FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of August 2010
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.
------------------------------
(Registrant)
By: /S/ Zenji Miura
------------------------------
Zenji Miura
Director, Chief Financial Officer
Corporate Executive Vice President
August 10, 2010
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RICOH COMPANY, LTD.
Consolidated Financial Statements
for the First Quarter Ended June 30, 2010
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the first quarter ended June 30, 2010 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
June 30, 2010 and March 31, 2010
Millions of Yen
--------------------
June 30, March 31,
ASSETS 2010 2010
----------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 286,277 242,165
Time deposits 1,873 1,723
Trade receivables:
Notes 47,313 45,277
Accounts 400,771 443,089
Less- Allowance for doubtful receivables (15,255) (16,896)
Current maturities of long-term finance receivables, net 432,829 196,144
Inventories:
Finished goods 95,260 95,436
Work in process and raw materials 76,111 73,815
Deferred income taxes and other 67,698 63,859
----------------------------------------------------------------------------------
Total current assets 1,161,268 1,144,612
----------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 44,631 44,998
Buildings 243,757 246,469
Machinery and equipment 672,900 656,962
Construction in progress 23,660 27,682
----------------------------------------------------------------------------------
Total 984,948 976,111
Less- accumulated depreciation (726,925) (713,090)
----------------------------------------------------------------------------------
Net property, plant and equipment 258,023 263,021
----------------------------------------------------------------------------------
Investments and other assets:
Long-term finance receivables, net 449,438 445,896
Investment securities 46,544 49,049
Investments in and advances to affiliates 717 819
Goodwill 230,655 246,637
Other intangible assets 137,602 147,886
Lease deposits and other 76,805 86,023
----------------------------------------------------------------------------------
Total investments and other assets 941,761 976,310
----------------------------------------------------------------------------------
Total assets 2,361,052 2,383,943
==================================================================================
1
Millions of Yen
--------------------
June 30, March 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2010 2010
----------------------------------------------------------------------------------
Current liabilities:
Short-term borrowings 46,293 75,701
Current maturities of long-term indebtedness 96,180 94,026
Trade payables:
Notes 14,361 12,211
Accounts 226,644 261,186
Accrued income taxes 13,971 15,263
Accrued expenses and other 203,303 202,017
----------------------------------------------------------------------------------
Total current liabilities 600,752 660,404
----------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness 601,235 514,718
Accrued pension and severance costs 141,333 140,460
Deferred income taxes and other 40,891 44,487
----------------------------------------------------------------------------------
Total long-term liabilities 783,459 699,665
----------------------------------------------------------------------------------
Equity:
Ricoh Company, Ltd. shareholders' equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 815,652 820,701
Accumulated other comprehensive loss (174,456) (132,051)
Treasury stock at cost (36,780) (36,756)
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Total Ricoh Company, Ltd. shareholders' equity 925,863 973,341
----------------------------------------------------------------------------------
Noncontrolling interests 50,978 50,533
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Total equity 976,841 1,023,874
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Total liabilities and equity 2,361,052 2,383,943
==================================================================================
The accompanying notes are an integral part of consolidated financial
statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the First Quarter Ended June 30, 2009 and 2010
Millions of Yen
---------------------------------------
First quarter ended First quarter ended
June 30, 2009 June 30, 2010
--------------------------------------------------------------------------------------------------------
Net Sales:
Products 225,311 218,672
Post sales and rentals 241,379 238,943
Other revenue 24,699 25,339
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Total 491,389 482,954
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Cost of sales:
Products 159,051 147,257
Post sales and rentals 113,074 111,690
Other revenue 18,959 19,689
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Total 291,084 278,636
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Gross profit 200,305 204,318
Selling, general and administrative expenses 194,229 182,471
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Operating income 6,076 21,847
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Other (income) expenses:
Interest and dividend income (583) (597)
Interest expense 2,103 1,854
Foreign currency exchange (gain) loss, net 944 5,276
Other, net 197 (178)
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Total 2,661 6,355
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Income before income taxes and equity in earnings of affiliates 3,415 15,492
