-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ppz2Lag1YqYvD0A4yevb+s3sNpxHuGDeCb/0C4syWCf06FPQh5+amYWvF9Oi0bja cJ2BCDGdGjzMJbsG58qJAg== 0000317891-09-000004.txt : 20090212 0000317891-09-000004.hdr.sgml : 20090212 20090212060341 ACCESSION NUMBER: 0000317891-09-000004 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20090212 FILED AS OF DATE: 20090212 DATE AS OF CHANGE: 20090212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RICOH CO LTD CENTRAL INDEX KEY: 0000317891 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 000000000 STATE OF INCORPORATION: M0 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-68279 FILM NUMBER: 09591706 BUSINESS ADDRESS: STREET 1: 13-1, GINZA 8-CHOME STREET 2: CHUO-KU CITY: TOKYO 104-8222 JAPAN STATE: M0 ZIP: 00000 BUSINESS PHONE: 81-3-6278-5241 MAIL ADDRESS: STREET 1: 13-1, GINZA 8-CHOME STREET 2: CHUO-KU CITY: TOKYO 104-8222 JAPAN STATE: M0 ZIP: 00000 6-K 1 r6k090212.txt 3ED QUARTERLY SECURITIES REPORT RICOH COMPANY, LTD. Consolidated Financial Statements For the nine months ended December 31, 2008 This is an English translation of the Quarterly Securities Report (Shihanki Hokokusho) for the nine months ended December 31, 2008 pursuant to the Japanese Financial Instrument and Exchange Law. Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, 2008 and March 31, 2008
Millions of Yen - --------------------------------------------------------------------------------------- December 31, March 31, ASSETS 2008 2008 - --------------------------------------------------------------------------------------- Current Assets: Cash and cash equivalents 155,141 170,607 Time deposits 1,986 1,531 Trade receivables: Notes 52,193 57,068 Accounts 466,292 463,999 Less- Allowance for doubtful receivables (18,991) (16,666) Current maturities of long-term finance receivables, net 195,611 194,642 Inventories: Finished goods 149,063 117,658 Work in process and raw materials 75,064 74,365 Deferred income taxes and other 69,112 60,936 - --------------------------------------------------------------------------------------- Total current assets 1,145,471 1,124,140 - --------------------------------------------------------------------------------------- Property, Plant and Equipment, at cost: Land 45,494 46,681 Buildings 232,382 235,106 Machinery and equipment 599,126 587,956 Construction in progress 11,952 12,884 - --------------------------------------------------------------------------------------- Total 888,954 882,627 Less- Accumulated depreciation (628,174) (627,994) - --------------------------------------------------------------------------------------- Net property, plant and equipment 260,780 254,633 - --------------------------------------------------------------------------------------- Investments and Other Assets: Long-term finance receivables, net 464,205 445,436 Investment securities 54,010 71,244 Investments in and advances to affiliates 1,655 1,977 Goodwill 267,536 112,538 Other intangible assets 113,850 114,402 Lease deposits and other 97,612 89,998 - --------------------------------------------------------------------------------------- Total investments and other assets 998,868 835,595 - --------------------------------------------------------------------------------------- Total 2,405,119 2,214,368 - ---------------------------------------------------------------------------------------
1
Millions of Yen - --------------------------------------------------------------------------------------- December 31, March 31, LIABILITIES AND SHAREHOLDERS' INVESTMENT 2008 2008 - --------------------------------------------------------------------------------------- Current Liabilities: Short-term borrowings 364,394 75,784 Current maturities of long-term indebtedness 101,753 82,658 Trade payables; Notes 19,121 18,942 Accounts 305,704 341,627 Accrued income taxes 10,090 28,909 Accrued expenses and other 145,553 165,836 - --------------------------------------------------------------------------------------- Total current liabilities 946,615 713,756 - --------------------------------------------------------------------------------------- Long-term Liabilities: Long-term indebtedness 251,068 225,930 Accrued pension and severance costs 131,891 99,830 Deferred income taxes and other 41,573 36,373 - --------------------------------------------------------------------------------------- Total long-term liabilities 424,532 362,133 - --------------------------------------------------------------------------------------- Minority Interests 49,073 58,283 - --------------------------------------------------------------------------------------- Commitments and Contingent Liabilities (Note 7) Shareholders' Investment: Common stock 135,364 135,364 Additional paid-in capital 186,083 186,448 Retained earnings 839,390 835,238 Accumulated other comprehensive income (loss) (139,262) (31,005) Treasury stock at cost (36,676) (45,849) - --------------------------------------------------------------------------------------- Total shareholders' investment 984,899 1,080,196 - --------------------------------------------------------------------------------------- Total 2,405,119 2,214,368 - ---------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 2 Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED STATEMENT OF INCOME For the Nine Months Ended December 31, 2008
