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 February 2010
Commission File Number 2 - 68279
RICOH COMPANY, LTD.
-----------------------------------------------
(Translation of Registrant's name into English)
13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, Japan
---------------------------------------------------
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.)
Form 20-F X Form 40-F __
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): __ )
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): __ )
(Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.)
Yes __ No X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-__ )
--------------------------------------------------------------------------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Ricoh Company, Ltd.
------------------------------
(Registrant)
By: /S/ Zenji Miura
------------------------------
Zenji Miura
Director, Chief Financial Officer
Corporate Executive Vice President
February 10, 2010
--------------------------------------------------------------------------------
RICOH COMPANY, LTD.
Consolidated Financial Statements
For the nine months ended December 31, 2009
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the nine months ended December 31, 2009 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, 2009 and March 31, 2009
Millions of Yen
-------------------------------------------------------------------------------------------------
ASSETS December 31, 2009 March 31, 2009
-------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 217,125 258,484
Time deposits 1,295 2,043
Trade receivables:
Notes 45,276 45,781
Accounts 430,417 460,519
Less- Allowance for doubtful receivables (21,571) (21,533)
Current maturities of long-term finance receivables, net 190,884 195,617
Inventories:
Finished goods 97,176 123,798
Work in process and raw materials 84,203 67,772
Deferred income taxes and other 71,948 79,385
-------------------------------------------------------------------------------------------------
Total current assets 1,116,753 1,211,866
-------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 45,387 45,693
Buildings 239,112 235,905
Machinery and equipment 642,749 613,879
Construction in progress 32,990 23,459
-------------------------------------------------------------------------------------------------
Total 960,238 918,936
Less- accumulated depreciation (700,310) (649,600)
-------------------------------------------------------------------------------------------------
Net property, plant and equipment 259,928 269,336
-------------------------------------------------------------------------------------------------
Investments and other assets:
Long-term finance receivables, net 456,359 465,262
Investment securities 50,924 47,815
Investments in and advances to affiliates 1,150 1,248
Goodwill 249,233 250,330
Other intangible assets 150,099 165,126
Lease deposits and other 98,020 102,512
-------------------------------------------------------------------------------------------------
Total investments and other assets 1,005,785 1,032,293
-------------------------------------------------------------------------------------------------
Total 2,382,466 2,513,495
-------------------------------------------------------------------------------------------------
1
Millions of Yen
-------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY December 31, 2009 March 31, 2009
-------------------------------------------------------------------------------------------------
Current liabilities:
Short-term borrowings 122,797 184,210
Current maturities of long-term indebtedness 98,610 85,582
Trade payables:
Notes 13,347 12,914
Accounts 240,626 272,499
Accrued income taxes 15,538 10,317
Accrued expenses and other 183,566 207,969
-------------------------------------------------------------------------------------------------
Total current liabilities 674,484 773,491
-------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness 497,057 509,403
Accrued pension and severance costs 155,940 156,625
Deferred income taxes and other 42,850 49,626
-------------------------------------------------------------------------------------------------
Total long-term liabilities 695,847 715,654
-------------------------------------------------------------------------------------------------
Ricoh Shareholders' Equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 807,415 815,725
Accumulated other comprehensive loss (129,887) (125,121)
Treasury stock at cost (36,711) (36,678)
-------------------------------------------------------------------------------------------------
Total Ricoh shareholders' equity 962,264 975,373
-------------------------------------------------------------------------------------------------
Non-controlling interest 49,871 48,977
-------------------------------------------------------------------------------------------------
Total equity 1,012,135 1,024,350
-------------------------------------------------------------------------------------------------
Total 2,382,466 2,513,495
-------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended December 31, 2008 and 2009
Millions of Yen
-------------------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
-------------------------------------------------------------------------------------------------------
Net Sales:
Products 810,962 686,038
Post sales and rentals 673,691 714,184
Other revenue 83,365 74,509
---------------------------------------------------------------------------------------------------
Total 1,568,018 1,474,731
---------------------------------------------------------------------------------------------------
Cost of sales:
Products 539,027 481,952
Post sales and rentals 305,244 326,827
Other revenue 66,258 57,546
---------------------------------------------------------------------------------------------------
Total 910,529 866,325
---------------------------------------------------------------------------------------------------
Gross profit 657,489 608,406
Selling, general and administrative expenses 571,111 570,674
---------------------------------------------------------------------------------------------------
Operating income 86,378 37,732
---------------------------------------------------------------------------------------------------
