0000317891-12-000021.txt : 20120810
0000317891-12-000021.hdr.sgml : 20120810
20120810072901
ACCESSION NUMBER: 0000317891-12-000021
CONFORMED SUBMISSION TYPE: 6-K
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20120810
FILED AS OF DATE: 20120810
DATE AS OF CHANGE: 20120810
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: 121022543
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
394419_001.txt
QUARTERLY SECURITIES REPORT FOR THE FIRST QUARTER ENDED JUNE 30, 2012
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 August 2012
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
Representative Director,
Deputy President and
Chief Financial Officer
August 10, 2012
RICOH COMPANY, LTD.
Consolidated Financial Statements
for the First Quarter Ended June 30, 2012
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the first quarter ended June 30, 2012 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, 2012 and June 30, 2012
Millions of Yen
---------------------
March 31, June 30,
ASSETS 2012 2012
------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 156,210 148,501
Time deposits 2,461 4,324
Trade receivables:
Notes 43,921 44,121
Accounts 439,673 421,071
Less- allowance for doubtful receivables (16,380) (16,287)
Current maturities of long-term finance receivables, net 219,716 216,966
Inventories:
Finished goods 101,165 107,090
Work in process and raw materials 93,844 92,336
Deferred income taxes and other 65,896 69,007
------------------------------------------------------------------------------------------------
Total current assets 1,106,506 1,087,129
------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 45,893 45,751
Buildings 265,843 264,804
Machinery and equipment 659,503 658,511
Construction in progress 9,576 11,825
------------------------------------------------------------------------------------------------
Total 980,815 980,891
Less- accumulated depreciation (712,288) (714,616)
------------------------------------------------------------------------------------------------
Net property, plant and equipment 268,527 266,275
------------------------------------------------------------------------------------------------
Investments and other assets:
Long-term finance receivables, net 468,004 465,270
Investment securities 45,470 44,490
Investments in and advances to affiliates 444 468
Goodwill 195,251 185,247
Other intangible assets 112,914 106,302
Lease deposits and other 92,242 87,937
------------------------------------------------------------------------------------------------
Total investments and other assets 914,325 889,714
------------------------------------------------------------------------------------------------
Total assets 2,289,358 2,243,118
================================================================================================
1
Millions of Yen
---------------------
March 31, June 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2012 2012
------------------------------------------------------------------------------------------------
Current liabilities:
Short-term borrowings 111,272 121,434
Current maturities of long-term indebtedness 105,160 110,842
Trade payables:
Notes 11,553 12,518
Accounts 240,656 223,251
Accrued income taxes 13,448 10,373
Accrued expenses and other 190,935 184,455
------------------------------------------------------------------------------------------------
Total current liabilities 673,024 662,873
------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness 525,435 526,566
Accrued pension and severance costs 164,757 163,007
Deferred income taxes and other 47,124 41,400
------------------------------------------------------------------------------------------------
Total long-term liabilities 737,316 730,973
------------------------------------------------------------------------------------------------
Equity:
Ricoh Company, Ltd. shareholders' equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 742,549 742,921
Accumulated other comprehensive loss (204,175) (234,811)
Treasury stock at cost (37,117) (37,119)
------------------------------------------------------------------------------------------------
Total Ricoh Company, Ltd. shareholders' equity 822,704 792,438
------------------------------------------------------------------------------------------------
Noncontrolling interests 56,314 56,834
------------------------------------------------------------------------------------------------
Total equity 879,018 849,272
------------------------------------------------------------------------------------------------
Total liabilities and equity 2,289,358 2,243,118
================================================================================================
The accompanying notes are an integral part of consolidated financial
statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the First Quarter Ended June 30, 2011 and 2012
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
--------------------------------------------------------------------------------------------------------------
Net sales:
Products 212,013 205,360
Post sales and rentals 229,555 225,565
Other revenue 25,825 28,462
--------------------------------------------------------------------------------------------------------------
Total 467,393 459,387
--------------------------------------------------------------------------------------------------------------
Cost of sales:
Products 146,353 143,926
Post sales and rentals 104,141 105,402
Other revenue 19,308 20,161
--------------------------------------------------------------------------------------------------------------
Total 269,802 269,489
--------------------------------------------------------------------------------------------------------------
Gross profit 197,591 189,898
Selling, general and administrative expenses 186,265 175,617
--------------------------------------------------------------------------------------------------------------
