricoh will account for the transfer in accordance with EITF 03-2 "Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities". As specified in EITF 03-2, the entire separation process is to be accounted for at the time of completion of the transfer to the government of the benefit obligation and related plan assets as a settlement in accordance with SFAS No. 88 "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits". Accordingly, there has been no effect on Ricoh's consolidated financial statements for the half year ended September 30, 2003. The aggregate effect of this separation will be determined based on the Company's total pension benefits obligation as of the date the transfer is completed and the amount of plan assets required to be transferred. Based on the Company's current estimates as to the total amount of such pension benefits obligation and the amount of plan assets required to be transferred, Ricoh's management does not presently expect that this separation will have a significant effect on Ricoh's financial condition or results of operation. However, the final amount of the impact could be significantly different depending on any change in the amounts of the pension benefit obligation or plan assets to be transferred. (L) INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (M) RESEARCH AND DEVELOPMENT EXPENSES AND ADVERTISING COSTS Research and development expenses and advertising costs are expensed as incurred. (N) SHIPPING AND HANDLING COSTS Shipping and handling costs, which mainly include transportation to customers, are included in selling, general and administrative expenses on the consolidated statements of income. (O) IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS Ricoh adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144 develops a single accounting model, based on the framework established in SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" for long-lived assets to be disposed of by sale, and broadens the scope of what constitutes a business to be disposed of that should be reported as a discontinued operation. The new standard was adopted on April 1, 2002, and did not have a material effect on Ricoh's consolidated financial position or results of operations. F-10 SFAS 144 requires that long-lived assets and acquired intangible assets with a definite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Recoverability of assets to be held and used is assessed by comparing the carrying amount of an asset or asset group to the expected future undiscounted net cash flows of the asset or group of assets. If an asset or group of assets is considered to be impaired, the impairment charge to be recognized is measured as the amount by which the carrying amount of the asset or group of assets exceeds fair value. Long-lived assets meeting the criteria to be considered as held for sale are reported at the lower of their carrying amount or fair value less costs to sell. (P) EARNINGS PER SHARE Basic net income per common share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. The calculation of diluted net income per common share is similar to the calculation of basic net income per share, except that the weighted-average number of shares outstanding includes the additional dilution from potential common stock equivalents such as convertible bonds. (Q) NON-CASH TRANSACTIONS The following non-cash transactions have been excluded from the consolidated statements of cash flows for the half years ended September 30, 2002, 2003 and year ended March 31, 2003:
Millions of Yen ------------------------------------------------------------------ September 30, 2002 September 30, 2003 March 31, 2003 -------------------------------------------------------------------------------------------------------------------- Conversion of convertible bonds 3,165 - 32,905 Capital lease obligations incurred 1,563 50 1,697 Retirement of treasury stock - - 13,328 Acquisition of minority interests of a consolidated subsidiary through stock for stock exchanges - 5,579 - --------------------------------------------------------------------------------------------------------------------
(R) USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including impairment losses of long-lived assets and the disclosures of fair value of financial instruments and contingent assets and liabilities, to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. The Company has identified five areas where it believes assumptions and estimates are particularly critical to the consolidated financial statements. These are revenue recognition, determination of the allowance for doubtful receivables, impairment on long-lived assets and goodwill, realizability of deferred tax assets and pension accounting. F-11 2. SECURITIES Marketable securities and investment securities as of September 30, 2002, 2003 and March 31, 2003 consist of the following:
Millions of Yen --------------------------------------------- September 30, September 30, March 31, 2002 2003 2003 ----------------------------------------------------------------------------------------------------------------- Marketable securities: Available-for-sale securities 2,118 136 107 ----------------------------------------------------------------------------------------------------------------- Investment securities: Available-for-sale securities 36,954 60,555 64,602 Non-marketable equity securities 7,519 7,171 7,371 ----------------------------------------------------------------------------------------------------------------- 44,473 67,726 71,973 -----------------------------------------------------------------------------------------------------------------
