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 2009
Commission File Number 2 - 68279
RICOH COMPANY, LTD.
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(Translation of Registrant's name into English)
13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, Japan
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(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-__ )
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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.
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(Registrant)
By: /S/ Zenji Miura
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Zenji Miura
Director, Chief Financial Officer
Corporate Executive Vice President
November 10, 2009
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RICOH COMPANY, LTD.
Consolidated Financial Statements
For the six months ended September 30, 2009
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the six months ended September 30, 2009 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30, 2009 and March 31, 2009
Millions of Yen
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September 30, March 31,
ASSETS 2009 2009
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Current assets:
Cash and cash equivalents 224,213 258,484
Time deposits 2,190 2,043
Trade receivables:
Notes 43,074 45,781
Accounts 415,595 460,519
Less- Allowance for doubtful receivables (21,211) (21,533)
Current maturities of long-term finance
receivables, net 193,308 195,617
Inventories:
Finished goods 99,533 123,798
Work in process and raw materials 78,234 67,772
Deferred income taxes and other 67,957 79,385
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Total current assets 1,102,893 1,211,866
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Property, plant and equipment, at cost:
Land 45,364 45,693
Buildings 238,806 235,905
Machinery and equipment 636,984 613,879
Construction in progress 32,963 23,459
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Total 954,117 918,936
Less- accumulated depreciation (684,820) (649,600)
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Net property, plant and equipment 269,297 269,336
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Investments and other assets:
Long-term finance receivables, net 455,739 465,262
Investment securities 54,236 47,815
Investments in and advances to affiliates 1,075 1,248
Goodwill 241,526 250,330
Other intangible assets 152,066 165,126
Lease deposits and other 100,144 102,512
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Total investments and other assets 1,004,786 1,032,293
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Total 2,376,976 2,513,495
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1
Millions of Yen
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September 30, March 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2009 2009
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Current liabilities:
Short-term borrowings 100,097 184,210
Current maturities of long-term indebtedness 106,667 85,582
Trade payables:
Notes 12,202 12,914
Accounts 231,539 272,499
Accrued income taxes 9,475 10,317
Accrued expenses and other 197,430 207,969
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Total current liabilities 657,410 773,491
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Long-term liabilities:
Long-term indebtedness 517,533 509,403
Accrued pension and severance costs 152,924 156,625
Deferred income taxes and other 43,671 49,626
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Total long-term liabilities 714,128 715,654
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Ricoh Shareholders' Equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 806,628 815,725
Accumulated other comprehensive loss (135,725) (125,121)
Treasury stock at cost (36,706) (36,678)
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Total Ricoh shareholders' equity 955,644 975,373
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Noncontrolling interest 49,794 48,977
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Total equity 1,005,438 1,024,350
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Total 2,376,976 2,513,495
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The accompanying notes are an integral part of these financial statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Six Months Ended September 30, 2008 and 2009
Millions of Yen
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Six months ended Six months ended
September 30, 2008 September 30, 2009
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Net Sales:
Products 573,451 464,196
Post sales and rentals 434,322 474,803
Other revenue 58,154 49,792
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Total 1,065,927 988,791
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Cost of sales:
Products 382,773 333,682
Post sales and rentals 192,998 218,281
Other revenue 46,812 38,626
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Total 622,583 590,589
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Gross profit 443,344 398,202
Selling, general and administrative expenses 378,268 384,207
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Operating income 65,076 13,995
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Other (income) expenses:
Interest and dividend income (3,078) (1,742)
Interest expense 2,448 4,071
Foreign currency exchange (gain) loss, net 1,279 4,863
Other, net 5,552 37
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Total 6,201 7,229
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Income before income taxes and equity in
earnings of affiliates 58,875 6,766
Provision for income taxes:
Current 28,379 9,500
Deferred (5,797) (5,626)
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Total 22,582 3,874
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Equity in earnings of affiliates 22 12
Consolidated net income 36,315 2,904
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Net income attributable to noncontrolling
interest 1,970 1,096
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Net income attributable to Ricoh Company, Ltd. 34,345 1,808
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Yen Yen
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Per share of common stock:
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Basic 47.56 2.49
Diluted 46.28 2.41
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Cash dividends paid per share 17.00 15.00
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Per American Depositary Share, each
representing 5 shares of common stock:
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Basic 237.80 12.45
Diluted 231.40 12.05
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Cash dividends paid per share 85.00 75.00
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The accompanying notes are an integral part of these financial statements.
3
For the Three Months Ended September 30, 2008 and 2009
Millions of Yen
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Three months ended Three months ended
September 30, 2008 September 30, 2009
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Net Sales:
Products 297,966 238,884
Post sales and rentals 213,278 233,425
Other revenue 33,109 25,093
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Total 544,353 497,402
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Cost of sales:
Products 207,523 174,631
Post sales and rentals 94,557 105,207
Other revenue 27,326 19,667
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Total 329,406 299,505
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Gross profit 214,947 197,897
Selling, general and administrative expenses 189,621 189,978
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Operating income 25,326 7,919
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Other (income) expenses:
Interest and dividend income (1,790) (1,159)
Interest expense 1,379 1,968
Foreign currency exchange (gain) loss, net 4,214 3,919
Other, net 6,383 (160)
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Total 10,186 4,568
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Income before income taxes and equity in
earnings of affiliates 15,140 3,351
Provision for income taxes:
Current 8,900 3,488
Deferred (3,143) (1,493)
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Total 5,757 1,995
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Equity in earnings of affiliates 15 8
Consolidated net income 9,398 1,364
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Net income attributable to noncontrolling
interest 796 459
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Net income attributable to Ricoh Company, Ltd. 8,602 905
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Yen Yen
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Per share of common stock:
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Basic 11.89 1.25
Diluted 11.57 1.21
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Cash dividends paid per share -- --
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Per American Depositary Share, each
representing 5 shares of common stock:
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Basic 59.45 6.25
Diluted 57.85 6.05
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Cash dividends paid per share -- --
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The accompanying notes are an integral part of these financial statements.