Other (income) expenses:
Interest and dividend income (3,828) (2,216)
Interest expense 4,322 6,156
Foreign currency exchange (gain) loss, net 19,752 3,412
Other, net 6,069 (443)
---------------------------------------------------------------------------------------------------
Total 26,315 6,909
---------------------------------------------------------------------------------------------------
Income before income taxes and equity in earnings of affiliates 60,063 30,823
Provision for income taxes:
Current 23,718 21,664
Deferred 4,562 (6,726)
---------------------------------------------------------------------------------------------------
Total 28,280 14,938
---------------------------------------------------------------------------------------------------
Equity in earnings of affiliates 15 6
Consolidated net income 31,798 15,891
---------------------------------------------------------------------------------------------------
Net income attributable to non-controlling interest 2,258 1,475
---------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 29,540 14,416
---------------------------------------------------------------------------------------------------
Yen Yen
---------------------------------------------------------------------------------------------------
Per share of common stock:
---------------------------------------------------------------------------------------------------
Basic 40.84 19.87
Diluted 39.73 19.32
---------------------------------------------------------------------------------------------------
Cash dividends paid per share 35.00 31.50
---------------------------------------------------------------------------------------------------
Per American Depositary Share, each representing 5 shares
of common stock:
---------------------------------------------------------------------------------------------------
Basic 204.20 99.35
Diluted 198.65 96.60
---------------------------------------------------------------------------------------------------
Cash dividends paid per share 175.00 157.50
---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
3
For the Three Months Ended December 31, 2008 and 2009
Millions of Yen
---------------------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
---------------------------------------------------------------------------------------------------------
Net Sales:
Products 237,511 221,842
Post sales and rentals 239,369 239,381
Other revenue 25,211 24,717
---------------------------------------------------------------------------------------------------------
Total 502,091 485,940
---------------------------------------------------------------------------------------------------------
Cost of sales:
Products 156,254 148,270
Post sales and rentals 112,246 108,546
Other revenue 19,446 18,920
---------------------------------------------------------------------------------------------------------
Total 287,946 275,736
---------------------------------------------------------------------------------------------------------
Gross profit 214,145 210,204
Selling, general and administrative expenses 192,843 186,467
---------------------------------------------------------------------------------------------------------
Operating income 21,302 23,737
---------------------------------------------------------------------------------------------------------
Other (income) expenses:
Interest and dividend income (750) (474)
Interest expense 1,874 2,085
Foreign currency exchange (gain) loss, net 18,473 (1,451)
Other, net 517 (480)
---------------------------------------------------------------------------------------------------------
Total 20,114 (320)
---------------------------------------------------------------------------------------------------------
Income before income taxes and equity in earnings of affiliates 1,188 24,057
Provision for income taxes:
Current (4,661) 12,164
Deferred 10,359 (1,100)
---------------------------------------------------------------------------------------------------------
Total 5,698 11,064
---------------------------------------------------------------------------------------------------------
Equity in earnings of affiliates (7) (6)
Consolidated net income (loss) (4,517) 12,987
---------------------------------------------------------------------------------------------------------
Net income attributable to non-controlling interest 288 379
---------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. (4,805) 12,608
---------------------------------------------------------------------------------------------------------
Yen Yen
---------------------------------------------------------------------------------------------------------
Per share of common stock:
Basic (6.62) 17.38
Diluted -- 16.91
---------------------------------------------------------------------------------------------------------
Cash dividends paid per share 18.00 16.50
---------------------------------------------------------------------------------------------------------
Per American Depositary Share, each representing 5 shares
of common stock:
---------------------------------------------------------------------------------------------------------
Basic (33.10) 86.90
Diluted -- 84.55
---------------------------------------------------------------------------------------------------------
Cash dividends paid per share 90.00 82.50
---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
4
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended December 31, 2008 and 2009
Millions of Yen
---------------------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income 31,798 15,891
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 74,449 73,402
Equity in earnings of affiliates, net of dividends received (15) (6)
Deferred income taxes 4,562 (6,726)
Losses on disposals and sales of property, plant and
equipment 1,170 606
Pension and severance costs, less payment 3,273 2,890
Changes in assets and liabilities, net of effects from
acquisition-
Decrease in trade receivables 15,315 27,035
(Increase) Decrease in inventories (30,936) 7,403
(Increase) Decrease in finance receivables (11,509) 16,684
Decrease in trade payables (50,108) (31,160)
Decrease in accrued income taxes and
accrued expenses and other (56,210) (15,453)
Other, net 26,976 18,377