The current and noncurrent security types of available-for-sale securities, and the respective cost, gross unrealized holding gains, gross unrealized holding losses and fair value as of September 30, 2002, 2003 and March 31, 2003 are as follows:
Millions of Yen -------------------------------------------------------------------------------------------------------------- September 30, 2002 September 30, 2003 March 31, 2003 ------------------------------------ ----------------------------------- ----------------------------------- Gross Gross Gross Gross Gross Gross unrealized unrealized unrealized unrealized unrealized unrealized holding holding Fair holding holding Fair holding holding Fair Cost gains losses value Cost gains losses value Cost gains losses value ------------------------------------------------------------------------------------------------------------------------------------ Current: Corporate debt securities 2,119 - 1 2,118 121 4 - 125 107 - - 107 Other - - - - 11 - - 11 - - - - ------------------------------------------------------------------------------------------------------------------------------------ 2,119 - 1 2,118 132 4 - 136 107 - - 107 ------------------------------------------------------------------------------------------------------------------------------------ Non-current: Equity securities 7,582 5,931 647 12,866 6,088 8,146 126 14,108 6,328 5,148 519 10,957 Corporate debt securities 15,020 6 97 14,929 45,013 2 83 44,932 45,020 5 195 44,830 Other 10,294 5 1,140 9,159 1,261 266 12 1,515 9,459 10 654 8,815 ------------------------------------------------------------------------------------------------------------------------------------ 32,896 5,942 1,884 36,954 52,362 8,414 221 60,555 60,807 5,163 1,368 64,602 ------------------------------------------------------------------------------------------------------------------------------------
Other non-current securities mainly include investment trusts consisting of investment in marketable debt and equity securities. The contractual maturities of debt securities classified as available-for-sale as of September 30, 2003, regardless of their balance sheet classification, are as follows: Millions of Yen --------------------------------- September 30, 2003 --------------------------------- Cost Fair value ------------------------------------------------------------------------------- Due within one year 121 125 Due after one year through five years 45,013 44,932 ------------------------------------------------------------------------------- 45,134 45,057 ------------------------------------------------------------------------------- F-12 Proceeds from the sales of available-for-sale securities were (Yen) 22,133 million, (Yen) 33,514 million and (Yen) 24,513 million for the half years ended September 30, 2002, 2003 and year ended March 31 2003, respectively. There were no significant realized gains on sales of available-for-sale securities for the half years ended September 30, 2002, 2003 and year ended March 31, 2003. There were no significant realized losses on sales of available-for-sale securities for the half years ended September 30, 2002, 2003 and year ended March 31, 2003. There were no significant losses on securities for the half years ended September 30, 2002 and 2003 charged to other expense for declines in market value of available-for-sale securities where the decline was determined to be other than temporary. The loss on securities of (Yen) 2,260 million for the year ended March 31, 2003 was charged to other expense for declines in market value of available-for-sale securities where the decline was determined to be other than temporary. In March 2000, the Company contributed certain marketable equity securities, not including those of its subsidiaries and affiliated companies, to an employee retirement benefit trust fully administered and controlled by an independent bank trustee, with no cash proceeds thereon. The transfer of the available-for-sale securities was accounted for as a sale in accordance with SFAS No.125, "Accounting for Transfer and Servicing of Financial Assets and Extinguishments of Liabilities" and accordingly the recorded pension liability was reduced by the fair market value amount of the transferred securities. The fair value of these securities at the time of contribution was (Yen) 20,760 million. The net unrealized gains on these available-for-sale securities amounting to (Yen) 13,095 million continues to be included in "Accumulated other comprehensive income (loss)" on the consolidated balance sheets and will only be reflected in realized gains in the statements of income upon the future sale of the transferred securities by the trustee. 3. PER SHARE DATA Shareholders' equity per share were (Yen) 912.98, (Yen) 885.41 and (Yen) 946.38 as of September 30, 2002, March 31, 2003 and September 30, 2003, respectively. Dividends per share shown in the consolidated statements of income are computed based on dividends paid for the year. The following table sets forth the computation of basic and diluted earnings per share showing the reconciliation of the numerators and denominators used for the computation.