Millions of Yen - ---------------------------------------------------------------------------------------------- Nine months ended December 31, 2008 - ---------------------------------------------------------------------------------------------- Net Sales: Products 810,962 Post sales and rentals 673,691 Other revenue 83,365 - ---------------------------------------------------------------------------------------------- Total 1,568,018 - ---------------------------------------------------------------------------------------------- Cost of Sales: Products 539,027 Post sales and rentals 305,244 Other revenue 66,258 - ---------------------------------------------------------------------------------------------- Total 910,529 - ---------------------------------------------------------------------------------------------- Gross profit 657,489 Selling, General and Administrative Expenses 571,111 - ---------------------------------------------------------------------------------------------- Operating income 86,378 - ---------------------------------------------------------------------------------------------- Other (Income) Expenses: Interest and dividend income (3,828) Interest expense 4,322 Foreign currency exchange (gain) loss, net 19,752 Other, net 6,069 - ---------------------------------------------------------------------------------------------- Total 26,315 - ---------------------------------------------------------------------------------------------- Income before Income Taxes, Minority Interests and Equity in Earnings of Affiliates 60,063 Provision for Income Taxes: Current 23,718 Deferred 4,562 - ---------------------------------------------------------------------------------------------- Total 28,280 - ---------------------------------------------------------------------------------------------- Minority Interests 2,258 Equity in Earnings of Affiliates 15 - ---------------------------------------------------------------------------------------------- Net Income 29,540 - ---------------------------------------------------------------------------------------------- Yen - ---------------------------------------------------------------------------------------------- Per Share of Common Stock: - ---------------------------------------------------------------------------------------------- Basic: 40.84 Diluted: 39.73 - ---------------------------------------------------------------------------------------------- Cash dividends paid per share 35.00 - ---------------------------------------------------------------------------------------------- Per American Depositary Share, each representing 5 shares of common stock: - ---------------------------------------------------------------------------------------------- Basic: 204.20 Diluted: 198.65 - ---------------------------------------------------------------------------------------------- Cash dividends paid per share 175.00 - ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 3 For the Three Months Ended December 31, 2008
Millions of Yen - ----------------------------------------------------------------------------------------------- Three months ended December 31, 2008 - ----------------------------------------------------------------------------------------------- Net Sales: Products 237,511 Post sales and rentals 239,369 Other revenue 25,211 - ----------------------------------------------------------------------------------------------- Total 502,091 - ----------------------------------------------------------------------------------------------- Cost of Sales: Products 156,254 Post sales and rentals 112,246 Other revenue 19,446 - ----------------------------------------------------------------------------------------------- Total 287,946 - ----------------------------------------------------------------------------------------------- Gross profit 214,145 Selling, General and Administrative Expenses 192,843 - ----------------------------------------------------------------------------------------------- Operating income 21,302 - ----------------------------------------------------------------------------------------------- Other (Income) Expenses: Interest and dividend income (750) Interest expense 1,874 Foreign currency exchange (gain) loss, net 18,473 Other, net 517 - ----------------------------------------------------------------------------------------------- Total 20,114 - ----------------------------------------------------------------------------------------------- Income before Income Taxes, Minority Interests and Equity in Earnings of Affiliates 1,188 Provision for Income Taxes: Current (4,661) Deferred 10,359 - ----------------------------------------------------------------------------------------------- Total 5,698 - ----------------------------------------------------------------------------------------------- Minority Interests 288 Equity in Earnings of Affiliates (7) - ----------------------------------------------------------------------------------------------- Net Income (4,805) - ----------------------------------------------------------------------------------------------- Yen - ----------------------------------------------------------------------------------------------- Per Share of Common Stock: - ----------------------------------------------------------------------------------------------- Basic: (6.62) Diluted: -- - ----------------------------------------------------------------------------------------------- Cash dividends paid per share 18.00 - ----------------------------------------------------------------------------------------------- Per American Depositary Share, each representing 5 shares of common stock: - ----------------------------------------------------------------------------------------------- Basic: (33.10) Diluted: -- - ----------------------------------------------------------------------------------------------- Cash dividends paid per share 90.00 - -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 4 Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS For the Nine Months Ended December 31, 2008
