0000317891-11-000016.txt : 20111114
0000317891-11-000016.hdr.sgml : 20111111
20111114065733
ACCESSION NUMBER: 0000317891-11-000016
CONFORMED SUBMISSION TYPE: 6-K
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20111114
FILED AS OF DATE: 20111114
DATE AS OF CHANGE: 20111114
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: 111197613
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
r6k111114.txt
2ND QUARTERLY SECURITIES REPORT
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 November 2011
Commission File Number 2 - 68279
RICOH COMPANY, LTD.
-----------------------------------------------
(Translation of Registrant's name into English)
13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, 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
Director, Chief Financial Officer
Corporate Executive Vice President
November 14, 2011
RICOH COMPANY, LTD.
Consolidated Financial Statements
For the Six Months Ended September 30, 2011
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the six months ended September 30, 2011 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, 2011 and September 30, 2011
Millions of Yen
------------------------------
March 31, September 30,
ASSETS 2011 2011
-----------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 179,169 136,311
Time deposits 2,010 2,294
Trade receivables:
Notes 46,355 39,161
Accounts 419,351 389,630
Less- Allowance for doubtful receivables (16,560) (14,687)
Current maturities of long-term finance receivables, net 208,671 211,319
Inventories:
Finished goods 85,800 96,022
Work in process and raw materials 85,233 92,912
Deferred income taxes and other 63,990 60,051
-----------------------------------------------------------------------------------------------------------
Total current assets 1,074,019 1,013,013
-----------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 44,444 44,396
Buildings 262,523 265,105
Machinery and equipment 737,270 781,117
Construction in progress 5,230 6,599
-----------------------------------------------------------------------------------------------------------
Total 1,049,467 1,097,217
Less- accumulated depreciation (784,727) (834,708)
-----------------------------------------------------------------------------------------------------------
Net property, plant and equipment 264,740 262,509
-----------------------------------------------------------------------------------------------------------
Investments and other assets:
Long-term finance receivables, net 445,782 445,068
Investment securities 48,909 44,718
Investments in and advances to affiliates 213 360
Goodwill 221,063 206,296
Other intangible assets 130,648 118,955
Lease deposits and other 77,022 96,001
-----------------------------------------------------------------------------------------------------------
Total investments and other assets 923,637 911,398
-----------------------------------------------------------------------------------------------------------
Total assets 2,262,396 2,186,920
===========================================================================================================
1
Millions of Yen
------------------------------
March 31, September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2011 2011
-----------------------------------------------------------------------------------------------------------
Current liabilities:
Short-term borrowings 39,927 63,439
Current maturities of long-term indebtedness 111,096 99,349
Trade payables:
Notes 12,216 13,290
Accounts 238,267 232,679
Accrued income taxes 13,414 8,851
Accrued expenses and other 199,780 199,615
-----------------------------------------------------------------------------------------------------------
Total current liabilities 614,700 617,223
-----------------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness 479,422 480,422
Accrued pension and severance costs 140,975 134,138
Deferred income taxes and other 44,535 39,011
-----------------------------------------------------------------------------------------------------------
Total long-term liabilities 664,932 653,571
-----------------------------------------------------------------------------------------------------------
Equity:
Ricoh Company, Ltd. shareholders' equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 815,970 796,625
Accumulated other comprehensive loss (170,702) (219,506)
Treasury stock at cost (36,838) (36,830)
-----------------------------------------------------------------------------------------------------------
Total Ricoh Company, Ltd. shareholders' equity 929,877 861,736
-----------------------------------------------------------------------------------------------------------
Noncontrolling interests 52,887 54,390
-----------------------------------------------------------------------------------------------------------
Total equity 982,764 916,126
-----------------------------------------------------------------------------------------------------------
Total liabilities and equity 2,262,396 2,186,920
===========================================================================================================
The accompanying notes are an integral part of consolidated financial
statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Six Months Ended September 30, 2010 and 2011
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
-----------------------------------------------------------------------------------------------------------------
Net Sales:
Products 467,109 434,789
Post sales and rentals 452,456 451,911
Other revenue 51,291 52,185
-----------------------------------------------------------------------------------------------------------------
Total 970,856 938,885
-----------------------------------------------------------------------------------------------------------------
Cost of sales:
Products 314,987 301,559
Post sales and rentals 212,667 212,312
Other revenue 40,284 38,752
-----------------------------------------------------------------------------------------------------------------
Total 567,938 552,623
-----------------------------------------------------------------------------------------------------------------
Gross profit 402,918 386,262
Selling, general and administrative expenses 364,906 388,038
-----------------------------------------------------------------------------------------------------------------
Operating income (loss) 38,012 (1,776)
-----------------------------------------------------------------------------------------------------------------
Other (income) expenses:
Interest and dividend income (1,375) (1,502)
Interest expense 3,911 3,418
Foreign currency exchange (gain) loss, net 7,430 4,330
Other, net (19) (268)
-----------------------------------------------------------------------------------------------------------------
Total 9,947 5,978
-----------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes and equity in earnings of affiliates 28,065 (7,754)
Provision for income taxes:
Current 12,773 11,438
Deferred 821 (13,980)
-----------------------------------------------------------------------------------------------------------------
Total 13,594 (2,542)
-----------------------------------------------------------------------------------------------------------------