Thousands of shares ------------------------------------------------------------ September 30, 2002 September 30, 2003 March 31, 2003 ------------------------------------------------------------------------------------------------------------------ Weighted average common shares outstanding 727,020 744,261 726,660 Effect of dilutive securities: Convertible bonds- 0.35%, payable in yen, due March 2003 24,684 - 23,250 ------------------------------------------------------------------------------------------------------------------ Diluted common shares outstanding 751,704 744,261 749,910 ------------------------------------------------------------------------------------------------------------------
F-13
Millions of Yen ------------------------------------------------------------ September 30, 2002 September 30, 2003 March 31, 2003 ------------------------------------------------------------------------------------------------------------------ Net income applicable to common shareholders 33,525 42,265 72,513 Effect of dilutive securities: Convertible bonds- 0.35%, payable in yen, due March 2003 60 - 86 ------------------------------------------------------------------------------------------------------------------ Diluted net income 33,585 42,265 72,599 ------------------------------------------------------------------------------------------------------------------ Yen ------------------------------------------------------------ Earnings per share: Basic (Yen) 46.11 (Yen) 56.79 (Yen) 99.79 Diluted 44.68 - 96.81 ------------------------------------------------------------------------------------------------------------------
4. DERIVATIVE FINANCIAL INSTRUMENTS Risk Management Policy Ricoh enters into various derivative financial instrument contracts in the normal course of business in connection with the management of its assets and liabilities. Ricoh uses derivative instruments to reduce risk and protect market value of assets and liabilities in conformity with the Ricoh's policy. Ricoh does not use derivative financial instruments for trading or speculative purposes, nor is it a party to leveraged derivatives. All derivative instruments are exposed to credit risk arising from the inability of counterparties to meet the terms of the derivative contracts. However, Ricoh does not expect any counterparties to fail to meet their obligations because these counterparties are financial institutions with satisfactory credit ratings. Ricoh utilizes a number of counterparties to minimize the concentration of credit risk. Foreign Exchange Risk Management Ricoh conducts business on a global basis and holds assets and liabilities denominated in foreign currencies. Ricoh enters into foreign exchange contracts and foreign currency options to hedge against the potentially adverse impacts of foreign currency fluctuations on these assets and liabilities denominated in foreign currencies. Interest Rate Risk Management Ricoh enters into interest rate swap agreements to hedge against the potential adverse impacts of changes in fair value or cash flow fluctuations on interest of its outstanding debt. Fair Value Hedges Changes in the fair value of derivative instruments and the related hedged items designated and qualifying as fair value hedges are included in other (income) expenses on the consolidated statements of income. There is no hedging ineffectiveness nor are net gains or losses excluded from the assessment of hedge effectiveness for the half years ended September 30, 2002, 2003 and year ended March 31 2003 as the critical terms of the interest rate swap match the terms of the hedged debt obligations. F-14 Cash Flow Hedges Changes in the fair value of derivative instruments designated and qualifying as cash flow hedges are included in accumulated other comprehensive income (loss) on the consolidated balance sheets. These amounts are reclassified into earnings as interest on the hedged loans is paid. There is no hedging ineffectiveness nor are net gains or losses excluded from the assessment of hedge effectiveness for the half years ended September 30, 2002, 2003 and year ended March 31 2003 as the critical terms of the interest rate swap match the terms of the hedged debt obligations. Ricoh expects that it will reclassify into earnings through other (income) expenses during the next 12 months approximately (Yen) 54 million of the balance of accumulated other comprehensive loss as of September 30, 2003. Undesignated Derivative Instruments Derivative instruments not designated as hedging instruments are held to reduce the risk relating to the variability in exchange rates on assets and liabilities denominated in foreign currencies. Changes in the fair value of these instruments are included in other (income) expenses on the consolidated statement of income. 5. CREDIT LINES The Company and certain of its subsidiaries enter into the contracts with financial institutions regarding lines of credit and overdrawing, and hold the issuing programs of commercial paper and medium-term notes. The unused lines of credit amounted to (Yen) 618,613 million, (Yen) 613,884 million and (Yen) 590,271 million as of September 30, 2002, March 31, 2003 and September 30, 2003, respectively, of which (Yen) 358,356 million, (Yen) 378,984 million and (Yen) 329,013 million related to commercial paper and medium-term notes programs at prevailing interest rates. 