---------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 8,765 108,943
---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 73 909
Expenditures for property, plant and equipment (72,344) (48,338)
Payments for purchases of available-for-sale securities (1,275) (695)
Proceeds from sales of available-for-sale securities 243 938
(Increase) Decrease in time deposits, net (689) 665
Purchase of business, net of cash acquired (158,673) (4,760)
Other, net (18,063) (15,421)
---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (250,728) (66,702)
---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 54,355 36,055
Repayment of long-term indebtedness (53,511) (60,825)
Increase (Decrease) in short-term borrowings, net 295,813 (57,767)
Proceeds from issuance of long-term debt securities -- 35,000
Repayment of long-term debt securities (26,143) (10,000)
Dividends paid (25,320) (22,858)
Payment for purchase of treasury stock (605) (127)
Other, net (427) (393)
---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 244,162 (81,915)
---------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (17,665) (1,685)
---------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (15,466) (41,359)
---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 170,607 258,484
---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 155,141 217,125
---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
5
Ricoh Company, Ltd. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
According to the article 93 of the "Regulations Regarding Terms, Forms and
Preparation of Interim Consolidated Financial Statements" (Cabinet office
Ordinance No.64, 2007), the accompanying consolidated financial statements of
Ricoh (Ricoh Company, Ltd. and its consolidated subsidiaries) have been prepared
in conformity with U.S. generally accepted accounting principles. Significant
accounting and reporting policies are summarized below:
The accompanying consolidated financial statements for the nine months ended
December 31, 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 inter-company balances and
transactions have been eliminated in consolidation.
The accounts of certain consolidated subsidiaries have been included on the
basis of fiscal periods ended within three months prior to December 31.
(B) REVENUE RECOGNITION
Ricoh generates revenue principally through the sale of equipment, supplies and
related services under separate contractual arrangements for each. Ricoh
recognizes revenue when (1) it has a firm contract, (2) the product has been
shipped to and accepted by the customer or the service has been provided, (3)
the sales price is fixed or determinable and (4) amounts are reasonably assured
of collection.
Products sales 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,
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 non-performing 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 December 31, 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 (iformer 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 result
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 plan assets used for pension
accounting is determined based on the historical long-term rate of return on
9
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 nine months ended December 31, 2008
have been excluded from the consolidated statements of cash flows:
10
Millions of yen
---------------------------------------------------------------------------------
Nine months ended
December 31, 2008
---------------------------------------------------------------------------------
Issuance of treasury stock in exchange for subsidiary's stock 9,138
---------------------------------------------------------------------------------
The following non-cash transactions for the nine months ended December 31, 2009
have been excluded from the consolidated statements of cash flows:
Millions of yen
---------------------------------------------------------------------------------
Nine months ended
December 31, 2009
---------------------------------------------------------------------------------
Debt assumed in connection with business acquisition 3,941
---------------------------------------------------------------------------------
(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 non-authoritative. 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 non-controlling 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 non-controlling 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 non-controlling
interest and changes in ownership interests in a subsidiary and the valuation of
retained non-controlling equity investments when a subsidiary is deconsolidated.
ASC 810 also requires additional disclosures that identify and distinguish
between the interests of the controlling and non-controlling
11
owners. ASC 810 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. In
accordance ASC 810, non-controlling 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 non-controlling interest.
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.
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
was adopted by Ricoh in the third quarter beginning October 1, 2009. The
adoption of this ASU did not have any effect on Ricoh's consolidated financial
position or results of operations.
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 was adopted by Ricoh
in the third quarter beginning October 1, 2009. The adoption of this ASU did not
have a material effect on Ricoh's consolidated financial position or results of
operations.
(U) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In December 2009, the FASB issued ASU No. 2009-16, "Accounting for Transfers of
Financial Assets." This accounting standard codified SFAS No. 166, "Accounting
for Transfers of Financial Assets-an amendment of FASB Statement No. 140" issued
in June 2009 in the FASB ASC 860 "Transfers and Servicing". 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. This ASU is effective for fiscal
years beginning after November 15, 2009 and for subsequent interim and annual
reporting periods. This ASU will be adopted by Ricoh in the first quarter
beginning April 1, 2010. Ricoh is currently evaluating the effect that the
adoption of this ASU will have on its consolidated results of operations and
financial condition.