Equity in earnings of affiliates (7) (1)
Consolidated net income (loss) 14,464 (5,213)
-----------------------------------------------------------------------------------------------------------------
Net income attributable to noncontrolling interests 1,952 2,150
-----------------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. 12,512 (7,363)
=================================================================================================================
Yen Yen
----------------------------------------
Per share of common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic 17.24 (10.15)
Diluted 16.77 (10.15)
-----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 16.50 16.50
=================================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic 86.20 (50.75)
Diluted 83.85 (50.75)
-----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 82.50 82.50
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
3
For the Three Months Ended September 30, 2010 and 2011
Millions of Yen
----------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
-----------------------------------------------------------------------------------------------------------------
Net Sales:
Products 248,437 223,224
Post sales and rentals 213,513 223,153
Other revenue 25,952 26,360
-----------------------------------------------------------------------------------------------------------------
Total 487,902 472,737
-----------------------------------------------------------------------------------------------------------------
Cost of sales:
Products 167,730 154,433
Post sales and rentals 100,977 106,694
Other revenue 20,595 19,444
-----------------------------------------------------------------------------------------------------------------
Total 289,302 280,571
-----------------------------------------------------------------------------------------------------------------
Gross profit 198,600 192,166
Selling, general and administrative expenses 182,435 203,949
-----------------------------------------------------------------------------------------------------------------
Operating income (loss) 16,165 (11,783)
-----------------------------------------------------------------------------------------------------------------
Other (income) expenses:
Interest and dividend income (778) (894)
Interest expense 2,057 1,958
Foreign currency exchange (gain) loss, net 2,154 3,823
Other, net 159 (393)
-----------------------------------------------------------------------------------------------------------------
Total 3,592 4,494
-----------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes and equity in earnings of
affiliates 12,573 (16,277)
Provision for income taxes:
Current 3,747 4,603
Deferred 2,551 (11,039)
-----------------------------------------------------------------------------------------------------------------
Total 6,298 (6,436)
-----------------------------------------------------------------------------------------------------------------
Equity in earnings of affiliates 0 7
Consolidated net income (loss) 6,275 (9,834)
-----------------------------------------------------------------------------------------------------------------
Net income attributable to noncontrolling interest 1,096 975
-----------------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. 5,179 (10,809)
=================================================================================================================
Yen Yen
----------------------------------------
Per share of common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic 7.13 (14.90)
Diluted 6.94 (14.90)
-----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share -- --
=================================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic 35.65 (74.50)
Diluted 34.70 (74.50)
-----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share -- --
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
4
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended September 30, 2010 and 2011
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss) 14,464 (5,213)
Adjustments to reconcile consolidated net income (loss) to net
cash provided by operating activities
Depreciation and amortization 46,718 43,956
Equity in earnings of affiliates, net of dividends received 7 1
Deferred income taxes 821 (13,980)
Losses on disposals and sales of property, plant and equipment 661 330
Loss on impairment of securities 5 73
Pension and severance costs, less payment 978 (8,479)
Changes in assets and liabilities, net of effects from acquisition-
Decrease in trade receivables 21,391 14,296
Increase in inventories (24,231) (29,161)
Decrease (Increase) in finance receivables 4,263 (10,596)
Decrease in trade payables (20,612) (1,089)
Increase in accrued income taxes and
accrued expenses and other 13,044 8,040
Other, net 9,999 13,126
-------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 67,508 11,304
-------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 429 523
Expenditures for property, plant and equipment, including
interest capitalized (39,541) (36,710)
Expenditures for intangible asset (7,886) (8,371)
Payments for purchases of available-for-sale securities (85) (122)
Proceeds from sales of available-for-sale securities 5 10
Increase in time deposits, net (57) (400)
Other, net (2,507) (7,754)
-------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (49,642) (52,824)
-------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 28,615 23,386
Repayment of long-term indebtedness (61,958) (29,671)
(Decrease) Increase in short-term borrowings, net (10,783) 24,725
Proceeds from issuance of long-term debt securities 79,741 --
Repayment of long-term debt securities -- (231)
Dividends paid (11,972) (11,971)
Payment for purchase of treasury stock (72) (14)
Other, net (264) (294)
-------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 23,307 5,930
-------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (9,279) (7,268)
-------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 31,894 (42,858)
-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 242,165 179,169
-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 274,059 136,311
===================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
5
Ricoh Company, Ltd. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
According to the article 95 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 six months ended
September 30, 2011 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 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
inter-company 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.
(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 are recognized at the time of delivery and installation at the
customer location. Service revenues are recognized in accordance with the
contract period of each service contract.
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. 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.
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
fiscal year-end, and income and expenses are translated at the average rates of
exchange prevailing during each fiscal year. The resulting translation
adjustments are included as a part of accumulated other comprehensive income
(loss) in equity.