6. COMMITMENTS AND CONTINGENT LIABILITIES Ricoh was also contingently liable as guarantor for employees' housing loans amounted to (Yen) 347 million as of September 30, 2003. As of September 30, 2003, the Company and certain of its subsidiaries were parties to litigation involving routine matters, such as patent rights. In the opinion of management, the ultimate liability, if any, resulting from such litigation will not materially affect the consolidated financial position or the results of operations of Ricoh. 7. SECURED LOAN AND COLLATERAL Certain subsidiaries of the company provide their land, buildings and lease receivables to banks, insurance companies and other financial institutions as collateral. Secured loan are amounted to (Yen) 3,269 million, (Yen) 2,553 million and (Yen) 1,483 million as of September 30, 2002, March 31, 2003 and September 30, 2003, respectively, which are collateralized by land, buildings and lease receivables with a book value of (Yen) 8,557 million, (Yen) 8,432 million and (Yen) 3,633 million as of September 30, 2002, March 31, 2003 and September 30, 2003, respectively. F-15 8. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (A) CASH AND CASH EQUIVALENTS, TIME DEPOSITS, TRADE RECEIVABLES, SHORT-TERM BORROWINGS, CURRENT MATURITIES OF LONG-TERM INDEBTEDNESS, TRADE PAYABLES AND ACCRUED EXPENSES The carrying amounts approximate fair values because of the short maturities of these instruments. (B) MARKETABLE SECURITIES AND INVESTMENT SECURITIES The fair value of the marketable securities and investment securities is principally based on quoted market price. (C) INSTALLMENT LOANS The fair value of installment loans is based on the present value of future cash flows using the current rate for similar instruments of comparable maturity. (D) LONG-TERM INDEBTEDNESS The fair value of each of the long-term indebtedness instruments is based on the quoted price in the most active market or the present value of future cash flows associated with each instrument discounted using the current borrowing rate for similar instruments of comparable maturity. (E) INTEREST RATE SWAP AGREEMENTS The fair value of interest rate swap agreements is estimated by obtaining quotes from brokers. (F) FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY OPTIONS The fair value of foreign currency contracts and foreign currency options is estimated by obtaining quotes from brokers. The estimated fair value of the financial instruments as of September 30, 2002, 2003 and March 31, 2003 is summarized as follows:
Millions of Yen --------------------------------------------------------------------------------- September 30, 2002 September 30, 2003 March 31, 2003 -------------------------- ------------------------- ---------------------------- Carrying Estimated Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value Amount Fair Value -------------------------------------------------------------------------------------------------------------------- Marketable securities and Investment securities 46,591 46,591 67,862 67,862 72,080 72,080 Installment loans 49,507 49,696 50,818 51,016 50,531 50,783 Long-term indebtedness (362,909) (369,351) (284,392) (287,780) (345,902) (351,305) Interest rate swap agreements, net 4,158 4,158 2,543 2,543 3,985 3,985 Foreign currency contracts, net (157) (157) 1,136 1,136 (594) (594) Foreign currency options, net (482) (482) 1,147 1,147 (466) (466) --------------------------------------------------------------------------------------------------------------------
F-16 Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 9. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF INCOME The following amounts were charged to selling, general and administrative expenses for the half years ended September 30, 2002, 2003 and year ended March 31, 2003:
Millions of Yen ----------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2002 September 30, 2003 March 31, 2003 ----------------------------------------------------------------------------------------------------------------- Research and development costs 40,230 44,255 83,551 Advertising costs 7,629 8,272 16,958 Shipping and handling costs 6,345 6,217 12,582 -----------------------------------------------------------------------------------------------------------------
10. SEGMENT INFORMATION The operating segments presented below are the segments of Ricoh for which separate financial information is available and for which a measure of profit or loss is evaluated regularly by Ricoh's management in deciding how to allocate resources and in assessing performance. The accounting policies of the segments are substantially the same as those described in the summary of significant accounting policies, as discussed in Note 1. Ricoh's operating segments are comprised of office equipment, including copiers and related supplies, communications and information systems, and others, including optical equipment and electronic devices. The following tables present certain information regarding Ricoh's operating segments and operations by geographic areas for the half years ended September 30, 2002, 2003 and year ended March 31, 2003. F-17 (A) OPERATING SEGMENT INFORMATION