Operating income 11,326 14,281
--------------------------------------------------------------------------------------------------------------
Other (income) expenses:
Interest and dividend income (607) (842)
Interest expense 1,463 1,521
Foreign currency exchange (gain) loss, net 1,185 1,315
Other, net (2) 12
--------------------------------------------------------------------------------------------------------------
Total 2,039 2,006
--------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in earnings of affiliates 9,287 12,275
Provision for income taxes:
Current 6,928 2,983
Deferred (3,757) 1,686
--------------------------------------------------------------------------------------------------------------
Total 3,171 4,669
--------------------------------------------------------------------------------------------------------------
Equity in earnings of affiliates (8) 41
Consolidated net income 6,108 7,647
--------------------------------------------------------------------------------------------------------------
Net income attributable to noncontrolling interests 1,175 1,110
--------------------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 4,933 6,537
==============================================================================================================
Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
--------------------------------------------------------------------------------------------------------------
Per share of common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------------
Basic 6.80 9.02
Diluted 6.79 --
--------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 16.50 8.50
==============================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------------
Basic 34.00 45.10
Diluted 33.95 --
--------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 82.50 42.50
==============================================================================================================
Diluted net income per share attributable to Ricoh Company, Ltd. for the first
quarter ended June 30, 2012 is omitted because the Company did not have
potentially dilutive common shares that were outstanding for the period.
3
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the First Quarter Ended June 30, 2011 and 2012
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
--------------------------------------------------------------------------------------------------------------
Consolidated net income 6,108 7,647
Other comprehensive income (loss), net of tax:
Net unrealized holding losses on available-for-sale securities (697) (699)
Pension liability adjustments 748 (255)
Net unrealized losses on derivative instruments (529) (289)
Foreign currency translation adjustments (6,291) (29,655)
--------------------------------------------------------------------------------------------------------------
Total (6,769) (30,898)
--------------------------------------------------------------------------------------------------------------
Comprehensive loss (661) (23,251)
--------------------------------------------------------------------------------------------------------------
Comprehensive income attributable to noncontrolling interests 1,115 848
--------------------------------------------------------------------------------------------------------------
Comprehensive loss attributable to Ricoh Company, Ltd. (1,776) (24,099)
==============================================================================================================
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 First Quarter Ended June 30, 2011 and 2012
Millions of Yen
---------------------------------------
First Quarter ended First Quarter ended
June 30, 2011 June 30, 2012
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income 6,108 7,647
Adjustments to reconcile consolidated net income to net cash
provided by operating activities
Depreciation and amortization 22,199 20,891
Equity in earnings of affiliates, net of dividends received 8 (41)
Deferred income taxes (3,758) 1,686
Pension and severance costs, less payment 541 (1,734)
Changes in assets and liabilities, net of effects from acquisition-
Decrease in trade receivables 8,488 1,037
Increase in inventories (18,159) (11,384)
Increase in finance receivables (2,329) (5,384)
Decrease in trade payables (12,335) (13,189)
Increase in accrued income taxes and accrued expenses and other 643 4,312
Other, net 3,468 5,020
------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,874 8,861
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 250 582
Expenditures for property, plant and equipment, including
interest capitalized (16,846) (19,195)
Expenditures for intangible asset (3,253) (3,609)
Payments for purchases of available-for-sale securities (59) (8)
Proceeds from sales of available-for-sale securities 10 --
Increase in time deposits, net (266) (2,028)
Other, net (4,787) 97
------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (24,951) (24,161)
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 2,569 25,564
Repayment of long-term indebtedness (17,358) (18,744)
Increase in short-term borrowings, net 40,238 12,098
Repayment of long-term debt securities (237) --
Dividends paid (11,971) (6,163)
Payment for purchase of treasury stock (5) (5)
Other, net (301) (327)
------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 12,935 12,423
------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (2,360) (4,832)
------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (9,502) (7,709)
------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 172,221 156,210
------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 162,719 148,501
==================================================================================================================
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 first quarter ended
June 30, 2012 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.