4
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended September 30, 2008 and 2009
Millions of Yen
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Six months ended Six months ended
September 30, 2008 September 30, 2009
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CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income 36,315 2,904
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 48,742 48,821
Equity in earnings of affiliates, net of
dividends received (22) (12)
Deferred income taxes (5,797) (5,626)
Losses on disposals and sales of
property, plant and equipment 760 341
Pension and severance costs, less payment 1,245 (1,274)
Changes in assets and liabilities, net
of effects from acquisition-
Decrease in trade receivables 4,719 41,056
(Increase) Decrease in inventories (15,586) 10,769
(Increase) Decrease in finance
receivables (16,240) 11,827
Decrease in trade payables (33,167) (37,705)
Decrease in accrued income taxes and
accrued expenses and other (9,550) (2,258)
Other, net 9,681 14,379
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Net cash provided by operating
activities 21,100 83,222
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and
equipment 73 752
Expenditures for property, plant and
equipment (46,965) (38,461)
Payments for purchases of available-for-sale
securities (909) (684)
Proceeds from sales of available-for-sale
securities 253 910
Increase in time deposits, net (1,047) (292)
Purchase of business, net of cash acquired (4,717) (4,760)
Other, net (12,328) (10,945)
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Net cash used in investing activities (65,640) (53,480)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 25,329 32,449
Repayment of long-term indebtedness (37,243) (38,739)
Increase (Decrease) in short-term
borrowings, net 58,981 (79,124)
Proceeds from issuance of long-term debt
securities -- 35,000
Dividends paid (12,256) (10,885)
Payment for purchase of treasury stock (317) (82)
Other, net (312) (247)
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Net cash provided by (used in)
financing activities 34,182 (61,628)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (575) (2,385)
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NET INCREASE IN CASH AND CASH EQUIVALENTS (10,933) (34,271)
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CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 170,607 258,484
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CASH AND CASH EQUIVALENTS AT END OF PERIOD 159,674 224,213
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The accompanying notes are an integral part of these financial statements.
5
Ricoh Company, Ltd. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
According to the article 93 of the "Regulations Regarding Terms, Forms and
Preparation of Interim Consolidated Financial Statements" (Cabinet office
Ordinance No.64, 2007), the accompanying consolidated financial statements of
Ricoh (Ricoh Company, Ltd. and its consolidated subsidiaries) have been
prepared in conformity with U.S. generally accepted accounting principles.
Significant accounting and reporting policies are summarized below:
The accompanying consolidated financial statements for the six months ended
September 30, 2009 are presented in Japanese yen, the functional currency of
the Company and its domestic subsidiaries.
The books of the Company and its domestic subsidiaries are maintained in
conformity with Japanese accounting principles and practices, while foreign
subsidiaries maintain their books in conformity with the standards of their
country of domicile.
The accompanying consolidated financial statements reflect necessary
adjustments, not recorded in the books, to present them in conformity with U.S.
generally accepted accounting principles.
(A) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. The accounts of variable interest
entity as defined by the FASB Accounting Standards Codification ("ASC") 810,
"Consolidation" (former EITF Issue No.46, revised December 2003), are included
in the consolidated financial statements, if applicable. Investments in
entities in which Ricoh has the ability to exercise significant influence over
the entities' operating and financial policies (generally 20 to 50% ownership)
are accounted for on an equity basis. All significant intercompany balances and
transactions have been eliminated in consolidation.
The accounts of certain consolidated subsidiaries have been included on the
basis of fiscal periods ended within three months prior to 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 is recognized at the time of delivery and installation at the
customer location. Equipment revenues are based on established prices by
product type and model and are net of discounts. A sales return is accepted
only when the equipment is defective and does not meet Ricoh's product
performance specifications. Other than installation, there are no customer
acceptance clauses in the sales contract.
Post sales and rentals result primarily from maintenance contracts that are
normally entered into at the time the equipment is sold. Standard service fee
prices are established depending on equipment classification and include a cost
value for the estimated services to be performed based on historical experience
plus a profit margin thereon. As a matter of policy, Ricoh does not discount
such prices. On a monthly basis,
6
maintenance service revenues are earned and recognized by Ricoh and billed to
the customer in accordance with the contract and include a fixed monthly fee
plus a variable amount based on usage. The length of the contract ranges up to
five-years, however, most contracts are cancelable at any time by the customer
upon a short notice period. Leases not qualifying as sales-type leases or
direct financing leases are accounted for as operating leases and related
revenue is recognized over the lease term.
Ricoh enters into arrangements with multiple elements, which may include any
combination of products, equipment, installation and maintenance. Ricoh
allocates revenue to each element based on its relative fair value if such
element meets the criteria for treatment as a separate unit of accounting as
prescribed in ASC 605, "Revenue Recognition" (former EITF Issue No.00-21).
Pursuant to ASC 605, the delivered item in a multiple element arrangement
should be considered a separate unit of accounting if all of the following
criteria are met: (1) a delivered item has value to customers on a stand-alone
basis, (2) there is objective and reliable evidence of fair value of an
undelivered item, and (3) the delivery of the undelivered item must be probable
and controlled by Ricoh if the arrangement includes the right of return. The
price charged when the element is sold separately generally determines fair
value. Otherwise, revenue is deferred until the undelivered elements are
fulfilled as a single unit of accounting.
Revenue from the sale of equipment under sales-type leases is recognized as
product sales at the inception of the lease. Other revenue consists primarily
of interest income on sales-type leases and direct-financing leases, which are
recognized as other revenue over the life of each respective lease using the
interest method.
(C) FOREIGN CURRENCY TRANSLATION
For foreign operations with functional currencies other than the Japanese yen,
assets and liabilities are translated at the exchange rates in effect at each
end of the period, and income and expenses are translated at the average rates
of exchange prevailing during each period. The resulting translation
adjustments are included as a part of accumulated other comprehensive income
(loss) in Ricoh shareholders' equity.
All foreign currency transaction gains and losses are included in other income
and expense in the period incurred.
(D) CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with maturities of
three months or less at the date of purchase such as time deposits and
short-term investment securities which are available-for sale at any time,
present insignificant risk of changes in value due to being readily convertible
into cash and have an original maturity of three months or less, such as money
management funds and free financial funds.
(E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
As discussed further in Note 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.
In accordance with ASC 815, "Derivatives and Hedging" (former SFAS No. 133,
138, 149 and 161) as amended, 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
7
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 of which Ricoh has concluded it will be unable to collect all
amounts due according to original terms of the lease or loan agreement. Account
balances net of expected recovery from available collateral are charged-off
against the allowances when collection is considered remote.