Millions of Yen - ---------------------------------------------------------------------------------------------- Nine months ended December 31, 2008 - ---------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income 29,540 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 74,449 Equity in earnings of affiliates, net of dividends received (15) Deferred income taxes 4,562 Losses on disposals and sales of property, plant and equipment 1,170 Pension and severance costs, less payment 3,273 Changes in assets and liabilities, net of effects from acquisition- Decrease in trade receivables 15,315 Increase in inventories (30,936) Increase in finance receivables (11,509) Decrease in trade payables (50,108) Decrease in accrued income taxes and accrued expenses and other (56,210) Other, net 29,234 - ---------------------------------------------------------------------------------------------- Net cash provided by operating activities 8,765 - ---------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of property, plant and equipment 73 Expenditures for property, plant and equipment (72,344) Payments for purchases of available-for-sale securities (1,275) Proceeds from sales of available-for-sale securities 243 Increase in time deposits, net (689) Purchase of business, net of cash acquired (158,673) Other, net (18,063) - ---------------------------------------------------------------------------------------------- Net cash used in investing activities (250,728) - ---------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term indebtedness 54,355 Repayment of long-term indebtedness (53,511) Increase in short-term borrowings, net 295,813 Repayment of long-term debt securities (26,143) Dividends paid (25,320) Payment for purchase of treasury stock (605) Other, net (427) - ---------------------------------------------------------------------------------------------- Net cash provided by financing activities 244,162 - ---------------------------------------------------------------------------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (17,665) - ---------------------------------------------------------------------------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (15,466) - ---------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 170,607 - ---------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD 155,141 - ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 5 Ricoh Company, Ltd. and Consolidated Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES According to the article 93 of the "Regulations Regarding Terms, Forms and Preparation of Interim Consolidated Financial Statements" (Cabinet office Ordinance No.64, 2007), the accompanying consolidated financial statements of Ricoh (Ricoh Company, Ltd. and its consolidated subsidiaries) have been prepared in conformity with U.S. generally accepted accounting principles. Significant accounting and reporting policies are summarized below: The accompanying consolidated financial statements for the nine months ended December 31, 2008 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 U.S. generally accepted accounting principles. (A) PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. The accounts of variable interest entity as defined by the FASB Interpretation ("FIN") No. 46 (revised December 2003), "Consolidated of Variable Interest Entities" are included in the consolidated financial statements, if applicable. Investments in entities in which Ricoh has the ability to exercise significant influence over the entities' operating and financial policies (generally 20 to 50 % 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 December 31. (B) REVENUE RECOGNITION Ricoh generates revenue principally through the sale of equipment, supplies and related services under separate contractual arrangements for each. 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. Products sales 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. 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. Post sales and rentals 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, 6 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. Leases not qualifying as sales-type leases or direct financing leases are accounted for as operating leases and related revenue is recognized over the lease term. Ricoh enters into arrangements with multiple elements, which may include any combination of products, equipment, installation and maintenance. Ricoh allocates revenue to each element based on its relative fair value if such element meets the criteria for treatment as a separate unit of accounting as prescribed in the Emerging Issues Task Force ("EITF") Issue No.00-21, "Revenue Arrangements with Multiple Deliverables". Pursuant to EITF 00-21, the delivered item in a multiple element arrangement should be considered a separate unit of accounting if all of the following criteria are met: (1) a delivered item has value to customers on a stand-alone basis, (2) there is objective and reliable evidence of fair value of an undelivered item, and (3) the delivery of the undelivered item must be probable and controlled by Ricoh if the arrangement includes the right of return. The price charged when the element is sold separately generally determines fair value. Otherwise, revenue is deferred