During the fiscal year ended March 31, 2012, certain subsidiaries of the Company
changed their fiscal year-ends from December 31 to March 31. Prior-year
consolidated financial statements have been retrospectively adjusted in order to
reflect the elimination of the lag period.
The effect of the retrospective application was as follows.
Millions of Yen
-------------------------------------
First quarter ended June 30, 2011
-------------------------------------
As originally reported As adjusted
---------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 3,446 4,933
Net income attributable to Ricoh Company, Ltd.
shareholders per share-basic(yen) 4.75 6.80
Net income attributable to Ricoh Company, Ltd.
shareholders per share-diluted (yen) 4.74 6.79
=======================================================================================
6
(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. 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, 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. Consideration
in a multiple-element arrangement is allocated at the inception of the
arrangement to all deliverables on the basis of the relative selling price if
both of the following criteria are met: the delivered item(s) has value to the
customer on a stand-alone basis; and the delivery of the undelivered item must
be probable and controlled by Ricoh if the arrangement includes the right of
return. If these criteria are not met, revenue is deferred until the undelivered
elements are fulfilled and accounted for 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
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.
7
(D) CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments such as certificates
of deposits (CD) and time deposits with maturities of three months or less.
In addition, short term investments such as money management funds (MMF) and
free financial funds (FFF) with maturities of three months or less are also
classified into cash and cash equivalents, as they are readily convertible to
cash and present insignificant risk of changes in value.
(E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
As discussed further in Note 7, 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 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.
8
(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).
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
Depreciation of property, plant and equipment is computed principally over the
estimated useful lives. Most of the foreign subsidiaries have adopted the
straight-line method for computing depreciation. The Company and its domestic
subsidiaries have adopted using the declining-balance method for computing
depreciation, but the Company reviewed the method of depreciating fixed assets,
triggered by the group-wide reorganization of its domestic manufacturing
functions based on the changes in the economic environment. As a result, the
Company decided that the straight-line method is more appropriate to reflect the
expected pattern of consumption of property, plant and equipment because the
change in assets structure due to the recent increase of the capital
expenditures for new manufacturing technology gives equalization of the pattern
of consumption of the future benefits to be derived from those assets. On April
1, 2012, the Company and its domestic consolidated subsidiaries changed their
depreciation method from the declining-balance method to the straight-line
method.
In accordance with ASC 250, "Accounting Changes and Error corrections", the
effects of the change are accounted for prospectively beginning with the period
of change, as a change in accounting estimate. Management believes that this
change did not make a material effect on Ricoh's consolidated financial
statements.
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.
9
(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 functionality. The
capitalized software is amortized on a straight line basis generally from 3
years to 10 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. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income for 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.
10
(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 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) RECENTLY ADOPTED NEW ACCOUNTING STANDARDS
Ricoh adopted ASC 220 as from April 1 2012, which was revised based on
Accounting Standards Update (ASU) 2011-05 and 2011-12. ASU 2011-05 requires an
entity to present net income and other comprehensive income either in a single
continuous statement or in two separate, but consecutive, statements. This ASU
also requires separate presentation in both net income and other comprehensive
income of reclassification adjustments for items that are reclassified from
other comprehensive income to net income. ASU 2011-12 defers the effective date
for only the presentation requirements related to reclassifications in ASU
2011-05.