(G) SECURITIES
Ricoh applies ASC 320, "Debt and Equity Securities" (former SFAS No.115), which
requires all investments in debt and marketable equity securities to be
classified as either held-to-maturity, trading, or available-for-sale
securities. As of September 30, 2009 and March 31, 2009, Ricoh's investments in
debt and marketable equity securities are classified as trading or
available-for-sale securities. Trading securities are reported at fair value
with gains and losses recognized in current earnings. 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: length of time and extent of decline, 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.
8
Non-marketable equity securities owned by Ricoh primarily relate to less than
20% owned companies and 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
In accordance with ASC 350 (former Statement of Position ("SOP") 98-1) Ricoh
capitalizes qualifying cost of computer software. Costs incurred during the
application development stage as well as upgrades and enhancements that results
in additional functionality are capitalized. The capitalized software is
amortized on a straight line basis over their estimated useful lives.
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
ASC 805, "Business Combinations" (former SFAS No. 141R) requires the use of the
acquisition method of accounting for business combinations and refines the
definition of intangible assets acquired in a purchase business combination.
ASC 350, "Goodwill and Other Intangible Assets" (former SFAS No.142) eliminates
the amortization of goodwill and instead requires goodwill to be tested at
least annually for impairment. ASC 350 also requires acquired intangible assets
with a definite useful life to be amortized over their respective estimated
useful lives and reviewed for impairment when an indication of impairment is
identified in accordance with ASC 360, "Property, Plant, and Equipment" (former
SFAS No.144). Other intangible assets with definite useful lives, consisting
primarily of software, patents, 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.
(L) PENSION AND RETIREMENT ALLOWANCES PLANS
The measurement of pension costs and liabilities is determined in accordance
with ASC 715, "Retirement Benefits" (former SFAS No.87 and SFAS No.158). Under
ASC 715 (former SFAS 158), Ricoh recognized the funded status (i.e., the
difference between the fair value of plan assets and the projected benefit
obligations) of its pension fund plans on the consolidated balance sheets, with
a corresponding adjustment to accumulated other comprehensive income (loss),
net of tax. The expected long-term rate of return on
9
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
In accordance with ASC 740, "Income Taxes" (former SFAS No.109), income taxes
are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences and carryforwards are expected to be realized or
settled.
Ricoh applies ASC 740 (former FIN 48), and Ricoh recognizes interest and
penalties accrued related to unrecognized tax benefits in income taxes in the
consolidated statement of income.
(N) RESEARCH AND DEVELOPMENT EXPENSES AND ADVERTISING COSTS
Research and development expenses and advertising costs are expensed as
incurred.
(O) SHIPPING AND HANDLING COSTS
Shipping and handling costs, which mainly include transportation to customers,
are included in selling, general and administrative expenses in the
consolidated statements of income.
(P) IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
Long-lived assets and acquired intangible assets with a definite life are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset or 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) EARNINGS PER SHARE
Basic net income attributable to Ricoh Company, Ltd. per common share is
calculated by dividing net income by the weighted-average number of shares
outstanding during the period. The calculation of diluted net income
attributable to Ricoh Company, Ltd. per common share 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) NON-CASH TRANSACTIONS
The following non-cash transactions for the six months ended September 30, 2008
have been excluded from the consolidated statements of cash flows:
10
Millions of Yen
----------------------------------------------------------------
Six months ended
September 30, 2008
----------------------------------------------------------------
Issuance of treasury stock in exchange for
subsidiary's stock 9,138
----------------------------------------------------------------
The following non-cash transactions for the six months ended September 30, 2009
have been excluded from the consolidated statements of cash flows:
Millions of Yen
----------------------------------------------------------------
Six months ended
September 30, 2009
----------------------------------------------------------------
Debt assumed in connection with business
acquisition 3,941
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(S) USE OF ESTIMATES
Management of Ricoh has made a number of estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses, including
impairment losses of long-lived assets and the disclosures of fair value of
financial instruments and contingent assets and liabilities, to prepare these
financial statements in conformity with 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 purchase business combinations and pension accounting.
(T) RECENTLY ADOPTED NEW ACCOUNTING STANDARDS
In June 2009, FASB issued ASC 105, "Generally Accepted Accounting Principles"
(former SFAS No.168) in this first half. ASC 105 reduced the hierarchy of
generally accepted accounting principles from traditional four levels to two
levels: authoritative (ASC) and nonauthoritative. ASC 105 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009 and was adopted by Ricoh in the second quarter beginning
July 1, 2009. The adoption of ASC 105 did not have a material effect on Ricoh's
consolidated financial position or results of operations.
In December 2007, the FASB issued ASC 805 "Business Combinations" (former SFAS
No.141R). ASC 805 establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any noncontrolling interest in the acquiree
and the goodwill acquired. ASC 805 also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business
combination. ASC 805 is effective for fiscal years beginning on or after
December 15, 2008 and was adopted by Ricoh in the first quarter beginning
April 1, 2009. The adoption of ASC 805 did not have a material effect on
Ricoh's consolidated financial position or results of operations.
In December 2007, the FASB issued ASC 810 "Consolidation", (former SFAS
No.160). This statement requires that the noncontrolling interest in the equity
of a subsidiary be accounted for and reported as equity, provides revised
guidance on the treatment of net income and losses attributable to the
noncontrolling interest and changes in ownership interests in a subsidiary and
the valuation of retained noncontrolling equity investments when a subsidiary
is deconsolidated. ASC 810 also requires additional disclosures that identify
and distinguish between the interests of the controlling and noncontrolling
owners. Pursuant to the
11
transition provisions of ASC 810, Ricoh will adopt ASC 810 in fiscal year 2009
via retrospective application of the presentation and disclosure requirements.
In accordance with ASC 810, noncontrolling interest which were previously
referred to as minority interests and classified between total liabilities and
shareholders' investment on the consolidated balance sheets, are now included
as a separate component of total equity. In addition, consolidated net income
on the consolidated statements of income now includes the net income (loss)
attributable to noncontrolling interest. These financial statement presentation
requirements have been adopted retrospectively and prior year amounts in the
consolidated financial statements of cash flows have been reclassified or
adjusted to conform to ASC 810.