Provision for income taxes:
Current 6,012 9,026
Deferred (4,133) (1,730)
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Total 1,879 7,296
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Equity in earnings of affiliates 4 (7)
Consolidated net income 1,540 8,189
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Net income attributable to noncontrolling interests 637 856
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Net income attributable to Ricoh Company, Ltd. 903 7,333
========================================================================================================
Yen Yen
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Per share of common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------
Basic 1.24 10.11
Diluted 1.20 9.83
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Cash dividends paid per share 15.00 16.50
========================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------
Basic 6.20 50.55
Diluted 6.00 49.15
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Cash dividends paid per share 75.00 82.50
========================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
3
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
For the First Quarter Ended June 30, 2009 and 2010
Millions of Yen
---------------------------------------
First Quarter ended First Quarter ended
June 30, 2009 June 30, 2010
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CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income 1,540 8,189
Adjustments to reconcile consolidated net income to net cash provided
by operating activities
Depreciation and amortization 23,836 22,412
Equity in earnings of affiliates, net of dividends received (4) 7
Deferred income taxes (4,133) (1,730)
Losses on disposals and sales of property, plant and equipment 86 443
Pension and severance costs, less payment (550) 1,692
Changes in assets and liabilities, net of effects from acquisition-
Decrease in trade receivables 35,697 16,795
(Increase) Decrease in inventories 241 (11,333)
Decrease in finance receivables 8,134 7,320
Decrease in trade payables (39,847) (26,347)
Increase in accrued income taxes and accrued expenses and other 4,306 21,579
Other, net 3,238 2,387
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Net cash provided by operating activities 32,544 41,414
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 178 16
Expenditures for property, plant and equipment, including interest
capitalized (17,384) (15,803)
Payments for purchases of available-for-sale securities (602) (57)
Proceeds from sales of available-for-sale securities 910 4
(Increase) Decrease in time deposits, net 218 (243)
Purchase of business, net of cash acquired (4,760) --
Other, net (5,124) (4,783)
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Net cash used in investing activities (26,564) (20,866)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 28,903 15,971
Repayment of long-term indebtedness (21,626) (23,693)
Decrease in short-term borrowings, net (101,061) (27,314)
Proceeds from issuance of long-term debt securities 35,000 79,741
Dividends paid (10,885) (11,972)
Payment for purchase of treasury stock (30) (29)
Other, net (276) (301)
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Net cash provided by (used in) financing activities (69,975) 32,403
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,609 (8,839)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (62,386) 44,112
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CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 258,484 242,165
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CASH AND CASH EQUIVALENTS AT END OF PERIOD 196,098 286,277
==========================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
4
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 first quarter ended
June 30, 2010 are presented in Japanese yen, the functional currency of the
Company and its domestic subsidiaries.
The books of the Company and its domestic subsidiaries are maintained in
conformity with Japanese accounting principles and practices, while foreign
subsidiaries maintain their books in conformity with the standards of their
country of domicile.
The accompanying consolidated financial statements reflect necessary
adjustments, not recorded in the books, to present them in conformity with U.S.
generally accepted accounting principles.
(A) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. The accounts of variable interest
entity are included in the consolidated financial statements, if applicable.
Investments in entities in which Ricoh has the ability to exercise significant
influence over the entities' operating and financial policies (generally 20% to
50% ownership) are accounted for on an equity basis. All significant
inter-company balances and transactions have been eliminated in consolidation.
The accounts of certain consolidated subsidiaries have been included on the
basis of fiscal periods ended within three months prior to June 30.
(B) REVENUE RECOGNITION
Ricoh generates revenue principally through the sale of equipment, supplies and
related services under separate contractual arrangements for each. Ricoh
recognizes revenue when (1) it has a firm contract, (2) the product has been
shipped to and accepted by the customer or the service has been provided,
(3) the sales price is fixed or determinable and (4) amounts are reasonably
assured of collection.