Millions of Yen ------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2002 September 30, 2003 March 31, 2003 -------------------------------------------------------------------------------------------------------------------- Sales- Office equipment 749,357 775,508 1,520,574 Other 108,956 113,747 220,539 Intersegment transaction (1,492) (1,165) (2,755) -------------------------------------------------------------------------------------------------------------------- Consolidated 856,821 888,090 1,738,358 -------------------------------------------------------------------------------------------------------------------- Operating Expenses- Office equipment 655,773 672,809 1,329,776 Other 112,047 110,761 222,772 Intersegment transaction (1,487) (1,195) (2,726) Unallocated expense 29,160 28,460 54,882 -------------------------------------------------------------------------------------------------------------------- Consolidated 795,493 810,835 1,604,704 -------------------------------------------------------------------------------------------------------------------- Operating Income- Office equipment 93,584 102,699 190,798 Other (3,091) 2,986 (2,233) Elimination (29,165) (28,430) (54,911) -------------------------------------------------------------------------------------------------------------------- Consolidated 61,328 77,255 133,654 -------------------------------------------------------------------------------------------------------------------- Other Expenses (5,655) (5,839) (10,184) -------------------------------------------------------------------------------------------------------------------- Income before Income Taxes, Minority Interests and Equity in Earnings of Affiliates 55,673 71,416 123,470 -------------------------------------------------------------------------------------------------------------------- Millions of Yen ------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2002 September 30, 2003 March 31, 2003 -------------------------------------------------------------------------------------------------------------------- Total Assets- Office equipment 1,168,995 1,196,927 1,198,706 Other 184,776 184,083 176,296 Elimination (6,851) (7,596) (6,908) Corporate assets 479,465 538,748 516,828 -------------------------------------------------------------------------------------------------------------------- Consolidated 1,826,385 1,912,162 1,884,922 -------------------------------------------------------------------------------------------------------------------- Expenditure for segment assets- Office equipment 35,202 31,938 65,720 Other 2,673 3,916 7,213 Corporate assets 546 480 1,023 -------------------------------------------------------------------------------------------------------------------- Consolidated 38,421 36,334 73,956 -------------------------------------------------------------------------------------------------------------------- Depreciation- Office equipment 29,718 29,378 60,687 Other 3,115 3,349 6,917 Corporate assets 1,062 895 1,954 -------------------------------------------------------------------------------------------------------------------- Consolidated 33,895 33,622 69,558 --------------------------------------------------------------------------------------------------------------------
F-18 Unallocated expense represents expenses for corporate headquarters. Intersegment sales are not separated by operating segment because they are immaterial. Corporate assets consist primarily of cash and cash equivalents and marketable securities maintained for general corporate purposes. (B) GEOGRAPHIC INFORMATION Sales which are attributed to countries based on location of customers and long-lived assets for the half years ended September 30, 2002, 2003 and year ended March 31, 2003 are as follows:
Millions of Yen ------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2002 September 30, 2003 March 31, 2003 -------------------------------------------------------------------------------------------------------------------- Sales- Japan 449,575 448,636 896,022 The Americas 170,433 167,664 343,940 Europe 166,169 196,951 354,477 Other 70,644 74,839 143,919 -------------------------------------------------------------------------------------------------------------------- Consolidated 856,821 888,090 1,738,358 -------------------------------------------------------------------------------------------------------------------- Long-Lived Assets- Japan 251,427 249,199 251,214 The Americas 74,795 66,242 71,850 Europe 34,007 33,780 34,062 Other 11,584 11,428 11,742 -------------------------------------------------------------------------------------------------------------------- Consolidated 371,813 360,649 368,868 --------------------------------------------------------------------------------------------------------------------