until the undelivered elements are fulfilled as a single unit of accounting. Revenue from the sale of equipment under sales-type leases is recognized as product sales at the inception of the lease. Other revenue consists primarily of interest income on sales-type leases and direct-financing leases, which are recognized as Other revenue over the life of each respective lease using the interest method. (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 such as time deposits and short-term investment securities which are available-for sale at any time, present insignificant risk of changes in value due to being readily convertible into cash and have an original maturity of three months or less, such as money management funds and free financial funds. (E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES As discussed further in Note 6, 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. In accordance with Statement of Financial Accounting Standards ("SFAS") No.133 "Accounting for Derivative Instruments and Hedging Activities", SFAS No.138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No.133" and SFAS No.149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", Ricoh recognizes all derivative instruments as either assets or liabilities in the consolidated balance sheets and 7 measures those instruments at fair value. When Ricoh enters into a derivative contract, it 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 value, cash flow, or foreign currency hedges to specific assets and liabilities on the consolidated balance sheets 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) 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 net of expected recovery from available collateral 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 December 31, 2008 and March 31, 2008, 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 fair market value by a charge to income for other than temporary declines in value. Factors considered in assessing whether an indication of other than temporary impairment exists with respect to available-for-sale securities include: length of time and extent of decline, financial condition and near term prospects of issuer and intent and ability of the Company to retain its investments for a period of time sufficient to allow for any anticipated recovery in market value. 8 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. The depreciation period generally ranges from 5 years to 50 years for buildings and 2 years to 12 years for machinery and equipment. 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) CAPITALIZED SOFTWARE COSTS In accordance with Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," Ricoh capitalizes qualifying cost of computer software. Costs incurred during the application development stage as well as upgrades and enhancements that results in additional functionality are capitalized. The capitalized software is amortized on a straight line basis over their estimated useful lives. (K) GOODWILL AND OTHER INTANGIBLE ASSETS SFAS No.141, "Business Combinations" 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 No.142, "Goodwill and Other Intangible Assets" 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 when an indication of impairment is identified in accordance with SFAS No.144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Other intangible assets with definite useful lives, consisting primarily of software, patents, customer relationships and tradenames are amortized on a straight line basis over 1 year to 20 years. Any acquired intangible asset determined to have an indefinite useful life is not amortized, but instead is tested annually for impairment based on its fair value until its life would be determined to no longer be indefinite. (L) PENSION AND RETIREMENT ALLOWANCES PLANS The measurement of pension costs and liabilities is determined in accordance with SFAS No.87, "Employers' Accounting for Pensions" and SFAS No.158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans." Under SFAS 158, Ricoh recognized the funded status (i.e., the 9 difference between the fair value of plan assets and the projected benefit obligations) of its pension fund plans on the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax. 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. (M) 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. FIN 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. Ricoh recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes in the consolidated statement of income. (N) RESEARCH AND DEVELOPMENT EXPENSES AND ADVERTISING COSTS Research and development expenses and advertising costs are expensed as incurred. (O) SHIPPING AND HANDLING COSTS Shipping and handling costs, which mainly include transportation to customers, are included in selling, general and administrative expenses in the consolidated statements of income. (P) IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS 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 group of assets 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. (Q) 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. 