All foreign currency transaction gains and losses are included in other income
and expenses 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 8, 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 recognizes all derivative instruments as either assets or liabilities in
the consolidated balance sheets and 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 change in fair value of
the hedged item. 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
7
determined from write-off history adjusted to reflect current economic
conditions and specific allowances for receivables including nonperforming
leases, impaired loans or other accounts for 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's investments in debt and marketable equity securities are classified as
available-for-sale securities. Available-for-sale securities are reported at
fair value with unrealized gains and losses, net of related taxes, 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: financial condition and near term prospects of issuer and intent and
ability of Ricoh to retain its investments for a period of time sufficient to
allow for any anticipated recovery in market value.
The cost of the securities sold is computed based on the average cost of each
security held at the time of sale.
Investments in affiliated companies over which Ricoh has the ability to exercise
significant influence, but does not hold a controlling financial interest, are
accounted for by the equity method.
Non-marketable equity securities owned by Ricoh primarily relate to less than
20% owned companies and funds are stated at cost unless indication of impairment
exist, which require the investment to be written down to its estimated fair
value.
(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
Ricoh capitalizes certain internal and external costs incurred to acquire or
create internal use software during the application development stage as well as
upgrades and enhancements that result in additional
8
functionality. The capitalized software is amortized on a straight line basis
generally from 3 years to 5 years.
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill is not amortized and is required to be tested at least annually for
impairment. Acquired intangible assets with a definite useful life are amortized
over their respective estimated useful lives and reviewed for impairment when an
indication of impairment is identified. Other intangible assets with definite
useful lives, consisting primarily of software, customer relationships and
trademarks are amortized on a straight line basis over 1 year to 20 years. Any
acquired intangible assets determined to have an indefinite useful life are not
amortized, but instead are tested annually for impairment based on its fair
value until its life would be determined to no longer be indefinite. In
performing the test, Ricoh utilizes the two-step approach prescribed. The first
step requires a comparison of the carrying amount of the reporting units to the
fair value of these units. If the carrying amount of a reporting unit exceeds
its fair value, Ricoh will perform the second step of the goodwill impairment
test to measure the amount of impairment loss, if any.
(L) PENSION AND RETIREMENT ALLOWANCES PLANS
Ricoh recognizes the overfunded or underfunded status of the defined benefit
plans as an asset or liability in the consolidated balance sheet, 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
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.
Ricoh recognizes interest and penalties related to unrecognized tax benefits in
provision for income taxes in the consolidated statements 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 asset group may not be
9
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 asset group. If an asset or asset
group 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 asset group
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) NET INCOME ATTRIBUTABLE TO RICOH COMPANY, LTD. PER SHARE
Basic net income attributable to Ricoh Company, Ltd. per share of common stock
is calculated by dividing net income attributable to Ricoh Company, Ltd. by the
weighted-average number of shares of common stock outstanding during the period.
The calculation of diluted net income attributable to Ricoh Company, Ltd. per
share of common stock is similar to the calculation of basic net income
attributable to Ricoh Company, Ltd. per share, except that the weighted-average
number of shares outstanding includes the additional dilution from potential
common stock equivalents such as convertible bonds.
(R) 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 and the
disclosures of fair value of financial instruments and contingent assets and
liabilities, to prepare these financial statements in conformity with U.S.
generally accepted accounting principles. Actual results could differ from those
estimates.
Ricoh has identified seven 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 including goodwill, uncertain tax
positions, realizability of deferred tax assets, the valuation of assets and
liabilities in business combinations and pension accounting.
(S) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In June 2011, the FASB issued Accounting Standards Update ("ASU") 2011-05. This
ASU requires entities to present comprehensive income in either: (i) one
continuous financial statement or (ii) two separate but consecutive statements
that display net income and the components of other comprehensive income. Totals
and individual components of both net income and other comprehensive income must
be included in either presentation. It is effective for fiscal years beginning
on or after December 16, 2011 and early adoption is permitted. This adoption of
ASU 2011-05 will not have any effect on Ricoh's consolidated financial position
and results of operations.
(T) RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements to conform with the current year's presentation.
Expenditures for intangible asset was included in other, net of cash flows from
investing activities in the consolidated statement of cash flows for the six
months ended September 30, 2010, has been reclassified to conform with the
current year's presentation.