Products sales are recognized at the time of delivery and installation at the
customer location. Equipment revenues are based on established prices by
product type and model and are net of discounts. A sales return is accepted
only when the equipment is defective and does not meet Ricoh's product
performance specifications. Other than installation, there are no customer
acceptance clauses in the sales contract.
Post sales and rentals result primarily from maintenance contracts that are
normally entered into at the time the equipment is sold. Standard service fee
prices are established depending on equipment classification and include a cost
value for the estimated services to be performed based on historical experience
plus a profit margin thereon. As a matter of policy, Ricoh does not discount
such prices. On a monthly basis, maintenance service revenues are earned and
recognized by Ricoh and billed to the customer in accordance
5
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, 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
fiscal year-end, and income and expenses are translated at the average rates of
exchange prevailing during each fiscal year. The resulting translation
adjustments are included as a part of accumulated other comprehensive income
(loss) in equity.
All foreign currency transaction gains and losses are included in other income
and expenses in the period incurred.
(D) CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with maturities of
three months or less at the date of purchase such as time deposits and
short-term investment securities which are available-for-sale at any time,
present insignificant risk of changes in value due to being readily convertible
into cash and have an original maturity of three months or less, such as money
management funds and free financial funds.
(E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
As discussed further in Note 7, Ricoh manages its exposure to certain market
risks, primarily foreign currency and interest rate risks, through the use of
derivative instruments. As a matter of policy, Ricoh does not enter into
derivative contracts for trading or speculative purposes.
Ricoh recognizes all derivative instruments as either assets or liabilities in
the consolidated balance sheets and measures those instruments at fair value.
When Ricoh enters into a derivative contract, it makes a determination as to
whether or not for accounting purposes the derivative is part of a hedging
relationship. In general, a derivative may be designated as either (1) a hedge
of the fair value of a recognized asset or liability or an unrecognized firm
commitment ("fair value hedge"), (2) a hedge of the variability of the expected
cash flows associated with an existing asset or liability or a forecasted
transaction ("cash flow hedge"), or (3) a foreign currency fair value or cash
flow hedge ("foreign currency hedge"). Ricoh formally documents all
relationships between hedging instruments and hedged items, as well as its
6
risk-management objective and strategy for undertaking various hedge
transactions. This process includes linking all derivatives that are designated
as fair value, cash flow, or foreign currency hedges to specific assets and
liabilities on the consolidated balance sheets or to specific firm commitments
or forecasted transactions.
For derivative contracts that are designated and qualify as fair value hedges
including foreign currency fair value hedges, the derivative instrument is
marked-to-market with gains and losses recognized in current period earnings to
offset the respective losses and gains recognized on the change in fair value
of the hedged item. For derivative contracts that are designated and qualify as
cash flow hedges including foreign currency cash flow hedges, the effective
portion of gains and losses on these contracts is reported as a component of
accumulated other comprehensive income (loss) and reclassified into earnings in
the same period the hedged item or transaction affects earnings. Any hedge
ineffectiveness on cash flow hedges is immediately recognized in earnings. For
all derivative instruments that are not designated as part of a hedging
relationship and for designated derivative instruments that do not qualify for
hedge accounting, the contracts are recorded at fair value with the gain or
loss recognized in current period earnings.
(F) ALLOWANCE FOR DOUBTFUL TRADE RECEIVABLES AND FINANCE RECEIVABLES
Ricoh records allowances for doubtful receivables that are based upon
historical experience and specific customer collection issues. The estimated
amount of probable credit losses in its existing receivables is determined from
write-off history adjusted to reflect current economic conditions and specific
allowances for receivables including nonperforming leases, impaired loans or
other accounts for which Ricoh has concluded it will be unable to collect all
amounts due according to original terms of the lease or loan agreement. Account
balances net of expected recovery from available collateral are charged-off
against the allowances when collection is considered remote.