Ricoh has presented this requirement in two separate, but consecutive
statements. Management believes this adoption has not made a material effect on
Ricoh's consolidated financial statements.
11
(T) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In December 2011, the FASB issued ASU 2011-11. This ASU requires an entity to
disclose information about offsetting and related arrangements to enable users
of financial statements to understand the effect of those arrangements on its
financial position, and to allow investors to better compare financial
statements prepared under U.S. GAAP with financial statements prepared under
International Financial Reporting Standards (IFRS). It is effective for fiscal
years beginning on or after January 1, 2013 and interim periods within those
annual periods. Retrospective application is required and early adoption is
permitted. Management believes the adoption of ASU 2011-11 will not have a
material effect on Ricoh's consolidated financial position.
(U) RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements to conform with the current year's presentation.
12
2. SECURITIES
Investment securities as of March 31, 2012 and June 30, 2012 consist of the
following:
Millions of Yen
-----------------------------
March 31, 2012 June 30, 2012
--------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 43,633 42,643
Non-marketable equity securities 1,837 1,847
--------------------------------------------------------------------------------
Total 45,470 44,490
================================================================================
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, 2012 and June 30, 2012 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
March 31, 2012 June 30, 2012
----------------------------------------- -----------------------------------------
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 35,489 6,590 225 41,854 35,421 5,907 405 40,923
Corporate debt
securities 1,697 82 -- 1,779 1,623 97 -- 1,720
----------------------------------------------------------------------------------------------------------
Total 37,186 6,672 225 43,633 37,044 6,004 405 42,643
==========================================================================================================
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, 2012
and June 30, 2012 are as follows:
Millions of Yen
----------------------------------------------------------------------------------
March 31, 2012
----------------------------------------------------------------------------------
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 781 129 467 96 1,248 225
==============================================================================================================
Millions of Yen
----------------------------------------------------------------------------------
June 30, 2012
----------------------------------------------------------------------------------
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 963 288 388 117 1,351 405
==============================================================================================================
13
Gross unrealized holding losses of available-for-sale securities as of March 31,
2012 and June 30, 2012 consist of 29 and 36 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 June 30, 2012 are as follows:
Millions of Yen
---------------------
Cost Fair value
------------------------------------------------------------------------------
Due after one year through five years 477 478
Over five years 1,146 1,242
------------------------------------------------------------------------------
Total 1,623 1,720
==============================================================================
There were no significant proceeds from the sales of available-for-sale
securities for the first quarter ended June 30, 2011and 2012, respectively.
There were no significant realized gains or losses on sales of
available-for-sale securities for the first quarter ended June 30, 2011 and
2012.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the first quarter ended June 30, 2011 and
2012.