10
2. SECURITIES
Investment securities as of March 31, 2011 and September 30, 2011 consist of the
following:
Millions of Yen
----------------------------------
March 31, 2011 September 30, 2011
--------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 46,938 42,696
Non-marketable equity securities 1,971 2,022
--------------------------------------------------------------------------------
48,909 44,718
================================================================================
The 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 March 31, 2011 and September 30, 2011 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
March 31, 2011 September 30, 2011
----------------------------------------- -----------------------------------------
Gross Gross Gross Gross
unrealized unrealized unrealized unrealized
holding holding Fair holding holding Fair
Cost gains losses value Cost gains losses value
----------------------------------------------------------------------------------------------------------
Noncurrent:
Equity
securities 40,765 4,655 327 45,093 40,847 3,180 3,041 40,986
Corporate debt
securities 1,802 43 -- 1,845 1,627 83 -- 1,710
----------------------------------------------------------------------------------------------------------
42,567 4,698 327 46,938 42,474 3,263 3,041 42,696
==========================================================================================================
Gross unrealized holding losses and the fair value of available-for-sale
securities, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position at March 31, 2011
and September 30, 2011 are as follows:
Millions of Yen
----------------------------------------------------------------------------------
March 31, 2011
----------------------------------------------------------------------------------
Less than 12 months 12 months or longer Total
--------------------------- ---------------------------- -------------------------
Gross Gross Gross
unrealized unrealized unrealized
holding holding holding
Fair value losses Fair value losses Fair value losses
--------------------------------------------------------------------------------------------------------------
Noncurrent:
Available-for-sale:
Equity securities 1,341 261 238 66 1,579 327
==============================================================================================================
Millions of Yen
----------------------------------------------------------------------------------
September 30, 2011
----------------------------------------------------------------------------------
Less than 12 months 12 months or longer Total
--------------------------- ---------------------------- -------------------------
Gross Gross Gross
unrealized unrealized unrealized
holding holding holding
Fair value losses Fair value losses Fair value losses
--------------------------------------------------------------------------------------------------------------
Noncurrent:
Available-for-sale:
Equity securities 31,987 2,711 1,021 330 33,008 3,041
===============================================================================================================
11
Gross unrealized holding losses of available-for-sale securities as of March 31,
2011 and September 30, 2011 consist of 39 and 37 kinds of securities. Ricoh
judged the decline in fair value of investment securities at period end to be
temporary, with considering such factors as financial and operating conditions
of issuer, the industry in which the issuer operates and other relevant factors.
The contractual maturities of debt securities classified as available-for-sale
as of September 30, 2011 are as follows:
Millions of Yen
---------------------
Cost Fair value
------------------------------------------------------------------------------
Due after one year through five years 532 530
Over five years 1,095 1,180
------------------------------------------------------------------------------
1,627 1,710
==============================================================================
There were no significant proceeds from the sales of available-for-sale
securities for the six months ended September 30, 2010 and 2011.
There were no significant realized gains or losses on sales of
available-for-sale securities for the six months ended September 30, 2010 and
2011.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the six months ended September 30, 2010 and
2011.
3. INCOME TAXES
The effective tax rate for fiscal year ending March 31, 2012 was approximately
33 percent as of September 30, 2011. The effective tax rate differed from
the approximately 41 percent statutory tax rate due primarily to the net
increase in valuation allowance for deferred tax assets.
4. PENSION AND RETIREMENT ALLOWANCE PLANS
The net periodic benefit costs of the pension plans consist of the following
components:
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------------------------
Service cost 6,343 6,141
Interest cost 7,396 7,121
Expected return on plan assets (4,293) (4,456)
Net amortization 1,530 1,092
-------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 10,976 9,898
=============================================================================================================
12
Millions of Yen
----------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------------------------
Service cost 3,159 3,102
Interest cost 3,632 3,553
Expected return on plan assets (2,087) (2,218)
Net amortization 755 542
-------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 5,459 4,979
=============================================================================================================
5. EQUITY
The change in Ricoh shareholders' equity, noncontrolling interests and total
equity for the six months ended September 30, 2010 and 2011 are as follow:
Ricoh adopted ASU 2009-17 on April 1, 2010. The adoption of this ASU resulted in
adjustments to change in Ricoh shareholders' equity, noncontrolling interests
and total equity as of April 1, 2010.
Millions of Yen
-----------------------------------------------------------------------------------
Six months ended September 30, 2010 Six months ended September 30, 2011
---------------------------------------- ----------------------------------------
Ricoh Ricoh
Shareholders' Noncontrolling Total Shareholders' Noncontrolling Total
Equity Interests Equity Equity Interests Equity
----------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period 973,341 50,533 1,023,874 929,877 52,887 982,764
----------------------------------------------------------------------------------------------------------------------
Cumulative effect of a change
in accounting principle -
adoption of accounting
guidance for a variable
interest entity, net of tax (410) (392) (802) -- -- --
----------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period as
adjusted 972,931 50,141 1,023,072 929,877 52,887 982,764
----------------------------------------------------------------------------------------------------------------------
Net income (loss) 12,512 1,952 14,464 (7,363) 2,150 (5,213)
Unrealized losses on securities (2,376) (8) (2,384) (2,426) (9) (2,435)
Pension liability adjustments 458 0 458 (501) 4 (497)
Unrealized gains (losses) on
derivatives (446) (30) (476) (29) 2 (27)
Foreign currency translation
adjustments (43,215) 331 (42,884) (45,848) (141) (45,989)
----------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) (33,067) 2,245 (30,822) (56,167) 2,006 (54,161)
----------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (11,972) -- (11,972) (11,971) -- (11,971)
Distributions to Noncontrolling
interests -- (341) (341) -- (305) (305)
Net changes in treasury stock (6) -- (6) 8 -- 8
Wholly owned subsidiaries -- -- -- -- (198) (198)
Other -- -- -- (11) -- (11)
----------------------------------------------------------------------------------------------------------------------
Equity, End of Period 927,886 52,045 979,931 861,736 54,390 916,126
----------------------------------------------------------------------------------------------------------------------
Comprehensive incomes were Yen 3,082 million (gains) and Yen 50,478 million
(losses) for the three months ended September 30, 2010 and 2011, respectively.