In May 2009, the FASB issued ASC 855 "Subsequent Events", (former SFAS No.165).
ASC 855 is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date - that is, whether that date represents the date
the financial statements were issued or were available to be issued. ASC 855 is
effective for fiscal years ended after June 15, 2009, and interim periods
within those fiscal years. ASC 855 was be adopted by Ricoh in the first quarter
beginning April 1, 2009. The adoption of ASC 855 did not have any effect on
Ricoh's consolidated financial position or results of operations.
In April 2008, the FASB finalized ASC 350, (former FSP 142-3). The position
amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset.
The position applies to intangible assets that are acquired individually or
with a group of other assets and both intangible assets acquired in business
combinations and asset acquisitions. ASC 350 is effective for fiscal years
beginning after December 15, 2008, and was adopted by Ricoh in the first
quarter beginning April 1, 2009. The adoption of ASC 350 did not have a
material effect on Ricoh's consolidated financial position or results of
operations.
(U) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In June 2009, the FASB issued SFAS No.166, "Accounting for Transfers of
Financial Assets-an amendment of FASB Statement No.140." This statement
eliminates the concept of a qualifying special-purpose entity ("QSPE"),
establishes conditions for reporting a transfer of a portion of a financial
asset as a sale, clarifies the financial-asset derecognition criteria, revises
how interests retained by the transferor in a sale of financial assets
initially are measured, removes the guaranteed mortgage securitization
recharacterization provisions and requires additional disclosures. SFAS 166 is
effective for fiscal years beginning after November 15, 2009 and for subsequent
interim and annual reporting periods. SFAS 166 will be adopted by Ricoh in the
first quarter beginning April 1, 2010. Ricoh is currently evaluating the effect
that the adoption of SFAS 166 will have on its consolidated results of
operations and financial condition.
In June 2009, the FASB issued SFAS No.167, "Amendments to FASB Interpretation
No.46(R)". This statement requires reporting entities to evaluate former QSPEs
for consolidation, changes the approach to determining a VIE's primary
beneficiary from a mainly quantitative assessment to an exclusively qualitative
assessment designed to identify a controlling financial interest, and increases
the frequency of required reassessments to determine whether a company is the
primary beneficiary of a VIE. SFAS 167 is effective for fiscal years beginning
after November 15, 2009 and for subsequent interim and annual reporting
periods. Earlier application is prohibited. SFAS 167 will be adopted by Ricoh
in the first quarter beginning April 1, 2010. Ricoh is currently evaluating the
effect that the adoption of SFAS 167 will have on its consolidated results of
operations and financial condition.
In December 2008, the FASB issued ASC 715, "Retirement Benefits" (former FSP
No. FAS 132(R)-1). ASC 715 requires additional disclosures about assets held in
an employer's defined benefit pension or other
12
postretirement plan. ASC 715 is effective for fiscal years ending after
December 15, 2009 and will be adopted by Ricoh in the fiscal year ending
March 31, 2010. Ricoh is currently evaluating the requirements of these
additional disclosures, but does not expect the adoption of ASC 715 to have an
impact on its consolidated results of operations and financial condition.
In August 2009, the FASB issued Accounting Standard Update ("ASU") 2009-05
"Measuring Liabilities at Fair Value" This ASU provides further guidance on how
to measure the fair value of a liability. This ASU is effective for the first
reporting period (including interim periods) beginning after issuance. This ASU
will be adopted by Ricoh in the third quarter beginning October 1, 2009. Ricoh
is currently evaluating the effect that the adoption of this ASU will have on
its consolidated results of operations and financial condition.
In September 2009, the FASB issued ASU 2009-12 "Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent)". This ASU allows
reporting entities to use net asset value per share to estimate the fair value
of these investments as a practical expedient. This ASU is effective for
interim and annual periods ending after December 15, 2009. This ASU will be
adopted by Ricoh in the third quarter beginning October 1, 2009. Ricoh is
currently evaluating the effect of this ASU on its consolidated results of
operations and financial condition but does not expect the effect to be
material.
In October 2009, the FASB issued ASU 2009-13 "Multiple-Deliverable Revenue
Arrangements". This ASU eliminates the residual method of revenue recognition
and allows the use of management's best estimate of selling price for
individual elements of an arrangement when vendor specific objective evidence
(VSOE) or third-party evidence (TPE) is unavailable. This ASU is effective for
fiscal years beginning on or after June 15, 2010 and early adoption is
permitted. If Ricoh does not elect early adoption, this ASU will be adopted by
Ricoh in the first quarter beginning April 1, 2011. Ricoh is currently
evaluating the effect that the adoption of this ASU will have on its
consolidated results of operations and financial condition.
In October 2009, the FASB issued ASU 2009-14 "Certain Revenue Arrangements That
Include Software Elements". This ASU amends the scope of pre-existing software
revenue guidance by removing from the guidance non-software components of
tangible products and certain software components of tangible products. This
ASU is effective for fiscal years beginning on or after June 15, 2010 and early
adoption is permitted. If Ricoh does not elect early adoption, this ASU will be
adopted by Ricoh in the first quarter beginning April 1, 2011. Ricoh is
currently evaluating the effect that the adoption of this ASU will have on its
consolidated results of operations and financial condition.
(V) RECLASSIFICATIONS
Certain reclassifications have been made to the prior year's consolidated
financial statement to confirm with the presentation used for the six months
ended September 30, 2009.
In accordance ASC 810, "Consolidation" (former SFAS No.160), noncontrolling
interest which were previously referred to as minority interests and classified
between total liabilities and shareholders' investment on the consolidated
balance sheets, are now included as a separate component of total equity. In
addition, consolidated net income on the consolidated statements of income now
includes the net income (loss) attributable to noncontrolling interest.
Purchase of business, net of cash acquired which was included in other, net of
"CASH FLOWS FROM INVESTING ACTIVITIES" on the consolidated statements of cash
flows for the six months ended September 30, 2008, are shown separately from
the six months ended September 30, 2009.