10 (R) NON-CASH TRANSACTIONS The following non-cash transaction has been excluded from the consolidated statements of cash flows: Millions of Yen - -------------------------------------------------------------- Nine months ended December 31, 2008 - -------------------------------------------------------------- Issuance of treasury stock in exchange for subsidiary's stock 9,138 - -------------------------------------------------------------- (S) USE OF ESTIMATES Management of Ricoh 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. Ricoh has identified four areas where it believes assumptions and estimates are particularly critical to the consolidated financial statements. These are determination of the allowance for doubtful receivables, impairment of securities, impairment of long-lived assets and goodwill, realizability of deferred tax assets and pension accounting. (T) NEW ACCOUNTING STANDARDS In September 2006, the FASB issued SFAS No.157, "Fair Value Measurements," which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, where fair value is the relevant measurement attribute. SFAS 157 does not require any new fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and was adopted by Ricoh in fiscal year beginning April 1, 2008. The adoption of SFAS 157 did not have a material effect on Ricoh's consolidated financial position or results of operations. In February 2008, the FASB issued Staff Positions ("FSP") No. FAS 157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13" and FSP 157-2, "Effective Date of FASB Statement No. 157," which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) and remove certain leasing transactions from its scope. In September 2006, the FASB issued SFAS 158. SFAS 158 requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements and to recognize changes in that funded status in comprehensive income (loss) in the year in which the changes occur. SFAS 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor's year-end. The standard provides two transition alternatives related to the change in measurement date provisions. The recognition of an asset and liability related to the funded status provision is effective for fiscal years ending after December 15, 2006. The effect of adoption of SFAS 158 on Ricoh's financial condition as of March 31, 2007 has been included in the accompanying consolidated financial statements. The change in measurement date provisions is effective for fiscal years ending after December 15, 2008 and was adopted by Ricoh in the fiscal year beginning April 1, 2008. The adoption of SFAS 158 did not have a material effect on Ricoh's consolidated financial position or results of operations. In December 2007, the FASB issued SFAS No.141 (revised 2007), "Business Combinations " ("SFAS 141R"). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures 11 in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141R is effective for fiscal years beginning on or after December 15, 2008 and is required to be adopted by Ricoh in the first quarter beginning April 1, 2009. Ricoh will apply prospectively to all business combinations subsequent to the effective date. In December 2007, the FASB issued SFAS No.160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51." This Statement requires that the noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity, provides revised guidance on the treatment of net income and losses attributable to the noncontrolling interest and changes in ownership interests in a subsidiary and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also requires additional disclosures that identify and distinguish between the interests of the controlling and noncontrolling owners. Pursuant to the transition provisions of SFAS 160, Ricoh will adopt SFAS 160 in fiscal year 2009 via retrospective application of the presentation and disclosure requirements. Ricoh is currently evaluating the effect that the adoption of SFAS 160 will have on its consolidated results of operations and financial condition. In March 2008, the FASB issued SFAS No.161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133". SFAS 161 requires disclosures of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 is effective for the first reporting period beginning after November 15, 2008 and is required to be adopted by Ricoh in the fourth quarter beginning January 1, 2009. Ricoh is currently evaluating the effect that the adoption of SFAS 161 will have on its consolidated results of operations and financial condition. In April 2008, the FASB finalized FSP 142-3, "Determination of the Useful Life of Intangible Assets". The position amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. The position applies to intangible assets that are acquired individually or with a group of other assets and both intangible assets acquired in business combinations and asset acquisitions. FSP 142-3 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Ricoh is currently evaluating the effect that the adoption of FSP 142-3 will have on its consolidated results of operations and financial condition. 12 2. ACQUISITION Ricoh acquired IKON Office Solutions, Inc. ("IKON") through the Company's wholly owned U.S. distribution subsidiary, Ricoh Americas Corporation ("RAC") on October 31, 2008 for total cash consideration of approximately Yen 170 billion, including transaction cost. This acquisition was financed with bank loan. IKON supplies and services a wide range of office equipment, such as MFPs, fax machines and printers, in the U.S., Canada and the Western European markets. Ricoh made the acquisition to strengthen its sales and service network in the Americas and Europe. Assets, liabilities and operations of IKON are included in the accompanying consolidated financial statements since the acquisition date. The unaudited pro forma results presented below include the effect of the IKON acquisition as if it had been consummated as of April 1, 2008. Pro forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of April 1, 2008.