(G) SECURITIES
Ricoh's investments in debt and marketable equity securities are classified as
available-for-sale securities. Available-for-sale securities are reported at
fair value with unrealized gains and losses, net of related taxes, reported in
accumulated other comprehensive income (loss). Available-for-sale securities,
which mature or are expected to be sold in one year, are classified as current
assets.
Individual securities classified as available-for-sale securities are reduced
to fair market value by a charge to income for other than temporary declines in
value. Factors considered in assessing whether an indication of other than
temporary impairment exists with respect to available-for-sale securities
include: financial condition and near term prospects of issuer and intent and
ability of Ricoh to retain its investments for a period of time sufficient to
allow for any anticipated recovery in market value.
The cost of the securities sold is computed based on the average cost of each
security held at the time of sale.
Investments in affiliated companies over which Ricoh has the ability to
exercise significant influence, but does not hold a controlling financial
interest, are accounted for by the equity method.
Non-marketable equity securities owned by Ricoh primarily relate to less than
20% owned companies and funds are stated at cost unless indication of
impairment exist, which require the investment to be written down to its
estimated fair value.
7
(H) INVENTORIES
Inventories are mainly stated at the lower of average cost or net realizable
values. Inventory costs include raw materials, labor and manufacturing
overheads.
(I) PROPERTY, PLANT AND EQUIPMENT
For the Company and its domestic subsidiaries, depreciation of property, plant
and equipment is computed principally by using the declining-balance method
over the estimated useful lives. Most of the foreign subsidiaries have adopted
the straight-line method for computing depreciation. The depreciation period
generally ranges from 5 years to 50 years for buildings and 2 years to 12 years
for machinery and equipment.
Ordinary maintenance and repairs are charged to expense as incurred. Major
replacements and improvements are capitalized. When properties are retired or
otherwise disposed of, the property and related accumulated depreciation
accounts are relieved of the applicable amounts, and any differences are
included in earnings.
(J) CAPITALIZED SOFTWARE COSTS
Ricoh capitalizes certain internal and external costs incurred to acquire or
create internal use software during the application development stage as well
as upgrades and enhancements that result in additional functionality. The
capitalized software is amortized on a straight line basis generally from 3
years to 5 years.
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill is not amortized and is required to be tested at least annually for
impairment. Acquired intangible assets with a definite useful life are
amortized over their respective estimated useful lives and reviewed for
impairment when an indication of impairment is identified. Other intangible
assets with definite useful lives, consisting primarily of software, customer
relationships and trademarks are amortized on a straight line basis over 1 year
to 20 years. Any acquired intangible assets determined to have an indefinite
useful life are not amortized, but instead are tested annually for impairment
based on its fair value until its life would be determined to no longer be
indefinite. In performing the test, Ricoh utilizes the two-step approach
prescribed. The first step requires a comparison of the carrying amount of the
reporting units to the fair value of these units. If the carrying amount of a
reporting unit exceeds its fair value, Ricoh will perform the second step of
the goodwill impairment test to measure the amount of impairment loss, if any.
(L) PENSION AND RETIREMENT ALLOWANCES PLANS
Ricoh recognizes the overfunded or underfunded status of the defined benefit
plans as an asset or liability in the consolidated balance sheet, with a
corresponding adjustment to accumulated other comprehensive income (loss), net
of tax. The expected long-term rate of return on plan assets used for pension
accounting is determined based on the historical long-term rate of return on
plan assets. The discount rate is determined based on the rates of return of
high-quality fixed-income investments currently available and expected to be
available during the period to maturity of the pension benefits.
8
(M) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences and carryforwards are
expected to be realized or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
On April 1, 2007, Ricoh adopted the guidance on accounting for uncertainty in
income taxes which requires a more-likely-than-not threshold for financial
statement recognition and measurement of tax positions taken or expected to be
taken in a tax return. Ricoh recognizes interest and penalties related to
unrecognized tax benefits in provision for income taxes in the consolidated
statements of income.