13
2. SECURITIES
Marketable securities and investment securities as of September 30, 2009 and
March 31, 2009 consist of the following:
Millions of Yen
-------------------------------------------------------------------------------
September 30, 2009 March 31, 2009
-------------------------------------------------------------------------------
Marketable securities:
Trading securities -- 725
-------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 52,762 46,341
Non-marketable equity securities 1,474 1,474
-------------------------------------------------------------------------------
54,236 47,815
-------------------------------------------------------------------------------
The current and non-current security types of available-for-sale securities,
and the respective cost, gross unrealized holding gains, gross unrealized
holding losses and fair value as of September 30, 2009 and March 31, 2009 are
as follows:
Millions of Yen
----------------------------------------------------------------------------------------------------------------------
September 30, 2009 March 31, 2009
----------------------------------------------------------------------------------------------------------------------
Gross Gross Gross Gross
unrealized unrealized unrealized unrealized
holding holding Fair holding holding Fair
Cost gains losses value Cost gains losses value
----------------------------------------------------------------------------------------------------------------------
Non-current:
Equity securities 42,458 8,852 408 50,902 43,002 2,650 590 45,062
Corporate debt securities 1,756 104 -- 1,860 1,279 0 -- 1,279
----------------------------------------------------------------------------------------------------------------------
44,214 8,956 408 52,762 44,281 2,650 590 46,341
----------------------------------------------------------------------------------------------------------------------
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
September 30, 2009 are as follows:
Millions of Yen
--------------------------------------------------------------------------------------------------
Less than 12 months 12 months or longer Total
--------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized
Fair holding Fair holding Fair Gross unrealized
value losses value losses value holding losses
--------------------------------------------------------------------------------------------------
Noncurrent:
Available-for-sale:
Equity securities 1,282 258 1,013 150 2,295 408
--------------------------------------------------------------------------------------------------
Ricoh judged the decline in fair value of investment securities at yearend 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, 2009 are as follows:
14
Millions of Yen
----------------------------------------------------------------------------
Fair
Cost value
----------------------------------------------------------------------------
Due after one year through five years 398 406
Over five years 1,358 1,454
----------------------------------------------------------------------------
1,756 1,860
----------------------------------------------------------------------------
Proceeds from the sales of available-for-sale securities were Yen 253 million
and Yen 910 million for the six months ended September 30, 2008 and 2009,
respectively.
There were no significant realized gains or losses on sales of
available-for-sale securities for the six months ended September 30, 2008 and
2009.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the six months ended September 30, 2008 and
2009.
3. INCOME TAXES
The effective tax rate was approximately 57 percent as of September 30, 2009.
The rate differed from the approximately 41 percent statutory tax rate due
primarily to the net increase in valuation allowance for deferred tax assets.
4. EQUITY
The change in Ricoh shareholders' equity, noncontrolling interest and total
equity for the six months ended September 30, 2008 and 2009 is as follow:
Ricoh adopted the measurement date provisions of ASC 715, "Retirement Benefits"
(former SFAS 158) on April 1, 2008. The adoption of the measurement date
provisions resulted in adjustments to change in Ricoh shareholders' equity and
total equity as of April 1, 2008.
Millions of Yen
------------------------------------------------------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
------------------------------------------------------------------------------------------------------------------------
Ricoh Ricoh
Shareholders' Noncontrolling Total Shareholders' Noncontrolling Total
Equity Interest Equity Equity Interest Equity
------------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period 1,080,196 58,283 1,138,479 975,373 48,977 1,024,350
------------------------------------------------------------------------------------------------------------------------
Cumulative effect of adjustment from
applying measurement date
provisions of ASC 715, net of tax (649) -- (649) -- -- --
------------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period as adjusted 1,079,547 58,283 1,137,830 975,373 48,977 1,024,350
------------------------------------------------------------------------------------------------------------------------
Net income 34,345 1,970 36,315 1,808 1,096 2,904
Unrealized gains on securities (1,385) (10) (1,395) 3,651 32 3,683
Pension liability adjustments (288) 77 (211) 1,086 5 1,091
Unrealized gains (losses) on
derivatives 420 55 475 (413) 3 (410)
Foreign currency translation
adjustments (7,430) (108) (7,538) (14,928) (43) (14,971)
------------------------------------------------------------------------------------------------------------------------
Comprehensive income 25,662 1,984 27,646 (8,796) 1,093 (7,703)
------------------------------------------------------------------------------------------------------------------------
15
------------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (12,256) -- (12,256) (10,885) -- (10,885)
Distributions to Noncontrolling interest -- (407) (407) -- (282) (282)
Payment to acquire Treasury stock 9,222 -- 9,222 (28) -- (28)
Wholly owned subsidiaries -- (10,516) (10,516) -- -- --
Other (331) (62) (393) (20) 6 (14)
------------------------------------------------------------------------------------------------------------------------
Equity, End of Period 1,101,844 49,282 1,151,126 955,644 49,794 1,005,438
------------------------------------------------------------------------------------------------------------------------
5. DIVIDENDS
Cash dividends paid during the six months ended September 30, 2009 is as
follows:
Resolved at the General meetings of Shareholders on June 25, 2009
-------------------------------------------------------------------
Total amount of dividends (millions of yen) 10,885
Dividend per share of common stock (yen) 15.00
Record date March 31, 2009
Effective date June 26, 2009
Resource for dividend Retained earnings
-------------------------------------------------------------------
Cash dividends to be paid for the six months ended September 30, 2009, of which
effective date is after September 30, 2009.
Resolved at the Board meeting on October 27, 2009
-------------------------------------------------------------------
Total amount of dividends (millions of yen) 11,973
Dividend per share of common stock (yen) 16.50
Record date September 30, 2009
Effective date December 1, 2009
Resource for dividend Retained earnings
-------------------------------------------------------------------
6. PER SHARE DATA
Ricoh shareholders' equity per share was Yen 1,316.96 and Yen 1,344.08 as of
September 30, 2009 and March 31, 2009, respectively. Dividends per share shown
in the consolidated statement of income are computed based on dividends paid
for the six months ended September 30, 2009 and the year ended March 31, 2009.