3. PENSION AND RETIREMENT ALLOWANCE PLANS
The net periodic benefit costs of the pension plans consist of the following
components:
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
----------------------------------------------------------------------------------------------
Service cost 3,039 3,122
Interest cost 3,568 3,275
Expected return on plan assets (2,238) (2,213)
Net amortization 550 905
----------------------------------------------------------------------------------------------
Total net periodic pension cost 4,919 5,089
==============================================================================================
14
4. EQUITY
The change in Ricoh shareholders' equity, noncontrolling interests and total
equity for the first quarter ended June 30, 2011 and 2012 is as follow:
First quarter ended June 30, 2011 First quarter ended June 30, 2012
---------------------------------------- ----------------------------------------
Ricoh Ricoh
Shareholders' Noncontrolling Total Shareholders' Noncontrolling Total
Equity Interests Equity Equity Interests Equity
----------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period 925,243 52,887 978,130 822,704 56,314 879,018
----------------------------------------------------------------------------------------------------------------------
Net income 4,933 1,175 6,108 6,357 1,110 7,647
Unrealized losses on securities (696) (1) (697) (695) (4) (699)
Pension liability adjustments 745 3 748 (235) (20) (255)
Unrealized losses on
derivatives (522) (7) (529) (228) (61) (289)
Foreign currency translation
adjustments (6,236) (55) (6,291) (29,478) (177) (29,655)
----------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) (1,776) 1,115 (661) (24,099) 848 (23,251)
----------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (11,971) -- (11,971) (6,163) -- (6,163)
Distributions to Noncontrolling
interests -- (305) (305) -- (328) (328)
Net changes in treasury stock 4 -- 4 (2) -- (2)
Equity transactions with
noncontrolling interests -- (198) (198) -- -- --
Other (5) -- (5) (2) -- (2)
----------------------------------------------------------------------------------------------------------------------
Equity, End of Period 911,495 53,499 964,994 792,438 56,834 849,272
======================================================================================================================
5. DIVIDENDS
Cash dividends paid during the first quarter ended June 30, 2011 and 2012 are 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
=============================================================================
Resolved at the General meetings of Shareholders on June 26, 2012
-----------------------------------------------------------------------------
Total amount of dividends (million of yen) 6,163
Dividend per share of common stock (yen) 8.50
Record date March 31, 2012
Effective date June 27, 2012
Resource for dividend Retained earnings
=============================================================================
15
6. PER SHARE DATA
Ricoh shareholders' equity per share was Yen 1,134.64 and Yen 1,092.90 as of
March 31, 2012 and June 30, 2012, respectively. Dividends per share shown in the
consolidated statement of income are computed based on dividends paid for the
first quarter ended June 30, 2011 and 2012.
Reconciliations 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:
Thousands of shares
---------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,503 725,077
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 793 --
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 726,296 725,077
======================================================================================================
Millions of Yen
---------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
------------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 4,933 6,537
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 0 --
------------------------------------------------------------------------------------------------------
Diluted net income attributable to Ricoh Company, Ltd. 4,933 6,537
======================================================================================================
Yen
---------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
------------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. per share:
Basic:
Basic: Net income attributable to Ricoh Company, Ltd. 6.80 9.02
Diluted:
Diluted: Net income attributable to Ricoh Company, Ltd. 6.79 --
======================================================================================================
Diluted net income per share attributable to Ricoh Company, Ltd. for the first
quarter ended June 30, 2012 is omitted because the Company did not have
potentially dilutive common shares that were outstanding for the period.
16
7. 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 (including interest rate and
currency 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 were no fair value
hedges as of June 30, 2011 and 2012.
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 first quarter ended June 30, 2012 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 expenses during the next 12 months
approximately Yen 30 million of the balance of accumulated other comprehensive
income as of June 30, 2012.
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.
17
Contract amounts of derivative instruments at March 31, 2012 and June 30, 2012
are shown in the following tables:
Millions of Yen
-------------------------------------------------------------------------------
March 31, June 30,
2012 2012
-------------------------------------------------------------------------------
Interest rate swap agreements 339,234 348,155
Foreign currency contracts 190,543 186,294
Foreign currency options 27,657 43,564
===============================================================================
The location and fair value amounts of derivatives in consolidated balance sheet
are shown in the following tables:
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, June 30, March 31, June 30,
Asset Derivatives 2012 2012 2012 2012
--------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Deferred income Lease deposits
taxes and other -- -- and other 45 87
==============================================================================================================
March 31, June 30, March 31, June 30,
Liability Derivatives 2012 2012 2012 2012
--------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Accrued expenses Deferred income
and other 452 470 taxes and other 1,526 1,971
==============================================================================================================
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, June 30, March 31, June 30,
Asset Derivatives 2012 2012 2012 2012