Comprehensive incomes attributable to Ricoh Company, Ltd. were Yen 2,005 million
(gains) and Yen 51,369 million (losses), and comprehensive incomes attributable
to noncontrolling interests were Yen 1,077 million (gains) and Yen 891 million
(gains) for the three months ended September 30, 2010 and 2011, respectively.
13
6. DIVIDENDS
Cash dividends paid during the six months ended September 30, 2010 is as
follows:
Resolved at the General meetings of Shareholders on June 25, 2010
-----------------------------------------------------------------------------
Total amount of dividends (million of yen) 11,972
Dividend per share of common stock (yen) 16.50
Record date March 31, 2010
Effective date June 28, 2010
Resource for dividend Retained earnings
=============================================================================
Cash dividends to be paid for the six months ended September 30, 2010, of which
effective date is after September 30, 2010.
Resolved at the Board meeting on October 28, 2010
-----------------------------------------------------------------------------
Total amount of dividends (millions of yen) 11,971
Dividend per share of common stock (yen) 16.50
Record date September 30, 2010
Effective date December 1, 2010
Resource for dividend Retained earnings
=============================================================================
Cash dividends paid during the six months ended September 30, 2011 is as
follows:
Resolved at the General meetings of Shareholders on June 24, 2011
-----------------------------------------------------------------------------
Total amount of dividends (million of yen) 11,971
Dividend per share of common stock (yen) 16.50
Record date March 31, 2011
Effective date June 27, 2011
Resource for dividend Retained earnings
=============================================================================
Cash dividends to be paid for the six months ended September 30, 2011, of which
effective date is after September 30, 2011.
Resolved at the Board meeting on October 28, 2011
-----------------------------------------------------------------------------
Total amount of dividends (millions of yen) 11,970
Dividend per share of common stock (yen) 16.50
Record date September 30, 2011
Effective date December 1, 2011
Resource for dividend Retained earnings
=============================================================================
7. PER SHARE DATA
Ricoh shareholders' equity per share was Yen 1,281.70 and Yen 1,187.78 as of
March 31, 2011 and September 30, 2011, respectively. Dividends per share shown
in the consolidated statement of income are computed based on dividends paid for
the year ended March 31, 2011 and the six months ended September 30, 2011.
A reconciliation of the numerator and the denominators of the basic and diluted
per share computations for net income attributable to Ricoh Company, Ltd. are as
follows:
14
Thousands of shares
---------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,578 725,501
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 --
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 745,319 725,501
======================================================================================================
Millions of Yen
---------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. 12,512 (7,363)
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (13) --
------------------------------------------------------------------------------------------------------
Diluted net income (loss) attributable to Ricoh Company, Ltd. 12,499 (7,363)
======================================================================================================
Yen
---------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd.
per share:
Basic:
Basic: Net income (loss) attributable to Ricoh
Company, Ltd. 17.24 (10.15)
Diluted:
Diluted: Net income (loss) attributable to Ricoh
Company, Ltd. 16.77 (10.15)
======================================================================================================
Thousands of shares
---------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,576 725,499
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 --
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 745,317 725,499
======================================================================================================
15
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. 5,179 (10,809)
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (6) --
------------------------------------------------------------------------------------------------------
Diluted net income (loss) attributable to Ricoh Company, Ltd. 5,173 (10,809)
======================================================================================================
Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company,
Ltd. per share:
Basic:
Basic: Net income (loss) attributable to Ricoh
Company, Ltd. 7.13 (14.90)
Diluted:
Diluted: Net income (loss) attributable to Ricoh
Company, Ltd. 6.94 (14.90)
======================================================================================================
Euro Yen Zero Coupon Convertible Bonds was excluded as anti-dilutive for the six
months and three months ended September 30, 2011 due to Ricoh incurring a net
loss attributable to Ricoh Company, Ltd.
8. 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.
16
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 are no Fair Value
Hedges derivative instruments effective at September 30, 2011 due to the
maturity of hedged instruments or contract.
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 six months ended September 30, 2011 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 29 million of the balance of accumulated other
comprehensive income as of September 30, 2011.
Undesignated Derivative Instruments
Derivative instruments not designated as hedging instruments are held mainly 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.