12
In December 2009, the FASB issued ASU No. 2009-17, "Improvements to Financial
Reporting by Enterprises Involved with Variable Interest Entities." This
accounting standard codified SFAS No. 167, "Amendments to FASB Interpretation
No. 46(R)" issued in June 2009 in the FASB ASC 810 "Consolidation". This
accounting standard requires an enterprise to perform an analysis to identify
the primary beneficiary of a variable interest entity and also requires ongoing
reassessments of whether an enterprise is the primary beneficiary of a variable
interest entity. This ASU is effective for fiscal years beginning after November
15, 2009 and for subsequent interim and annual reporting periods. Earlier
application is prohibited. This ASU will be adopted by Ricoh in the first
quarter beginning April 1, 2010. Ricoh is currently evaluating the effect that
the adoption of this ASU 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 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 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.
In January 2010, the FASB issued ASU No. 2010-06, "Improving Disclosures about
Fair Value Measurements." This ASU provides amendments to ASC 820-10 "Fair Value
Measurements and Disclosures". The new disclosures and clarifications of
existing disclosures are effective for interim and fiscal years beginning after
December 15, 2009, except for the disclosures about purchases, sales, issuances,
and settlements in the roll forward of activity in Level 3 fair value
measurements. Those disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years. 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 nine months
ended December 31, 2009.
In accordance ASC 810, "Consolidation" (former SFAS No.160), non-controlling
interest which were previously referred to as minority interests and classified
between total liabilities and shareholders'
13
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 non-controlling interest.
2. SECURITIES
Marketable securities and investment securities as of December 31, 2009 and
March 31, 2009 consist of the following:
Millions of Yen
--------------------------------------------------------------------------------------------------
December 31, 2009 March 31, 2009
--------------------------------------------------------------------------------------------------
Marketable securities:
Trading securities -- 725
--------------------------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 49,466 46,341
Non-marketable equity securities 1,458 1,474
--------------------------------------------------------------------------------------------------
50,924 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 December 31, 2009 and March 31, 2009 are as follows:
Millions of Yen
---------------------------------------------------------------------------------------------------------------------
December 31, 2009 March 31, 2009
---------------------------------------------------------------------------------------------------------------------
Gross Gross Gross Gross
unrealized unrealized unrealized unrealized
holding holding holding holding
Cost gains losses Fair value Cost gains losses Fair value
---------------------------------------------------------------------------------------------------------------------
Non-current:
Equity securities 42,436 5,747 576 47,607 43,002 2,650 590 45,062
Corporate debt
securities 1,792 67 -- 1,859 1,279 0 -- 1,279
---------------------------------------------------------------------------------------------------------------------
44,228 5,814 576 49,466 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 December 31,
2009 are as follows:
Millions of Yen
------------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------------
Non-current:
Available-for-sale:
Equity securities 2,002 175 1,627 401 3,629 576
------------------------------------------------------------------------------------------------------
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.
14
The contractual maturities of debt securities classified as available-for-sale
as of December 31, 2009 are as follows:
Millions of Yen
------------------
Cost Fair value
----------------------------------------------------------
Due after one year through five years 416 423
Over five years 1,376 1,436
----------------------------------------------------------
1,792 1,859
----------------------------------------------------------
Proceeds from the sales of available-for-sale securities were Yen 243 million
and Yen 938 million for the nine months ended December 31, 2008 and 2009,
respectively.
There were no significant realized gains or losses on sales of
available-for-sale securities for the nine months ended December 31, 2008 and
2009.