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:
Thousands of shares
-------------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
-------------------------------------------------------------------------------
Weighted average number of shares of
common stock outstanding 722,136 725,661
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 19,741
-------------------------------------------------------------------------------
Diluted shares of common stock
outstanding 741,877 745,402
-------------------------------------------------------------------------------
16
Millions of Yen
----------------------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
----------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 34,345 1,808
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (13) (13)
----------------------------------------------------------------------------------------
Diluted net income 34,332 1,795
----------------------------------------------------------------------------------------
Yen
----------------------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
----------------------------------------------------------------------------------------
Earnings per share:
Basic 47.56 2.49
Diluted 46.28 2.41
----------------------------------------------------------------------------------------
Thousands of shares
----------------------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2008 September 30, 2009
----------------------------------------------------------------------------------------
Weighted average number of shares of
common stock outstanding 723,339 725,652
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 19,741
----------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 743,080 745,393
----------------------------------------------------------------------------------------
Millions of Yen
----------------------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2008 September 30, 2009
----------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 8,602 905
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (6) (6)
----------------------------------------------------------------------------------------
Diluted net income 8,596 899
----------------------------------------------------------------------------------------
Yen
----------------------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2008 September 30, 2009
----------------------------------------------------------------------------------------
Earnings per share:
Basic 11.89 1.25
Diluted 11.57 1.21
----------------------------------------------------------------------------------------
17
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 to hedge against the potential
adverse impacts of changes in fair value or cash flow fluctuations on interest
of its outstanding debt.
Fair Value Hedges
Changes in the fair value of derivative instruments and the related hedged
items designated and qualifying as fair value hedges are included in other
(income) expenses in the consolidated statements of income. There is no hedging
ineffectiveness nor are net gains or losses excluded from the assessment of
hedge effectiveness for the six months ended September 30, 2009 as the critical
terms of the interest rate swap match the terms of the hedged debt obligations.
Cash Flow Hedges
Changes in the fair value of derivative instruments designated and qualifying
as cash flow hedges are included in accumulated other comprehensive income
(loss) on the consolidated balance sheets. These amounts are reclassified into
earnings as interest on the hedged loans is paid. There is no hedging
ineffectiveness nor are net gains or losses excluded from the assessment of
hedge effectiveness for the six months ended September 30, 2009 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 186 million of the balance
of accumulated other comprehensive loss as of September 30, 2009.
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.
18
Contract amounts of derivative instruments at September 30, 2009 are shown in
the following tables:
September 30, 2009 Millions of Yen
------------------------------------------------------------------
Interest rate swap agreements 315,607
Foreign currency contracts 99,310
Foreign currency options 10,170
------------------------------------------------------------------
The location and fair value amounts of derivatives in consolidated balance
sheet are shown in the following tables:
Derivatives designated as hedging instruments under ASC 815
Millions of Yen
-------------------------------------------------------------------------------------------
Current Long-term
-------------------------------------------------------------------------------------------
Balance Sheet Balance Sheet
Location Fair Value Location Fair Value
-------------------------------------------------------------------------------------------
Asset Derivatives
Interest rate swap agreements Deferred income Lease deposits
taxes and other 6 and other 84
-------------------------------------------------------------------------------------------
Liability Derivatives
Interest rate swap agreements Accrued expenses Deferred income
and other 6 taxes and other 1,676
-------------------------------------------------------------------------------------------
Derivatives not designated as hedging instruments under ASC 815
Millions of Yen
-------------------------------------------------------------------------------------------
Current Long-term
-------------------------------------------------------------------------------------------
Balance Sheet Balance Sheet
Location Fair Value Location Fair Value
-------------------------------------------------------------------------------------------
Asset Derivatives
Foreign currency contracts Deferred income 1,351 Lease deposits 234
Foreign currency options taxes and other 279 and other --
-------------------------------------------------------------------------------------------
Total 1,630 234
-------------------------------------------------------------------------------------------
Liability Derivatives
Interest rate swap agreements Accrued expenses -- Deferred income 339
Foreign currency contracts and other 1,466 taxes and other 225
Foreign currency options 57 --
-------------------------------------------------------------------------------------------
Total 1,523 564
-------------------------------------------------------------------------------------------
Millions of Yen
------------------------------------------------------------------
Fair Value
------------------------------------------------------------------
Total Asset Derivatives 1,954
Total Liability Derivatives 3,769
------------------------------------------------------------------
19
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,
2009 are shown in the following tables:
Derivatives designated as hedging instruments under ASC 815
Millions of Yen
--------------------------------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from Gain or (Loss) Recognized
on Derivative Accumulated OCI Into Income in Income on Derivative
(Effective Portion) (Effective Portion) (Ineffective Portion)
--------------------------------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
--------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (450) Interest expense (37) -- --
--------------------------------------------------------------------------------------------------------------------
Millions of Yen
----------------------------------------------------------------------------------------------
Gain or (Loss) Recognized in Gain or (Loss) on Hedged Item
Income on Derivative Recognized in Income
----------------------------------------------------------------------------------------------
Location Amount Location Amount
----------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest income 111 Interest expense (184)
----------------------------------------------------------------------------------------------
Derivatives not designated as hedging instruments under ASC 815
Millions of Yen
----------------------------------------------------------------
Location Amount
----------------------------------------------------------------
Interest rate swap agreements Other (income) (156)
Foreign currency contracts expenses 1,737
Foreign currency options 1,665
----------------------------------------------------------------
Total 3,246
----------------------------------------------------------------
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,
2009 are shown in the following tables:
Derivatives designated as hedging instruments under ASC 815
Millions of Yen
-----------------------------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from Gain or (Loss) Recognized
on Derivative Accumulated OCI Into Income in Income on Derivative
(Effective Portion) (Effective Portion) (Ineffective Portion)
-----------------------------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
-----------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (84) Interest expense (22) -- --
-----------------------------------------------------------------------------------------------------------------
20
Millions of Yen
----------------------------------------------------------------------------------------------
Gain or (Loss) Recognized in Gain or (Loss) on Hedged Item
Income on Derivative Recognized in Income
----------------------------------------------------------------------------------------------
Location Amount Location Amount
----------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest income 59 Interest expense (92)
----------------------------------------------------------------------------------------------
Derivatives not designated as hedging instruments under ASC 815
Millions of Yen
---------------------------------------------------------------
Location Amount
---------------------------------------------------------------
Interest rate swap agreements Other (income) (179)
Foreign currency contracts expenses 1,507
Foreign currency options 621
---------------------------------------------------------------
Total 1,949
---------------------------------------------------------------
8. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees
housing loans of Yen 261 million as of September 30, 2009.