Contract amounts of derivative instruments at March 31, 2011 and September 30,
2011 are shown in the following tables:
Millions of Yen
------------------------------------------
March 31, 2011 September 30, 2011
--------------------------------------------------------------------------------
Interest rate swap agreements 284,444 288,177
Foreign currency contracts 211,249 141,409
Foreign currency options 3,555 41,241
================================================================================
The location and fair value amounts of derivatives in consolidated balance sheet
are shown in the following tables:
17
Derivatives designated as hedging instruments
Current Long-term
----------------------------------------- ----------------------------------------
Fair value Fair value
----------------------------------------- ----------------------------------------
Balance sheet Balance sheet
Location Millions of Yen Location Millions of Yen
----------------------------------------------------------------------------- ----------------------------------------
March 31, September 30, March 31, September 30,
Asset Derivatives 2011 2011 2011 2011
----------------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Deferred income Lease deposits
taxes and other 4 -- and other -- --
======================================================================================================================
March 31, September 30, March 31, September 30,
Liability Derivatives 2011 2011 2011 2011
----------------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Accrued expenses Deferred income
and other 73 40 taxes and other 2,766 2,748
======================================================================================================================
Derivatives not designated as hedging instruments
Current Long-term
----------------------------------------- ----------------------------------------
Fair value Fair value
----------------------------------------- ----------------------------------------
Balance sheet Balance sheet
Location Millions of Yen Location Millions of Yen
----------------------------------------------------------------------------------------------------------------------
March 31, September 30, March 31, September 30,
Asset Derivatives 2011 2011 2011 2011
----------------------------------------------------------------------------------------------------------------------
Foreign currency contracts Deferred income Lease deposits
taxes and other 1,497 2,012 and other -- 1,761
Foreign currency options 20 500 -- --
----------------------------------------------------------------------------------------------------------------------
Total 1,517 2,512 -- 1,761
======================================================================================================================
March 31, September 30, March 31, September 30,
Liability Derivatives 2011 2011 2011 2011
----------------------------------------------------------------------------------------------------------------------
Interest rate swap agreements 72 28 24 200
Foreign currency contracts Accrued expenses Deferred income
and other 3,087 2,358 taxes and other 477 21
Foreign currency options 64 118 -- --
----------------------------------------------------------------------------------------------------------------------
Total 3,223 2,504 501 221
======================================================================================================================
Total fair value amounts of derivatives
Millions of
Yen
-----------------------
Fair value
-------------------------------------------------------------------------------
March 31, September 30,
2011 2011
-------------------------------------------------------------------------------
Total Asset Derivatives 1,521 4,273
Total Liability Derivatives 6,563 5,513
-------------------------------------------------------------------------------
18
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the six months ended September 30, 2010
are shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI Into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (594) Interest expense (133) -- --
===========================================================================================================================
Millions of Yen
------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
------------------------------------ -----------------------------
Location Amount Location Amount
------------------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest and dividend income 55 Interest expense (72)
======================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2010
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (93)
Foreign currency contracts Foreign currency exchange (gain) loss, net 2,266
Foreign currency options Foreign currency exchange (gain) loss, net (314)
---------------------------------------------------------------------------------------------
Total 1,859
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of for the three months ended September 30, 2010 are
shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI Into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (51) Interest expense (98) -- --
===========================================================================================================================
19
Millions of Yen
------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
------------------------------------ -----------------------------
Location Amount Location Amount
------------------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest and dividend income 25 Interest expense (33)
======================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2010
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (185)
Foreign currency contracts Foreign currency exchange (gain) loss, net (2,169)
Foreign currency options Foreign currency exchange (gain) loss, net (1,044)
---------------------------------------------------------------------------------------------
Total (3,398)
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the Six months ended September 30, 2011
are shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI Into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (121) Interest expense (92) -- --
===========================================================================================================================
Millions of Yen
------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
------------------------------------ -----------------------------
Location Amount Location Amount
------------------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest and dividend income -- Interest expense --
======================================================================================================
20
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2011
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (132)
Foreign currency contracts Foreign currency exchange (gain) loss, net 3,461
Foreign currency options Foreign currency exchange (gain) loss, net 426
---------------------------------------------------------------------------------------------
Total 3,755
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the three months ended September 30,
2011 are shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI Into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements 466 Interest expense (27) -- --
===========================================================================================================================
Millions of Yen
------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
------------------------------------ -----------------------------
Location Amount Location Amount
------------------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest and dividend income -- Interest expense --
======================================================================================================
21
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2011
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (82)
Foreign currency contracts Foreign currency exchange (gain) loss, net (1,330)
Foreign currency options Foreign currency exchange (gain) loss, net 350
---------------------------------------------------------------------------------------------
Total (1,062)
=============================================================================================
9. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees housing
loans of Yen 48 million as of September 30, 2011.
As of September 30, 2011 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.
10. 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) INVESTMENT SECURITIES
The fair value of the investment securities is principally based on quoted
market price. Ricoh have not estimated the fair value of non-marketable equity
securities, as it is not practicable. Because there were no quoted market prices
for non-marketable equity securities and each security had different nature and
characteristics, reasonable estimates of fair values could not be made without
incurring excessive costs. The carrying amounts of non-marketable equity
securities were Yen 1,971 million and Yen 2,022 million as of March 31, 2011 and
September 30, 2011, respectively.
(C) INSTALLMENT LOANS
The fair value of installment loans is based on the present value of future cash
flows using the current interest rate for similar instruments of comparable
maturity.
22
(D) LONG-TERM INDEBTEDNESS
The fair value of each of the long-term indebtedness instruments is based on 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, FOREIGN CURRENCY CONTRACTS AND FOREIGN
CURRENCY OPTIONS
The fair value of interest rate swap agreements, foreign currency contracts and
foreign currency options is estimated by obtaining quotes from brokers or
suitable valuation method based on available data.