3. INCOME TAXES
The effective tax rate was approximately 48 percent as of December 31, 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, non-controlling interest and total
equity for the nine months ended December 31, 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
--------------------------------------------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
--------------------------------------------------------------------------------------------------------------------------------
Ricoh Ricoh
Shareholders' Non-controlling Shareholders' Non-controlling
Equity Interest Total Equity Equity Interest Total 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 29,540 2,258 31,798 14,416 1,475 15,891
Unrealized gains (losses) on
securities (8,454) (78) (8,532) 1,711 90 1,801
Pension liability adjustments (17,921) 80 (17,841) 1,003 8 1,011
Unrealized gains (losses) on
derivatives 54 (9) 45 (1,150) (16) (1,166)
Foreign currency translation
adjustments (81,936) (203) (82,139) (6,330) (36) (6,366)
--------------------------------------------------------------------------------------------------------------------------------
Comprehensive income (78,717) 2,048 (76,669) 9,650 1,521 11,171
--------------------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (25,320) -- (25,320) (22,858) -- (22,858)
Distributions to Non-controlling
interest -- (683) (683) -- (557) (557)
Payment to acquire Treasury stock 9,173 -- 9,173 (33) -- (33)
Wholly owned subsidiaries -- (10,516) (10,516) -- -- --
Other 216 (59) 157 132 (70) 62
--------------------------------------------------------------------------------------------------------------------------------
Equity, End of Period 984,899 49,073 1,033,972 962,264 49,871 1,012,135
--------------------------------------------------------------------------------------------------------------------------------
15
Comprehensive incomes were Yem 104,315 million (losses) and Yen 18,874 million
(gains) for the three months ended December 31, 2008 and 2009, respectively.
Comprehensive incomes attributable to Ricoh Company, Ltd. were Yen 104,379
million (losses) and Yen 18,446 million (gains), and comprehensive incomes
attributable to non-controlling interest were Yen 64 million (gains) and Yen 428
million (gains) for the three months ended December 31, 2008 and 2009,
respectively.
5. DIVIDENDS
Cash dividends paid during the nine months ended December 31, 2009 are 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
---------------------------------------------------------------
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 1,326.17 and Yen 1,344.08 as of
December 31, 2009 and March 31, 2009, respectively. Dividends per share shown in
the consolidated statement of income are computed based on dividends paid for
the nine months ended December 31, 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:
16
Thousands of shares
---------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
---------------------------------------------------------------------------------------------
Weighted average number of shares of common stock
outstanding 723,339 725,624
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 19,741
---------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 743,080 745,365
---------------------------------------------------------------------------------------------
Millions of Yen
---------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
---------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 29,540 14,416
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (19) (19)
---------------------------------------------------------------------------------------------
Diluted net income attributable to Ricoh Company, Ltd 29,521 14,397
---------------------------------------------------------------------------------------------
Yen
-------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
---------------------------------------------------------------------------------------------
Earnings per share:
Basic 40.84 19.87
Diluted 39.73 19.32
---------------------------------------------------------------------------------------------
Thousands of shares
-----------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
-----------------------------------------------------------------------------------------------
Weighted average number of shares of common stock
outstanding 725,746 725,606
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 19,741
-----------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 745,487 745,347
-----------------------------------------------------------------------------------------------
17
Millions of Yen
-----------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
-----------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. (4,805) 12,608
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (6) (6)
-----------------------------------------------------------------------------------------------
Diluted net income (loss) attributable to Ricoh
Company, Ltd (4,811) 12,602
-----------------------------------------------------------------------------------------------
Yen
-----------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
-----------------------------------------------------------------------------------------------
Earnings per share:
Basic (6.62) 17.38
Diluted -- 16.91
-----------------------------------------------------------------------------------------------
18
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 nine months ended December 31, 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 nine months ended December 31, 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 31 million of the balance of accumulated other
comprehensive loss as of December 31, 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.