--------------------------------------------------------------------------------------------------------------
Foreign currency contracts Deferred income Lease deposits
taxes and other 389 2,506 and other 79 --
Foreign currency options 36 421 -- --
--------------------------------------------------------------------------------------------------------------
Total 425 2,927 79 --
==============================================================================================================
March 31, June 30, March 31, June 30,
Liability Derivatives 2012 2012 2012 2012
--------------------------------------------------------------------------------------------------------------
Interest rate swap agreements 27 58 222 203
Foreign currency contracts Accrued expenses Deferred income
and other 3,112 684 taxes and other 3,188 542
Foreign currency options 1,056 149 -- --
--------------------------------------------------------------------------------------------------------------
Total 4,195 891 3,410 745
==============================================================================================================
18
Total fair value amounts of derivatives
Millions of Yen
-------------------
Fair value
---------------------------------------------------------------------------
March 31, June 30,
2012 2012
---------------------------------------------------------------------------
Total Asset Derivatives 549 3,014
Total Liability Derivatives 9,583 4,077
---------------------------------------------------------------------------
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the first quarter ended June 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 (588) Interest expense (66) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
-----------------------------------------------------------
Location Millions of Yen
---------------
June 30, 2011
------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (162)
Foreign currency contracts Foreign currency exchange (gain) loss, net 4,870
Foreign currency options Foreign currency exchange (gain) loss, net 76
------------------------------------------------------------------------------------------
Total 4,784
==========================================================================================
19
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the first quarter ended June 30, 2012
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 (247) Interest expense (19) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
-----------------------------------------------------------
Location Millions of Yen
---------------
June 30, 2012
------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (12)
Foreign currency contracts Foreign currency exchange (gain) loss, net 7,112
Foreign currency options Foreign currency exchange (gain) loss, net 1,292
------------------------------------------------------------------------------------------
Total 8,392
==========================================================================================
8. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees housing
loans of Yen 13 million as of June 30, 2012.
As of June 30, 2012 the Company and its certain 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.
9. 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 to fair values because of the short maturities
of these instruments.
20
(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 1,837 million and Yen 1,847 million as of March 31, 2012 and
June 30, 2012, 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. Installment loans using inputs described above are classified as Level
2 under the Fair Value Measurement and Disclosure framework.
The definition of the three levels of input used to measure fair value is more
fully described in Note 10.
(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.
Long-term indebtedness using inputs described above are classified as Level 2
under the Fair Value Measurement and Disclosure framework.
(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 are estimated by obtaining quotes from brokers.
The estimated fair value of the financial instruments as of March 31, 2012 and
June 30, 2012 are summarized as follows:
Millions of Yen
-----------------------------------------
March 31, 2012 June 30, 2012
-------------------- --------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------------------------------------------------------------------------------
Investment securities 45,470 45,470 44,490 44,490
Installment loans 83,361 84,441 83,339 84,418
Long-term indebtedness (525,435) (524,056)(526,566) (525,666)
Interest rate swap agreements, net (2,182) (2,182) (2,615) (2,615)
Foreign currency contracts, net (5,832) (5,832) 1,280 1,280
Foreign currency options, net (1,020) (1,020) 272 272
==============================================================================
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.
21
10. 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-level 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, 2012 and June 30, 2012.
Millions of Yen
------------------------------
March 31, 2012
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 35,734 -- -- 35,734
Foreign equity securities 6,120 -- -- 6,120
Foreign corporate bonds 1,779 -- -- 1,779
Derivative instruments
Interest rate swap agreements -- 45 -- 45
Foreign currency contracts -- 468 -- 468
Foreign currency options -- 36 -- 36
-------------------------------------------------------------------------
Total assets 43,633 549 -- 44,182
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,227 -- 2,227
Foreign currency contracts -- 6,300 -- 6,300
Foreign currency options -- 1,056 -- 1,056
------------------------------------ ------------------------------------
Total liabilities -- 9,583 -- 9,583
=========================================================================
22
Millions of Yen
------------------------------
June 30, 2012
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 33,585 -- -- 33,585
Foreign equity securities 7,338 -- -- 7,338
Foreign corporate bonds 1,720 -- -- 1,720
Derivative instruments
Interest rate swap agreements -- 87 -- 87
Foreign currency contracts -- 2,506 -- 2,506
Foreign currency options -- 421 -- 421
-------------------------------------------------------------------------
Total assets 42,643 3,014 -- 45,657
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,702 -- 2,702
Foreign currency contracts -- 1,226 -- 1,226
Foreign currency options -- 149 -- 149
-------------------------------------------------------------------------
Total liabilities -- 4,077 -- 4,077
=========================================================================
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 (including interest rate and currency 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.