The estimated fair value of the financial instruments as of March 31, 2011 and
September 30, 2011 are summarized as follows:
Millions of Yen
-------------------------------------------------
March 31, 2011 September 30, 2011
----------------------- -----------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------------------------------------------------------------------------------------
Investment securities 48,909 48,909 44,718 44,718
Installment loans 72,634 73,769 77,026 78,229
Long-term indebtedness (479,422) (475,116) (480,422) (478,063)
Interest rate swap agreements, net (2,931) (2,931) (3,016) (3,016)
Foreign currency contracts, net (2,067) (2,067) 1,394 1,394
Foreign currency options, net (44) (44) 382 382
=====================================================================================
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.
11. FAIR VALUE MEASUREMENTS
Fair value is 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. The three levels fair value hierarchy that prioritizes the
inputs used to measure fair value is established. 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.
The following tables present the fair-value hierarchy levels of Ricoh's assets
and liabilities that are measured at fair value on a recurring basis as of March
31, 2011 and September 30, 2011.
23
Millions of Yen
------------------------------
March 31, 2011
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 38,243 -- -- 38,243
Foreign equity securities 6,850 -- -- 6,850
Foreign corporate bonds 1,845 -- -- 1,845
Derivative instruments
Interest rate swap agreements -- 4 -- 4
Foreign currency contracts -- 1,497 -- 1,497
Foreign currency options -- 20 -- 20
-------------------------------------------------------------------------
Total assets 46,938 1,521 -- 48,459
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,935 -- 2,935
Foreign currency contracts -- 3,564 -- 3,564
Foreign currency options -- 64 -- 64
-------------------------------------------------------------------------
Total liabilities -- 6,563 -- 6,563
=========================================================================
Millions of Yen
------------------------------
September 30, 2011
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 35,429 -- -- 35,429
Foreign equity securities 5,557 -- -- 5,557
Foreign corporate bonds 1,710 -- -- 1,710
Derivative instruments
Interest rate swap agreements -- -- -- --
Foreign currency contracts -- 3,773 -- 3,773
Foreign currency options -- 500 -- 500
-------------------------------------------------------------------------
Total assets 42,696 4,273 -- 46,969
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 3,016 -- 3,016
Foreign currency contracts -- 2,379 -- 2,379
Foreign currency options -- 118 -- 118
-------------------------------------------------------------------------
Total liabilities -- 5,513 -- 5,513
=========================================================================
Available-for-sale securities
Available-for-sale securities classified Level 1 in the fair value hierarchy
contains marketable securities and bonds. Marketable securities and bonds 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
24
in the fair value hierarchy, since they are valued using observable market data
such as LIBOR-based yield curves.
12. VARIABLE INTEREST ENTITY
Ricoh sold certain finance lease receivables in prior years through revolving
securitization transactions, which were structured as special purpose entities
("SPE"). The value assigned to undivided interests retained in these
transactions was based on the fair value of retained interests as of a transfer
of these receivables. Ricoh's retained interests were considered as variable
interest, because Ricoh's retained interests were subordinate to the investors'
interests and had the liability with received the potential losses. And, Ricoh
was considered as primary beneficiary, because Ricoh was special servicer for
the program. As a result, Ricoh consolidated the interests as VIE and recorded
the assets and liabilities. Adoption of the new accounting standards did not
have a material effect on Ricoh's results of operation. The main impact of
adopting the new accounting standards on Ricoh's consolidated financial position
is as follows:
Millions of Yen
----------------------------------
March 31, 2011 September 30, 2011
--------------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 8,460 8,488
Long-term finance receivables, net 15,849 15,904
Current maturities of long-term indebtedness 7,044 7,048
Long-term indebtedness 13,197 13,206
============================================================================================
13. CREDIT QUALITY OF FINANCING RECEIVABLES AND THE ALLOWANCE FOR DOUBTFUL
RECEIVABLES
(A) FINANCING RECEIVABLES AND ALLOWANCE FOR DOUBTFUL RECEIVABLES
The financial subsidiaries of the Company have financing receivables and Ricoh
classifies them into three categories; "lease receivables", "installment loans"
and "installment receivables and other". These receivables consist of a large
number of smaller-balance homogenous loans, lease receivables and installment
receivables. Financing receivables classified as "lease receivables" and
"installment receivables and other" are resulting from sale and lease
transactions of mainly office equipment. Financing receivables classified as
"installment loans" are resulting from financial services.
Ricoh continuously monitors overdue financing receivables, which Ricoh considers
as uncollectible risk receivables. For financing receivables with specific
customer collection issues, Ricoh individually evaluates their collectability in
order to determine the amount of allowance for doubtful receivables. For other
financing receivables, Ricoh categorizes these receivables into groups by their
nature and characteristics. Ricoh collectively evaluates the collectability by
each group, using its historical experience of write-off and determines the
amount of allowance for doubtful receivables.