Millions of yen - --------------------------------------------------------------------------------------- Nine months ended Three months ended December 31, 2008 December 31, 2008 - --------------------------------------------------------------------------------------- Net sales 1,782,422 525,753 Net income 32,752 -5,196 - ---------------------------------------------------------------------------------------
Yen - --------------------------------------------------------------------------------------- Nine months ended Three months ended December 31, 2008 December 31, 2008 - --------------------------------------------------------------------------------------- Earnings per share: Basic 45.28 -7.16 Diluted 44.05 -- - ---------------------------------------------------------------------------------------
13 3. SECURITIES Marketable securities and investment securities as of December 31, 2008 and March 31, 2008 consist of the following:
Millions of Yen - ----------------------------------------------------------------------------------- December 31, 2008 March 31, 2008 - ----------------------------------------------------------------------------------- Marketable securities: Available-for-sale securities -- 0 - ----------------------------------------------------------------------------------- Investment securities: Available-for-sale securities 52,365 69,962 Non-marketable equity securities 1,645 1,282 - ----------------------------------------------------------------------------------- 54,010 71,244 - -----------------------------------------------------------------------------------
The current and non-current security types of available-for-sale securities, and the respective cost, gross unrealized holding gains, gross unrealized holding losses and fair value as of December 31, 2008 and March 31, 2008 are as follows:
Millions of Yen - ------------------------------------------------------------------------------------------------------------ December 31, 2008 March 31, 2008 - ------------------------------------------------------------------------------------------------------------ Gross Gross Gross Gross unrealized unrealized unrealized unrealized holding holding Fair holding holding Fair Cost gains losses value Cost gains losses value - ------------------------------------------------------------------------------------------------------------ Current: -- -- -- -- 0 -- -- 0 - ------------------------------------------------------------------------------------------------------------ Non-current: Equity securities 63,074 3,148 13,856 52,365 62,208 6,231 3,723 64,716 Corporate debt securities -- -- -- -- 6,000 -- 754 5,246 - ------------------------------------------------------------------------------------------------------------ 63,074 3,148 13,856 52,365 68,208 6,231 4,477 69,962 - ------------------------------------------------------------------------------------------------------------
Proceeds from the sales of available-for-sale securities were Yen 243 million and Yen 100,025 million for the nine months ended December 31,2008 and for the year ended March 31, 2008, respectively. There were no significant realized gains or losses on sales of available-for-sale securities for the nine months ended December 31, 2008 and for the year ended March 31, 2008. 4. RELATED TO STOCKHOLDERS' EQUITY Cash dividends paid during the nine months ended December 31, 2008 Resolved at the General meeting of Shareholders on June 26, 2008 - ----------------------------------------------------------------- Total amount of dividends (million of yen) 12,256 Dividend per share of common stock (yen) 17.00 Record date March 31, 2008 Effective date June 27, 2008 Resource for dividend Retained earnings - ----------------------------------------------------------------- 14 Resolved at the Board meeting on October 28, 2008 - ----------------------------------------------------------------- Total amount of dividends (million of yen) 13,064 Dividend per share of common stock (yen) 18.00 Record date September 30, 2008 Effective date December 1, 2008 Resource for dividend Retained earnings - ----------------------------------------------------------------- 5. PER SHARE DATA Shareholders' equity per share was Yen 1,357.20 and Yen 1,498.29 as of December 31, 2008 and March 31, 2008, respectively. Dividends per share shown in the consolidated statement of income are computed based on dividends paid for the nine months ended December 31, 2008 and the year ended March 31, 2008. A reconciliation of the numerator and the denominators of the basic and diluted per share computations for net income are as follows:
Thousands of shares - ------------------------------------------------------------------------------------ Nine months ended Three months ended December 31, 2008 December 31, 2008 - ------------------------------------------------------------------------------------ Weighted average number of shares of common stock outstanding 723,339 725,746 Effect of dilutive securities: Euro Yen Zero Coupon Convertible Bonds - Due December 2011 19,741 19,741 - ------------------------------------------------------------------------------------ Diluted shares of common stock outstanding 743,080 745,487 - ------------------------------------------------------------------------------------
Millions of yen - ------------------------------------------------------------------------------------ Nine months ended Three months ended December 31, 2008 December 31, 2008 - ------------------------------------------------------------------------------------ Net income 29,540 (4,805) Effect of dilutive securities: Euro Yen Zero Coupon Convertible Bonds - Due December 2011 (19) (6) - ------------------------------------------------------------------------------------ Diluted net income 29,521 (4,811) - ------------------------------------------------------------------------------------
Yen - ------------------------------------------------------------------------------------ Nine months ended Three months ended December 31, 2008 December 31, 2008 - ------------------------------------------------------------------------------------ Earnings per share: Basic 40.84 (6.62) Diluted 39.73 -- - ------------------------------------------------------------------------------------
15 6. 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 in 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 nine months ended December 31, 2008 as the critical terms of the interest rate swap match the terms of the hedged debt obligations. 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 nine months ended December 31, 2008 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 (147) million of the balance of accumulated other comprehensive income (loss) as of December 31, 2008 16 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 in the consolidated statement of income. 7. COMMITMENTS AND CONTINGENT LIABILITIES Ricoh was contingently liable for certain guarantees including employees housing loans of Yen 361 million as of December 31, 2008. As of December 31, 2008 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. 8. FAIR VALUE MEASUREMENTS In September 2006, the FASB issued SFAS 157, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, where fair value is the relevant measurement attribute. SFAS 157 does not require any new fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and was adopted by Ricoh in the fiscal year beginning April 1, 2008. Pursuant to the provisions of FSP 157-2, Ricoh have decided to defer adoption of SFAS 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows: Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 - Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. 17 The following table presents the fair-value hierarchy levels of Ricoh's assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2008. Millions of Yen - ----------------------------------------------------------------------- December 31, 2008 - ----------------------------------------------------------------------- Level 1 Level 2 Level 3 Total - ----------------------------------------------------------------------- Assets: Available-for-sale securities 50,890 -- -- 50,890 Derivative instruments -- 3,309 -- 3,309 Other investments -- -- 4,283 4,283 - ----------------------------------------------------------------------- Total assets 50,890 3,309 4,283 58,482 - ----------------------------------------------------------------------- Liabilities: Derivatives instruments -- 4,641 -- 4,641 - ----------------------------------------------------------------------- Total liabilities -- 4,641 -- 4,641 - ----------------------------------------------------------------------- Available-for-sale securities Marketable securities are classified Level 1 in the faire value hierarchy Marketable securities are valued using a market approach based on the quoted market prices of identical instruments in active markets. Derivative instruments Ricoh uses foreign exchange contracts, foreign currency options and interest rate swap agreements to manage exposure to the variability of cash flow. These derivative instruments are classified as Level 2 in the fair value hierarchy, since they are valued using observable market data such as LIBOR-based yield curves. Other investments Other investments classified as Level 3 in the fair value hierarchy represent the retained interests in securitizations of finance lease receivables in which Ricoh valued using cash flows discounted by an estimated interest rate reflecting underlying risks. The following table presents a reconciliation of activity for such retained interests on a net basis.