Assets and liabilities measured at fair value on a non-recurring basis
There were no material assets and liabilities measured at fair value on a
non-recurring basis during the three months ended June 30, 2012 and 2011.
11. TRANSFER OF FINANCIAL ASSETS
Ricoh Leasing Company, Ltd. transferred its lease receivables to a trust and
received the beneficial interests in the trust originated from the transferred
assets. Subsequently, Ricoh Leasing Company, Ltd. transferred the
non-subordinated beneficial interests to and received cash as consideration from
transferees, such as Special Purpose Entity ("SPE") that are different from the
trust mentioned above, as a part of securitization programs. The retained
subordinated interests were considered as variable interests, since the
subordinated interests had the obligation to absorb the expected loss of the
trust.
23
Ricoh performs a qualitative analysis to determine the primary beneficiary of a
Variable Interest Entity ("VIE"). The primary beneficiary of a VIE has both the
: (1) power to direct the activities of a VIE that most significantly impact the
entity's economic performance and (2) obligation to absorb losses or the right
to receive benefits from the VIE that could potentially be significant to the
VIE.
Ricoh Leasing Company, Ltd. was considered as the primary beneficiary since
Ricoh Leasing Company, Ltd. acted as a special servicer for lease receivables
transferred to the trust and therefore, deemed to meet the criteria (1) and (2)
above.
As a result of the above consideration, Ricoh consolidated the trust and
eliminating the retained subordinated beneficial interests on the consolidated
balance sheet. The consolidated assets and liabilities as of March 31, 2012 and
June 30, 2012 are as follows:
Millions of Yen
-----------------------------
March 31, 2012 June 30, 2012
---------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 15,487 15,109
Long-term finance receivables, net 30,225 29,486
Current maturities of long-term indebtedness 12,487 11,963
Long-term indebtedness 24,371 23,349
The transferring of the non-subordinated beneficial interests was recorded as
secured loans, since Ricoh Leasing Company, Ltd. retained subordinated
beneficial interests and such interests did not meet the definition of
participating interest. Lease receivables are only to be used to settle
obligation of the trust's liabilities or transferee's liabilities in
substantially. Servicing assets or liabilities related to securitization
transactions initiated were not recorded, because the servicing fees adequately
compensate Ricoh.
Apart from the transactions mentioned above, Ricoh's foreign subsidiaries
transferred lease receivables with recourse. Ricoh recorded these transfers as
secured loans, since these transactions did not meet the derecognition criteria
of financial assets. The assets and liabilities that were accounted for as
secured loans are as follows:
Millions of Yen
-----------------------------
March 31, 2012 June 30, 2012
---------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 1,397 1,187
Long-term finance receivables, net 6,919 6,413
Current maturities of long-term indebtedness 1,397 1,187
Long-term indebtedness 6,919 6,413
12. 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.
24
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.