(N) RESEARCH AND DEVELOPMENT EXPENSES AND ADVERTISING COSTS
Research and development expenses and advertising costs are expensed as
incurred.
(O) SHIPPING AND HANDLING COSTS
Shipping and handling costs, which mainly include transportation to customers,
are included in selling, general and administrative expenses in the
consolidated statements of income.
(P) IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
Long-lived assets and acquired intangible assets with a definite life are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset or asset group may not be recoverable.
Recoverability of assets to be held and used is assessed by comparing the
carrying amount of an asset or asset group to the expected future undiscounted
net cash flows of the asset or asset group. If an asset or asset group is
considered to be impaired, the impairment charge to be recognized is measured
as the amount by which the carrying amount of the asset or asset group exceeds
fair value. Long-lived assets meeting the criteria to be considered as held for
sale are reported at the lower of their carrying amount or fair value less
costs to sell.
(Q) NET INCOME ATTRIBUTABLE TO RICOH COMPANY, LTD. PER SHARE
Basic net income attributable to Ricoh Company, Ltd. per share of common stock
is calculated by dividing net income attributable to Ricoh Company, Ltd. by the
weighted-average number of shares of common stock outstanding during the
period. The calculation of diluted net income attributable to Ricoh Company,
Ltd. per share of common stock is similar to the calculation of basic net
income attributable to Ricoh Company, Ltd. per share, except that the
weighted-average number of shares outstanding includes the additional dilution
from potential common stock equivalents such as convertible bonds.
(R) NON-CASH INVESTING AND FINANCING TRANSACTIONS
Non-cash investing and financing transactions are as follows:
Millions of Yen
First quarter ended
--------------------
2009 2010
------------------------------------------------------------------------------
Debt assumed in connection with business acquisition Yen 3,941 --
Debt assumed with adoption of new accounting standards
regarding consolidation of VIE -- Yen 20,229
9
(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 and the
disclosures of fair value of financial instruments and contingent assets and
liabilities, to prepare these financial statements in conformity with U.S.
generally accepted accounting principles. Actual results could differ from
those estimates.
Ricoh has identified seven areas where it believes assumptions and estimates
are particularly critical to the consolidated financial statements. These are
determination of the allowance for doubtful receivables, impairment of
securities, impairment of long-lived assets including goodwill, uncertain tax
positions, realizability of deferred tax assets, the valuation of assets and
liabilities in business combinations and pension accounting.
(T) RECENTLY ADOPTED NEW ACCOUNTING STANDARDS
In December 2009, the FASB issued Accounting Standard Update ("ASU") 2009-16.
This ASU eliminates the concept of a qualifying special-purpose entity,
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. It is
effective for fiscal years beginning after November 15, 2009 and for subsequent
interim and annual reporting periods, and was adopted by Ricoh in the first
quarter beginning April 1, 2010.
In December 2009, the FASB issued ASU 2009-17. This ASU 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. It is
effective for fiscal years beginning after November 15, 2009 and for subsequent
interim and annual reporting periods and earlier application is prohibited. It
was adopted by Ricoh in the first quarter beginning April 1, 2010.
Regarding an effect on Ricoh's consolidated financial position or results of
operations by adoption of ASU 2009-16 and ASU 2009-17, refer to Note
11-variable interest entity.
(U) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In October 2009, the FASB issued ASU 2009-13. 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 adoption of this ASU will have on its
consolidated results of operations and financial condition.
In October 2009, the FASB issued ASU 2009-14. 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. It 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
10
Ricoh in the first quarter beginning April 1, 2011. Ricoh is currently
evaluating the effect that adoption of this ASU will have on its consolidated
results of operations and financial condition.