25
Financing receivables and allowance for doubtful receivables as of September 30,
2011 are as follows:
Millions of Yen
---------------------------------------------------
September 30, 2011
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Beginning balance 10,527 1,772 2,485 14,784
-------------------------------------------------------------------------------------------------
Charge-offs (1,114) (28) (38) (1,180)
Recoveries -- -- -- --
Provision 1,570 298 73 1,941
Translation adjustment (304) -- (50) (354)
Ending balance 10,679 2,042 2,470 15,191
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 4,452 805 1,251 6,508
Collectively evaluated 6,227 1,237 1,219 8,683
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 67,237 1,061 3,803 72,101
Collectively evaluated 522,803 78,007 47,030 647,840
-------------------------------------------------------------------------------------------------
Total: Financing receivables 590,040 79,068 50,833 719,941
=================================================================================================
(B) AGE ANALYSIS
Ricoh ascribes the fact of past due to credit quality indicators and classifies
financing receivables into Overdue and Current.
Analysis of the age of the recorded financing receivables as of March 31,
2011 and September 30, 2011 are as follows:
Millions of Yen
---------------------------------------------------
March 31, 2011
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 584,913 74,373 48,544 707,830
Overdue 7,433 33 1,661 9,127
-------------------------------------------------------------------------------------------------
Total: Financing receivables 592,346 74,406 50,205 716,957
=================================================================================================
Millions of Yen
---------------------------------------------------
September 30, 2011
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 584,669 79,058 49,064 712,791
Overdue 5,371 10 1,769 7,150
-------------------------------------------------------------------------------------------------
Total: Financing receivables 590,040 79,068 50,833 719,941
=================================================================================================
26
14. SEGMENT INFORMATION
Ricoh's operating segments are comprised of Imaging & Solutions, including
copiers and related supplies, communications and information systems, Industrial
Products, including thermal media and semiconductors, and Other, including
digital cameras.
Segment Profit (loss) is determined by subtracting cost of sales and selling,
general and administrative expenses from sales, and is used by Ricoh's
management in deciding how to allocate resources and in assessing performance.
Segment Profit (loss) excludes certain corporate expenses, such as costs related
to human resources, legal relations, investor relations, public relations,
corporate planning and environmental activities.
The following tables present certain information regarding Ricoh's operating
segments and by geographic areas for the six and three months ended
September 30, 2010 and 2011, respectively.
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 850,983 829,105
Industrial Products 58,334 52,714
Other 64,130 59,330
Intersegment transaction (2,591) (2,264)
------------------------------------------------------------------------------------------
Total Segment Sales 970,856 938,885
==========================================================================================
Segment Profit (loss):
Imaging & Solutions 73,001 37,680
Industrial Products 1,046 (2,166)
Other (464) (2,844)
------------------------------------------------------------------------------------------
Total Segment Profit (loss) 73,583 32,670
==========================================================================================
Reconciling Items:
Corporate expenses and Elimination (35,571) (34,446)
Interest and dividend income 1,375 1,502
Interest expense (3,911) (3,418)
Foreign currency exchange loss, net (7,430) (4,330)
Other, net 19 268
------------------------------------------------------------------------------------------
Income (loss) before Income Taxes and Equity in
Earnings of Affiliates 28,065 (7,754)
==========================================================================================
27
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 426,294 417,000
Industrial Products 29,244 26,504
Other 33,770 30,431
Intersegment transaction (1,406) (1,198)
-------------------------------------------------------------------------------------------
Total Segment Sales 487,902 472,737
===========================================================================================
Segment Profit (loss):
Imaging & Solutions 35,083 10,820
Industrial Products 562 (1,684)
Other (336) (2,329)
-------------------------------------------------------------------------------------------
Total Segment Profit (loss) 35,309 6,807
===========================================================================================
Reconciling Items:
Corporate expenses and Elimination (19,144) (18,590)
Interest and dividend income 778 894
Interest expense (2,057) (1,958)
Foreign currency exchange loss, net (2,154) (3,823)
Other, net (159) 393
-------------------------------------------------------------------------------------------
Income (loss) before Income Taxes and Equity in
Earnings of Affiliates 12,573 (16,277)
===========================================================================================
Intersegment sales represent sales of Industrial Products segment to Imaging &
Solutions segment.
(B) GEOGRAPHIC INFORMATION
Sales which are attributed to countries based on location of customers are as
follows:
Millions of Yen
-----------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------
Sales-
Japan 439,065 434,501
The Americas 264,857 234,240
Europe 201,051 201,940
Other 65,883 68,204
-------------------------------------------------------------------------------------------
Consolidated 970,856 938,885
===========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------
Sales-
Japan 226,149 219,354
The Americas 131,447 118,671
Europe 97,934 99,446
Other 32,372 35,266
-------------------------------------------------------------------------------------------
Consolidated 487,902 472,737
===========================================================================================
28
15. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF INCOME
The following amounts were charged to selling, general and administrative
expenses for the six months and three months ended September 30, 2010 and 2011:
Millions of Yen
-----------------------------------------
Six months ended Six months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------
Research and development costs 53,997 59,507
Advertising costs 5,191 5,483
Shipping and handling costs 8,909 11,211
===========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2010 September 30, 2011
-------------------------------------------------------------------------------------------
Research and development costs 28,327 31,825
Advertising costs 2,994 3,110
Shipping and handling costs 4,706 6,275
===========================================================================================
29