Financing receivables and allowance for doubtful receivables as of June 30, 2011
and June 30, 2012 are as follows:
Millions of Yen
---------------------------------------------------
June 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 (425) (4) (19) (448)
Recoveries (54) 0 0 (54)
Provision 2,570 58 86 2,714
Translation adjustment (35) -- (19) (54)
Ending balance 12,583 1,826 2,533 16,942
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 6,148 743 1,318 8,209
Collectively evaluated 6,435 1,083 1,215 8,733
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 75,931 885 4,079 80,895
Collectively evaluated 517,376 74,905 46,449 638,730
-------------------------------------------------------------------------------------------------
Total: Financing receivables 593,307 75,790 50,528 719,625
=================================================================================================
Millions of Yen
---------------------------------------------------
June 30, 2012
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Beginning balance 8,472 1,747 2,595 12,814
-------------------------------------------------------------------------------------------------
Charge-offs (402) (7) (34) (443)
Recoveries -- -- -- --
Provision 683 (64) (9) 610
Translation adjustment (168) -- -- (168)
Ending balance 8,585 1,676 2,552 12,813
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 2,609 623 1,982 5,214
Collectively evaluated 5,976 1,053 570 7,599
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 60,028 837 5,088 65,953
Collectively evaluated 547,454 84,178 45,381 677,013
-------------------------------------------------------------------------------------------------
Total: Financing receivables 607,482 85,015 50,469 742,966
=================================================================================================
25
(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, 2012
and June 30, 2012 are as follows:
Millions of Yen
---------------------------------------------------
March 31, 2012
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 608,336 84,274 45,049 737,659
Overdue 4,495 834 2,403 7,732
-------------------------------------------------------------------------------------------------
Total: Financing receivables 612,831 85,108 47,452 745,391
=================================================================================================
Millions of Yen
---------------------------------------------------
June 30, 2012
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 603,696 84,227 48,102 736,025
Overdue 3,786 788 2,367 6,941
-------------------------------------------------------------------------------------------------
Total: Financing receivables 607,482 85,015 50,469 742,966
=================================================================================================
13. 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 first quarter ended June 30, 2011 and
2012. Intersegment sales are made at arm's-length prices. No single customer
accounted for 10% or more of the total revenues for the first quarter ended June
30, 2011 and 2012.
26
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
------------------------------------------------------------------------------------------
Segment sales:
Imaging & Solutions 413,350 400,550
Industrial Products 26,265 24,508
Other 28,844 35,317
Intersegment transaction (1,066) (988)
------------------------------------------------------------------------------------------
Total segment sales 467,393 459,387
==========================================================================================
Segment profit (loss):
Imaging & Solutions 28,050 30,742
Industrial Products (481) (418)
Other (387) (304)
------------------------------------------------------------------------------------------
Total segment profit (loss) 27,182 30,020
==========================================================================================
Reconciling items:
Corporate expenses and elimination (15,856) (15,739)
Interest and dividend income 607 842
Interest expense (1,463) (1,521)
Foreign currency exchange loss, net (1,185) (1,315)
Other, net 2 (12)
------------------------------------------------------------------------------------------
Income before income taxes and equity in earnings
of affiliates 9,287 12,275
==========================================================================================
Intersegment sales represent sales of Industrial Products segment to Imaging &
Solutions segment.
Certain products were reclassified into Imaging & Solutions and Industrial
Products from Other in this fiscal year. The reclassification was made to the
prior year's figures.
(B) GEOGRAPHIC INFORMATION
Sales which are attributed to countries based on location of customers are as
follows:
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
------------------------------------------------------------------------------------------
Sales:
Japan 215,312 215,449
The Americas 114,243 117,467
Europe, Middle East and Africa 107,718 95,253
Other 30,120 31,218
------------------------------------------------------------------------------------------
Consolidated 467,393 459,387
==========================================================================================
Middle East and Africa were reclassified from Other into Europe in this fiscal
year. The reclassification was made to the prior year's figures.
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14. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF INCOME
The following amounts were charged to selling, general and administrative
expenses for the first quarter ended June 30, 2011 and 2012:
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2011 June 30, 2012
------------------------------------------------------------------------------------------
Research and development costs 27,683 27,063
Advertising costs 2,373 2,317
Shipping and handling costs 4,936 5,740
==========================================================================================
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