As of September 30, 2009 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.
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 fair values because of the short maturities of
these instruments.
(B) MARKETABLE SECURITIES AND INVESTMENT SECURITIES
The fair value of the marketable securities and investment securities is
principally based on quoted market price.
(C) INSTALLMENT LOANS
The fair value of installment loans is based on the present value of future
cash flows using the current interest rate for similar instruments of
comparable maturity.
21
(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
The fair value of interest rate swap agreements is estimated by obtaining
quotes from brokers.
(F) FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY OPTIONS
The fair value of foreign currency contracts and foreign currency options is
estimated by obtaining quotes from brokers.
The estimated fair value of the financial instruments as of September 30, 2009
and March 31, 2009 are summarized as follows:
Millions of Yen
------------------------------------------------------------------------
September 30, 2009 March 31, 2009
------------------------------------------------------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------------------------------------------------------------------------
Marketable securities and
Investment securities 54,236 54,236 48,540 48,540
Installment loans 64,501 64,510 60,781 60,754
Long-term indebtedness (517,533) (512,429) (509,403) (500,774)
Interest rate swap
agreements, net (1,931) (1,931) (1,031) (1,031)
Foreign currency contracts,
net (106) (106) (2,994) (2,994)
Foreign currency options, net 222 222 (1,443) (1,443)
------------------------------------------------------------------------
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.
10. FAIR VALUE MEASUREMENTS
ASC 820, "Fair Value Measurements and Disclosures" (former SFAS No.157),
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants
at the measurement date. ASC 820 establishes a three-level fair value hierarchy
that prioritizes the inputs used to measure fair value.
Ricoh adopted ASC 820 for nonfinancial assets and nonfinancial liabilities that
are recognized or disclosed at fair value in the financial statements on a
nonrecurring basis in the first quarter beginning April 1, 2009.
During the six months ended September 30, 2009, there were no circumstances
that required any nonfinancial assets or nonfinancial liabilities that are not
measured at fair value in the financial statements on a nonrecurring basis.
The three levels of inputs used to measure fair value are as follows:
22
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 table presents the fair-value hierarchy levels of Ricoh's assets
and liabilities that are measured at fair value on a recurring basis as of
September 30, 2009 and March 31, 2009.
Millions of Yen
-------------------------------------------------------------------------
September 30, 2009
-------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities 51,543 -- -- 51,543
Derivative instruments -- 1,954 -- 1,954
Other investments -- -- 4,291 4,291
-------------------------------------------------------------------------
Total assets 51,543 1,954 4,291 57,788
-------------------------------------------------------------------------
Liabilities:
Derivatives instruments -- 3,769 -- 3,769
-------------------------------------------------------------------------
Total liabilities -- 3,769 -- 3,769
-------------------------------------------------------------------------
Millions of Yen
-------------------------------------------------------------------------
March 31, 2009
-------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Trading and
Available-for-sale
securities 45,761 -- -- 45,761
Derivative instruments -- 1,359 -- 1,359
Other investments -- -- 4,293 4,293
-------------------------------------------------------------------------
Total assets 45,761 1,359 4,293 51,413
-------------------------------------------------------------------------
Liabilities:
Derivatives instruments -- 6,827 -- 6,827
-------------------------------------------------------------------------
Total liabilities -- 6,827 -- 6,827
-------------------------------------------------------------------------
Trading and Available-for-sale securities
Trading and 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 in the fair value hierarchy,
since they are valued using observable market data such as LIBOR-based yield
curves.
23
Other investments
Other investments classified as Level 3 in the fair value hierarchy represent
the retained interests in securitizations of finance lease receivables in which
Ricoh valued using cash flows discounted by an estimated interest rate
reflecting underlying risks. The following table presents a reconciliation of
activity for such retained interests on a net basis.
Millions of Yen
-------------------------------------------------------------------------------------
Six months ended
Other investments September 30, 2009
-------------------------------------------------------------------------------------
Balance at beginning of period 4,293
Total gains or losses (realized and unrealized)
Included in net income --
Included in other comprehensive income (loss) --
Sales, collections and repurchases, net (2)
-------------------------------------------------------------------------------------
Balance at end of period 4,291
-------------------------------------------------------------------------------------
Millions of Yen
-------------------------------------------------------------------------------------
Three months ended
Other investments September 30, 2009
-------------------------------------------------------------------------------------
Balance at beginning of period 4,289
Total gains or losses (realized and unrealized)
Included in net income --
Included in other comprehensive income (loss) --
Sales, collections and repurchases, net 2
-------------------------------------------------------------------------------------
Balance at end of period 4,291
-------------------------------------------------------------------------------------
24
11. SEGMENT INFORMATION
The operating segments presented below are the segments of Ricoh for which
separate financial information is available and for which a measure of profit
or loss is evaluated regularly by Ricoh's management in deciding how to
allocate resources and in assessing performance.
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
-------------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
-------------------------------------------------------------------------------
Sales-
Imaging & Solutions 919,772 875,129
Industrial Products 70,134 53,242
Other 78,314 62,461
Intersegment transaction (2,293) (2,041)
-------------------------------------------------------------------------------
Consolidated 1,065,927 988,791
-------------------------------------------------------------------------------
Operating Income(Loss)-
Imaging & Solutions 98,203 51,553
Industrial Products 776 (767)
Other 1,518 (1,097)
Elimination (1) (11)
Unallocated expense (35,483) (35,683)
-------------------------------------------------------------------------------
Consolidated 65,076 13,995
-------------------------------------------------------------------------------
Other, net (6,201) (7,229)
-------------------------------------------------------------------------------
Income before Income Taxes and Equity
in Earnings of Affiliates 58,875 6,766
-------------------------------------------------------------------------------
Millions of Yen
-------------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2008 September 30, 2009
-------------------------------------------------------------------------------
Sales-
Imaging & Solutions 464,514 438,309
Industrial Products 35,881 27,594
Other 45,093 32,646
Intersegment transaction (1,135) (1,147)
-------------------------------------------------------------------------------
Consolidated 544,353 497,402
-------------------------------------------------------------------------------
Operating Income(Loss)-
Imaging & Solutions 42,785 27,694
Industrial Products (230) (413)
Other 1,068 (819)
Elimination 0 (7)
Unallocated expense (18,297) (18,536)
-------------------------------------------------------------------------------
Consolidated 25,326 7,919
-------------------------------------------------------------------------------
Other, net (10,186) (4,568)
-------------------------------------------------------------------------------
Income before Income Taxes and Equity
in Earnings of Affiliates 15,140 3,351
-------------------------------------------------------------------------------
25
Unallocated expense represents expenses for corporate headquarters.