19
Contract amounts of derivative instruments at December 31, 2009 are shown in the
following tables:
December 31, 2009 Millions of Yen
-----------------------------------------------
Interest rate swap agreements 294,463
Foreign currency contracts 131,753
Foreign currency options 29,336
-----------------------------------------------
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 Fair Value Balance Sheet Fair Value
Location Location
------------------------------------------------------------------------------------------
Asset Derivatives
Interest rate swap Deferred income Lease deposits
agreements taxes and other 63 and other --
-----------------------------------------------------------------------------------------
Liability Derivatives
Interest rate swap Accrued expenses Deferred income
agreements and other 40 taxes and other 2,895
------------------------------------------------------------------------------------------
Derivatives not designated as hedging instruments under ASC 815
Millions of Yen
------------------------------------------------------------------------------------------
Current Long-term
------------------------------------------------------------------------------------------
Balance Sheet Fair Value Balance Sheet Fair Value
Location Location
------------------------------------------------------------------------------------------
Asset Derivatives
Foreign currency contracts Deferred income Lease deposits
taxes and other 921 and other 27
Foreign currency options 362 --
------------------------------------------------------------------------------------------
Total 1,283 27
------------------------------------------------------------------------------------------
Liability Derivatives
Interest rate swap Accrued expenses Deferred income
agreements and other 16 taxes and other 263
Foreign currency contracts 2,853 77
Foreign currency options 354 --
------------------------------------------------------------------------------------------
Total 3,223 340
------------------------------------------------------------------------------------------
Millions of Yen
-----------------------------------------------------------
Fair Value
-----------------------------------------------------------
Total Asset Derivatives 1,373
Total Liability Derivatives 6,498
-----------------------------------------------------------
20
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the nine months ended December 31, 2009
are shown in the following tables:
Derivatives designated as hedging instruments under ASC 815
Millions of Yen
-----------------------------------------------------------------------------------------------------------
Gain or (Loss) Gain or (Loss) Reclassified
Recognized in OCI from Accumulated OCI Gain or (Loss) Recognized
on Derivative Into Income in Income on Derivative
(Effective Portion) (Effective Portion) (Ineffective Portion)
-----------------------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
-----------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (1,216) Interest expense (64) -- --
Millions of Yen
----------------------------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
----------------------------------------------------------------------------------------
Location Amount Location Amount
----------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest income 145 Interest expense (235)
----------------------------------------------------------------------------------------
Derivatives not designated as hedging instruments under ASC 815
Millions of Yen
---------------------------------------------------------
Location Amount
---------------------------------------------------------
Interest rate swap agreements (14)
Foreign currency contracts Other expenses 563
Foreign currency options 1,451
---------------------------------------------------------
Total 2,000
---------------------------------------------------------
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the nine months ended December 31, 2009
are shown in the following tables:
Derivatives designated as hedging instruments under ASC 815
Millions of Yen
-----------------------------------------------------------------------------------------------------------
Gain or (Loss) Gain or (Loss) Reclassified
Recognized in OCI from Accumulated OCI Gain or (Loss) Recognized
on Derivative Into Income in Income on Derivative
(Effective Portion) (Effective Portion) (Ineffective Portion)
-----------------------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
-----------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (766) Interest expense (27) -- --
-----------------------------------------------------------------------------------------------------------
21
Millions of Yen
----------------------------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
----------------------------------------------------------------------------------------
Location Amount Location Amount
----------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest income 34 Interest expense (51)
----------------------------------------------------------------------------------------
Derivatives not designated as hedging instruments under ASC 815
Millions of Yen
----------------------------------------------------------
Location Amount
----------------------------------------------------------
Interest rate swap agreements Other (income) 79
Foreign currency contracts expenses (1,174)
Foreign currency options (214)
----------------------------------------------------------
Total (1,309)
----------------------------------------------------------
8. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees housing
loans of Yen 233 million as of December 31, 2009.
As of December 31, 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.
22
(D) LONG-TERM INDEBTEDNESS
The fair value of each of the long-term indebtedness instruments is based on the
present value of future cash flows associated with each instrument discounted
using the current borrowing rate for similar instruments of comparable maturity.
(E) INTEREST RATE SWAP AGREEMENTS
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 December 31, 2009
and March 31, 2009 are summarized as follows:
Millions of Yen
-----------------------------------------------------------------------------------------------
December 31, 2009 March 31, 2009
-----------------------------------------------------------------------------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-----------------------------------------------------------------------------------------------
Marketable securities and Investment securities 50,924 50,924 48,540 48,540
Installment loans 65,696 65,700 60,781 60,754
Long-term indebtedness (497,057) (493,670) (509,403) (500,774)
Interest rate swap agreements, net (3,151) (3,151) (1,031) (1,031)
Foreign currency contracts, net (1,982) (1,982) (2,994) (2,994)
Foreign currency options, net 8 8 (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 non-financial assets and non-financial liabilities that are recognized or
disclosed at fair value in the financial statements on a non-recurring basis in
the first quarter beginning April 1, 2009.
During the nine months ended December 31, 2009, there were no circumstances that
required any non-financial assets or non-financial liabilities that are not
measured at fair value in the financial statements on a non-recurring basis.
The three levels of inputs used to measure fair value are as follows:
23
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
December 31, 2009 and March 31, 2009.
Millions of Yen
-----------------------------------------------------------------------
December 31, 2009
-----------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
-----------------------------------------------------------------------
Assets:
Available-for-sale securities 48,246 -- -- 48,246
Derivative instruments -- 1,373 -- 1,373
Other investments -- -- 4,288 4,288
-----------------------------------------------------------------------
Total assets 48,246 1,373 4,288 53,907
-----------------------------------------------------------------------
Liabilities:
Derivatives instruments -- 6,498 -- 6,498
-----------------------------------------------------------------------
Total liabilities -- 6,498 -- 6,498
-----------------------------------------------------------------------
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.