Millions of yen - -------------------------------------------------------------------------------------------- Nine months ended Three months ended Other investments December 31, 2008 December 31, 2008 - -------------------------------------------------------------------------------------------- Balance at beginning of period 5,887 4,286 Total gains or losses (realized and unrealized) Included in net income -- -- Included in other comprehensive income (loss) -- -- Sales, collections and repurchases, net (1,604) (3) - -------------------------------------------------------------------------------------------- Balance at end of period 4,283 4,283 - --------------------------------------------------------------------------------------------
18 9. 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. (A) OPERATING SEGMENT INFORMATION
Millions of Yen - --------------------------------------------------------------------------------------- Nine months ended Three months ended December 31, 2008 December 31, 2008 - --------------------------------------------------------------------------------------- Sales- Imaging & Solutions 1,363,768 443,996 Industrial Products 97,226 27,092 Other 110,496 32,182 Intersegment transaction (3,472) (1,179) - --------------------------------------------------------------------------------------- Consolidated 1,568,018 502,091 - --------------------------------------------------------------------------------------- Operating Income- Imaging & Solutions 139,418 41,215 Industrial Products (968) (1,744) Other 579 (1,002) Elimination 1 2 Unallocated expense 52,652 17,169 - --------------------------------------------------------------------------------------- Consolidated 86,378 21,302 - --------------------------------------------------------------------------------------- Other, net (26,315) (20,114) - --------------------------------------------------------------------------------------- Income before Income Taxes, Minority Interests and Equity in Earnings of Affiliates 60,063 1,188 - ---------------------------------------------------------------------------------------
Millions of Yen - -------------------------------------------------------------------------- December 31, March 31, 2008 2008 - -------------------------------------------------------------------------- Total assets- Imaging & Solutions 1,850,959 1,643,500 Industrial Products 96,852 91,635 Other 100,333 106,233 Elimination (1,179) (1,063) Corporate assets 358,154 374,063 - -------------------------------------------------------------------------- Consolidated 2,405,119 2,214,368 - -------------------------------------------------------------------------- Unallocated expense represents expenses for corporate headquarters. Intersegment sales are not separated by operating segment because they are immaterial. (B) GEOGRAPHIC INFORMATION Sales which are attributed to countries based on location of customers for the nine months and the three months ended December 31, 2008 are as follows:
Millions of Yen - --------------------------------------------------------------------------------------- Nine months ended Three months ended December 31, 2008 December 31, 2008 - --------------------------------------------------------------------------------------- Sales- Japan 704,886 221,069 The Americas 350,467 132,882 Europe 408,263 119,553 Other 104,402 28,587 - --------------------------------------------------------------------------------------- Consolidated 1,568,018 502,091 - ---------------------------------------------------------------------------------------
(C) ADDITIONAL INFORMATION The following information shows net sales and operating income recognized by geographic origin for the nine months and the three months ended December 31, 2008. 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 Financial Instrument and Exchange Law, which a Japanese public company is subject to.
Millions of Yen - --------------------------------------------------------------------------------------- Nine months ended Three months ended December 31, 2008 December 31, 2008 - --------------------------------------------------------------------------------------- Sales- Japan External customers 723,708 224,054 Intersegment 346,985 110,052 - --------------------------------------------------------------------------------------- Total 1,070,693 334,106 - --------------------------------------------------------------------------------------- The Americas External customers 351,451 134,803 Intersegment 3,172 916 - --------------------------------------------------------------------------------------- Total 354,623 135,719 - --------------------------------------------------------------------------------------- Europe External customers 405,532 118,625 Intersegment 2,046 560 - --------------------------------------------------------------------------------------- Total 407,578 119,185 - --------------------------------------------------------------------------------------- Other External customers 87,327 24,609 Intersegment 126,922 41,757 - --------------------------------------------------------------------------------------- Total 214,249 66,366 - --------------------------------------------------------------------------------------- Elimination of intersegment sales (479,125) (153,285) - --------------------------------------------------------------------------------------- Consolidated 1,568,018 502,091 - --------------------------------------------------------------------------------------- Operating Income- Japan 60,142 12,425 The Americas (12,663) (7,384) Europe 26,761 6,608
20 Other 10,063 1,765 - --------------------------------------------------------------------------------------- Elimination of intersegment sales 2,075 7,888 - --------------------------------------------------------------------------------------- Consolidated 86,378 21,302 - --------------------------------------------------------------------------------------- Other, net (26,315) (20,114) - --------------------------------------------------------------------------------------- Income before Income Taxes, Minority Interests and Equity in Earnings of Affiliates 60,063 1,188 - ---------------------------------------------------------------------------------------
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. 10. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF INCOME The following amounts are charged to selling, general and administrative expenses for the nine months and the three months ended December 31, 2008: Millions of Yen - ----------------------------------------------------------------------- Nine months ended Three months ended December 31, 2008 December 31, 2008 - ----------------------------------------------------------------------- Research and development costs 93,506 30,259 Advertising costs 10,686 2,687 Shipping and handling costs 15,656 4,161 - ----------------------------------------------------------------------- 21 -----END PRIVACY-ENHANCED MESSAGE-----