Ricoh's long-lived assets consist property, plant and equipment, goodwill, other intangible assets and lease deposits and other. (C) ADDITIONAL INFORMATION The following information shows net sales and operating income recognized by geographic origin for the half years ended September 30, 2002, 2003 and year ended March 31, 2003. In addition to the disclosure requirements under SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information", Ricoh discloses this information as supplemental information in light of the disclosure requirements of the Japanese Securities and Exchange Law, which a Japanese public company is subject to. F-19
Millions of Yen ------------------------------------------------------------------- Half year ended Half year ended Year ended September 30, 2002 September 30, 2003 March 31, 2003 -------------------------------------------------------------------------------------------------------------------- Sales- Japan External customers 478,814 478,922 954,310 Intersegment 152,398 184,331 320,596 -------------------------------------------------------------------------------------------------------------------- Total 631,212 663,253 1,274,906 -------------------------------------------------------------------------------------------------------------------- The Americas External customers 164,940 161,965 333,935 Intersegment 2,537 2,992 5,620 -------------------------------------------------------------------------------------------------------------------- Total 167,477 164,957 339,555 -------------------------------------------------------------------------------------------------------------------- Europe External customers 165,668 196,560 352,943 Intersegment 1,432 1,771 3,019 -------------------------------------------------------------------------------------------------------------------- Total 167,100 198,331 355,962 -------------------------------------------------------------------------------------------------------------------- Other External customers 47,399 50,643 97,170 Intersegment 34,830 49,225 72,664 -------------------------------------------------------------------------------------------------------------------- Total 82,229 99,868 169,834 -------------------------------------------------------------------------------------------------------------------- Elimination of intersegment sales (191,197) (238,319) (401,899) -------------------------------------------------------------------------------------------------------------------- Consolidated 856,821 888,090 1,738,358 -------------------------------------------------------------------------------------------------------------------- Operating Expenses- Japan 593,978 606,466 1,188,760 The Americas 159,936 157,274 325,228 Europe 160,097 188,819 337,693 Other 77,669 95,302 159,864 -------------------------------------------------------------------------------------------------------------------- Elimination of intersegment sales (196,187) (237,026) (406,841) -------------------------------------------------------------------------------------------------------------------- Consolidated 795,493 810,835 1,604,704 -------------------------------------------------------------------------------------------------------------------- Operating Income- Japan 37,234 56,787 86,146 The Americas 7,541 7,683 14,327 Europe 7,003 9,512 18,269 Other 4,560 4,566 9,970 -------------------------------------------------------------------------------------------------------------------- Elimination of intersegment profit 4,990 (1,293) 4,942 -------------------------------------------------------------------------------------------------------------------- Consolidated 61,328 77,255 133,654 -------------------------------------------------------------------------------------------------------------------- Other Expenses (5,655) (5,839) (10,184) -------------------------------------------------------------------------------------------------------------------- Income before Income Taxes, Minority Interests and Equity in Earnings of Affiliates 55,673 71,416 123,470 -------------------------------------------------------------------------------------------------------------------- Total Assets- Japan 1,047,667 1,061,188 1,064,857 The Americas 204,813 192,700 201,359 Europe 165,816 186,650 174,541 Other 59,483 69,154 70,458 Elimination (130,859) (136,278) (143,121) Corporate assets 479,465 538,748 516,828 -------------------------------------------------------------------------------------------------------------------- Consolidated 1,826,385 1,912,162 1,884,922 --------------------------------------------------------------------------------------------------------------------
F-20 Intersegment sales between geographic areas are made at cost plus profit. Operating income by geographic area is sales less expense related to the area's operating revenue. No single customer accounted for 10% or more of the total revenues for the half years ended September 30, 2002, 2003 and year ended March 31, 2003. F-21