24
Other investments
Other investments classified as Level 3 in the fair value hierarchy represent
the retained interests in securitizations of finance lease receivables in which
Ricoh valued using cash flows discounted by an estimated interest rate
reflecting underlying risks. The following table presents a reconciliation of
activity for such retained interests on a net basis.
Millions of Yen
-----------------------------------------------------------------------
Nine months ended
December 31, 2009
-----------------------------------------------------------------------
Other investments
-----------------------------------------------------------------------
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 (5)
------------------------------------------------------------------------
Balance at end of period 4,288
------------------------------------------------------------------------
Millions of Yen
------------------------------------------------------------------------
Three months ended
December 31, 2009
------------------------------------------------------------------------
Other investments
------------------------------------------------------------------------
Balance at beginning of period 4,291
Total gains or losses (realized and unrealized)
Included in net income --
Included in other comprehensive income (loss) --
Sales, collections and repurchases, net (3)
------------------------------------------------------------------------
Balance at end of period 4,288
------------------------------------------------------------------------
25
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
--------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
--------------------------------------------------------------------------------------------
Sales-
Imaging & Solutions 1,363,768 1,306,090
Industrial Products 97,226 79,510
Other 110,496 92,284
Inter-segment transaction (3,472) (3,153)
--------------------------------------------------------------------------------------------
Consolidated 1,568,018 1,474,731
--------------------------------------------------------------------------------------------
Operating Income(Loss)-
Imaging & Solutions 139,418 92,985
Industrial Products (968) (1,034)
Other 579 (1,986)
Elimination 1 (18)
Unallocated expense (52,652) (52,215)
--------------------------------------------------------------------------------------------
Consolidated 86,378 37,732
--------------------------------------------------------------------------------------------
Other, net (26,315) (6,909)
--------------------------------------------------------------------------------------------
Income before Income Taxes and Equity in Earnings of
Affiliates 60,063 30,823
--------------------------------------------------------------------------------------------
Millions of Yen
----------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
----------------------------------------------------------------------------------------------
Sales-
Imaging & Solutions 443,996 430,961
Industrial Products 27,092 26,268
Other 32,182 29,823
Inter-segment transaction (1,179) (1,112)
----------------------------------------------------------------------------------------------
Consolidated 502,091 485,940
----------------------------------------------------------------------------------------------
Operating Income(Loss)-
Imaging & Solutions 41,215 41,432
Industrial Products (1,744) (267)
Other (1,002) (889)
Elimination 2 (7)
Unallocated expense (17,169) (16,532)
----------------------------------------------------------------------------------------------
Consolidated 21,302 23,737
----------------------------------------------------------------------------------------------
Other, net (20,114) 320
----------------------------------------------------------------------------------------------
Income before Income Taxes and Equity in Earnings of
Affiliates 1,188 24,057
----------------------------------------------------------------------------------------------
26
Unallocated expense represents expenses for corporate headquarters.
Inter-segment 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
----------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
----------------------------------------------------------------------------------------------
Sales-
Japan 704,886 626,527
The Americas 350,467 416,397
Europe 408,263 341,467
Other 104,402 90,340
----------------------------------------------------------------------------------------------
Consolidated 1,568,018 1,474,731
----------------------------------------------------------------------------------------------
Millions of Yen
----------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
----------------------------------------------------------------------------------------------
Sales-
Japan 221,069 204,838
The Americas 132,882 135,239
Europe 119,553 115,321
Other 28,587 30,542
----------------------------------------------------------------------------------------------
Consolidated 502,091 485,940
----------------------------------------------------------------------------------------------
(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.