Intersegment sales are not separated by operating segment because they are
immaterial.
(B) GEOGRAPHIC INFORMATION
Sales which are attributed to countries based on location of customers are as
follows:
Millions of Yen
-------------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
-------------------------------------------------------------------------------
Sales-
Japan 483,817 421,689
The Americas 217,585 281,158
Europe 288,710 226,146
Other 75,815 59,798
-------------------------------------------------------------------------------
Consolidated 1,065,927 988,791
-------------------------------------------------------------------------------
Millions of Yen
-------------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2008 September 30, 2009
-------------------------------------------------------------------------------
Sales-
Japan 249,948 214,950
The Americas 115,921 138,388
Europe 140,039 112,396
Other 38,445 31,668
-------------------------------------------------------------------------------
Consolidated 544,353 497,402
-------------------------------------------------------------------------------
(C) ADDITIONAL INFORMATION
The following information shows net sales and operating income recognized by
geographic origin. In addition to the disclosure requirements under ASC 280,
"Segment Reporting" (former SFAS No.131), Ricoh discloses this information as
supplemental information in light of the disclosure requirements of the
Japanese Financial Instrument and Exchange Law, which a Japanese public company
is subject to.
Millions of Yen
-------------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
-------------------------------------------------------------------------------
Sales-
Japan
External customers 499,654 430,319
Intersegment 236,933 179,609
-------------------------------------------------------------------------------
Total 736,587 609,928
-------------------------------------------------------------------------------
The Americas
External customers 216,648 280,410
Intersegment 2,256 1,744
-------------------------------------------------------------------------------
Total 218,904 282,154
-------------------------------------------------------------------------------
Europe
External customers 286,907 227,259
26
Intersegment 1,486 1,128
-------------------------------------------------------------------------------
Total 288,393 228,387
-------------------------------------------------------------------------------
Other
External customers 62,718 50,803
Intersegment 85,165 68,192
-------------------------------------------------------------------------------
Total 147,883 118,995
-------------------------------------------------------------------------------
Elimination of intersegment sales (325,840) (250,673)
-------------------------------------------------------------------------------
Consolidated 1,065,927 988,791
-------------------------------------------------------------------------------
Operating Income(Loss)-
Japan 47,717 7,972
The Americas (5,279) (8,380)
Europe 20,153 11,689
Other 8,298 5,936
-------------------------------------------------------------------------------
Elimination of intersegment sales (5,813) (3,222)
-------------------------------------------------------------------------------
Consolidated 65,076 13,995
-------------------------------------------------------------------------------
Other, net (6,201) (7,229)
-------------------------------------------------------------------------------
Income before Income Taxes and Equity in
Earnings of Affiliates 58,875 6,766
-------------------------------------------------------------------------------
Millions of Yen
-------------------------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2008 September 30, 2009
-------------------------------------------------------------------------------------------
Sales-
Japan
External customers 258,534 219,898
Intersegment 113,562 89,099
-------------------------------------------------------------------------------------------
Total 372,096 308,997
-------------------------------------------------------------------------------------------
The Americas
External customers 115,363 137,754
Intersegment 1,032 1,106
-------------------------------------------------------------------------------------------
Total 116,395 138,860
-------------------------------------------------------------------------------------------
Europe
External customers 138,651 112,743
Intersegment 763 524
-------------------------------------------------------------------------------------------
Total 139,414 113,267
-------------------------------------------------------------------------------------------
Other
External customers 31,805 27,007
Intersegment 41,238 34,295
-------------------------------------------------------------------------------------------
Total 73,043 61,302
-------------------------------------------------------------------------------------------
Elimination of intersegment sales (156,595) (125,024)
-------------------------------------------------------------------------------------------
Consolidated 544,353 497,402
-------------------------------------------------------------------------------------------
Operating Income(Loss)-
Japan 21,641 5,382
The Americas (4,066) (3,647)
Europe 8,484 6,431
Other 3,731 3,536
-------------------------------------------------------------------------------------------
Elimination of intersegment sales (4,464) (3,783)
-------------------------------------------------------------------------------------------
Consolidated 25,326 7,919
-------------------------------------------------------------------------------------------
27
Other, net (10,186) (4,568)
-------------------------------------------------------------------------------------------
Income before Income Taxes and Equity in Earnings of Affiliates 15,140 3,351
-------------------------------------------------------------------------------------------
Intersegment sales between geographic areas are made at cost plus profit.
Operating income by geographic area is sales less expense related to the area's
operating revenue.
No single customer accounted for 10% or more of the total revenues for the six
months and three months ended September 30, 2008 and 2009.
12. 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, 2008 and 2009:
Millions of Yen
------------------------------------------------------------------------
Six months ended Six months ended
September 30, 2008 September 30, 2009
------------------------------------------------------------------------
Research and development costs 63,247 55,990
Advertising costs 7,999 4,551
Shipping and handling costs 11,495 8,553
------------------------------------------------------------------------
Millions of Yen
------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2008 September 30, 2009
------------------------------------------------------------------------
Research and development costs 31,449 28,711
Advertising costs 4,659 2,570
Shipping and handling costs 5,671 4,287
------------------------------------------------------------------------
13. SUBSEQUENT EVENTS
There had been no significant subsequent event through November 10, 2009, which
is the date the financial statements were issued.
Ricoh Company, Ltd. and Consolidated Subsidiaries
OTHER INFORMATION
The following information regarding interim dividend were resolved at the board
meeting on October 27, 2009.
-------------------------------------------------------------
Resolved date October 27, 2009
Total amount of dividends (yen) 11,973,102,818
Dividend per share of common stock (yen) 16.50
Effective date and Payment starting date December 1, 2009
-------------------------------------------------------------
28