27
Millions of Yen
--------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
--------------------------------------------------------------------------------------------
Sales-
Japan
External customers 723,708 639,289
Inter-segment 346,985 288,956
--------------------------------------------------------------------------------------------
Total 1,070,693 928,245
--------------------------------------------------------------------------------------------
The Americas
External customers 351,451 415,474
Inter-segment 3,172 2,710
--------------------------------------------------------------------------------------------
Total 354,623 418,184
--------------------------------------------------------------------------------------------
Europe
External customers 405,532 342,376
Inter-segment 2,046 1,706
--------------------------------------------------------------------------------------------
Total 407,578 344,082
--------------------------------------------------------------------------------------------
Other
External customers 87,327 77,592
Inter-segment 126,922 103,913
--------------------------------------------------------------------------------------------
Total 214,249 181,505
--------------------------------------------------------------------------------------------
Elimination of inter-segment sales (479,125) (397,285)
--------------------------------------------------------------------------------------------
Consolidated 1,568,018 1,474,731
--------------------------------------------------------------------------------------------
Operating Income(Loss)-
Japan 60,142 20,994
The Americas (12,663) (11,761)
Europe 26,761 19,803
Other 10,063 10,003
--------------------------------------------------------------------------------------------
Elimination of inter-segment sales 2,075 (1,307)
--------------------------------------------------------------------------------------------
Consolidated 86,378 37,732
--------------------------------------------------------------------------------------------
Other, net (26,315) (6,909)
--------------------------------------------------------------------------------------------
Income before Income Taxes and Equity in Earnings of
Affiliates 60,063 30,823
--------------------------------------------------------------------------------------------
Millions of Yen
----------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
----------------------------------------------------------------------------------------------
Sales-
Japan
External customers 224,054 208,970
Inter-segment 110,052 109,347
----------------------------------------------------------------------------------------------
Total 334,106 318,317
----------------------------------------------------------------------------------------------
The Americas
External customers 134,803 135,064
Inter-segment 916 966
----------------------------------------------------------------------------------------------
Total 135,719 136,030
----------------------------------------------------------------------------------------------
Europe
External customers 118,625 115,117
Inter-segment 560 578
----------------------------------------------------------------------------------------------
Total 119,185 115,695
----------------------------------------------------------------------------------------------
Other
External customers 24,609 26,789
Inter-segment 41,757 35,721
----------------------------------------------------------------------------------------------
Total 66,366 62,510
----------------------------------------------------------------------------------------------
Elimination of inter-segment sales (153,285) (146,612)
----------------------------------------------------------------------------------------------
Consolidated 502,091 485,940
----------------------------------------------------------------------------------------------
Operating Income(Loss)-
Japan 12,425 13,022
The Americas (7,384) (3,381)
Europe 6,608 8,114
Other 1,765 4,067
----------------------------------------------------------------------------------------------
Elimination of inter-segment sales 7,888 1,915
----------------------------------------------------------------------------------------------
Consolidated 21,302 23,737
----------------------------------------------------------------------------------------------
Other, net (20,114) 320
----------------------------------------------------------------------------------------------
Income before Income Taxes and Equity in Earnings of
Affiliates 1,188 24,057
----------------------------------------------------------------------------------------------
28
Inter-segment 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 nine
months and three months ended December 31, 2008 and 2009.
12. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF INCOME
The following amounts were charged to selling, general and administrative
expenses for the nine months and three months ended December 31, 2008 and 2009:
Millions of Yen
--------------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, 2008 December 31, 2009
--------------------------------------------------------------------------------------------
Research and development costs 93,506 81,887
Advertising costs 10,686 7,484
Shipping and handling costs 15,656 12,773
--------------------------------------------------------------------------------------------
Millions of Yen
----------------------------------------------------------------------------------------------
Three months ended Three months ended
December 31, 2008 December 31, 2009
----------------------------------------------------------------------------------------------
Research and development costs 30,259 25,897
Advertising costs 2,687 2,933
Shipping and handling costs 4,161 4,220
----------------------------------------------------------------------------------------------
13. SUBSEQUENT EVENTS
Ricoh has performed an evaluation of subsequent events through February 10,
2010, the date that the financial statements were issued in Japan.
Subsidiary of the Company, Ricoh Leasing Company, Ltd. issued unsecured straight
bonds on January 21, 2010.
Unsecured Bonds No. 12 (with Limited Inter-Bond Pari Passu Clause)
(i) Issue amount: Yen 20.0 billion
(ii) Issue price: Full price: Yen 100 per Yen 100 bond
(iii) Payment date: January 21, 2010
(iv) Redemption date: January 21, 2014
(v) Interest rate: 0.605% per annum
(vi) Appropriation of proceeds: To redeem CP (commercial paper)
OTHER INFORMATION
The following information regarding interim dividend were resolved at the board
meeting on October 27, 2009.
29
-----------------------------------------------------------
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
-----------------------------------------------------------
30