11
2. SECURITIES
Investment securities as of June 30, 2010 and March 31, 2010 consist of the
following:
Millions of Yen
----------------------------
June 30, 2010 March 31, 2010
-------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 43,994 46,624
Non-marketable equity securities 2,550 2,425
-------------------------------------------------------------------------------
46,544 49,049
===============================================================================
The noncurrent security types of available-for-sale securities, and the
respective cost, gross unrealized holding gains, gross unrealized holding
losses and fair value as of June 30, 2010 and March 31, 2010 are as follows:
Millions of Yen
-----------------------------------------------------------------------
June 30, 2010 March 31, 2010
----------------------------------- -----------------------------------
Gross Gross Gross Gross
unrealized unrealized unrealized unrealized
holding holding Fair holding holding Fair
Cost gains losses value Cost gains losses value
------------------------------------------------------------------------------------------------------
Noncurrent:
Equity securities 41,524 2,964 2,317 42,171 40,552 5,300 1,093 44,759
Corporate debt securities 1,709 114 -- 1,823 1,778 87 -- 1,865
------------------------------------------------------------------------------------------------------
43,233 3,078 2,317 43,994 42,330 5,387 1,093 46,624
======================================================================================================
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
June 30, 2010 and March 31, 2010 are as follows:
Millions of Yen
-------------------------------------------------------------------
June 30, 2010
-------------------------------------------------------------------
Less than 12 months 12 months or longer Total
----------------------- --------------------- ---------------------
Gross Gross Gross
unrealized unrealized unrealized
holding holding holding
Fair value losses Fair value losses Fair value losses
--------------------------------------------------------------------------------------------
Noncurrent:
Available-for-sale:
Equity securities 27,601 2,080 1,022 237 28,623 2,317
============================================================================================
Millions of Yen
-------------------------------------------------------------------
March 31, 2010
-------------------------------------------------------------------
Less than 12 months 12 months or longer Total
----------------------- --------------------- ---------------------
Gross Gross Gross
unrealized unrealized unrealized
holding holding holding
Fair value losses Fair value losses Fair value losses
--------------------------------------------------------------------------------------------
Noncurrent:
Available-for-sale:
Equity securities 26,871 836 985 257 27,856 1,093
============================================================================================
12
Gross unrealized holding losses of available-for-sale securities as of June 30,
2010 and March 31, 2010 consist of 43 and 37 kinds of securities. Ricoh judged
the decline in fair value of investment securities at period end to be
temporary, with considering such factors as financial and operating conditions
of issuer, the industry in which the issuer operates and other relevant factors.
The contractual maturities of debt securities classified as available-for-sale
as of June 30, 2010 are as follows:
Millions of Yen
----------------
Cost Fair value
-------------------------------------------------------------------------------
Due after one year through five years 322 329
Over five years 1,387 1,494
-------------------------------------------------------------------------------
1,709 1,823
===============================================================================
Proceeds from the sales of available-for-sale securities were Yen 910 million
and Yen 4 million for the first quarter ended June 30, 2009 and 2010,
respectively.
There were no significant realized gains or losses on sales of
available-for-sale securities for the first quarter ended June 30, 2009 and
2010.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the first quarter ended June 30, 2009 and
2010.
3. INCOME TAXES
The estimated annual effective tax rate for fiscal year ending March 31, 2011
was approximately 47 percent as of June 30, 2010. The estimated 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 interests and total
equity for the three months ended June 30, 2009 and 2010 is as follow:
Ricoh adopted ASU 2009-17 on April 1, 2010. The adoption of this ASU resulted
in adjustments to change in Ricoh shareholders' equity, noncontrolling
interests and total equity as of April 1, 2010.
Millions of Yen
------------------------------------------------------------------------------
Three months ended June 30, 2009 Three months ended June 30, 2010
-------------------------------------- --------------------------------------
Ricoh Ricoh
Shareholders' Noncontrolling Total Shareholders' Noncontrolling Total
Equity Interests Equity Equity Interests Equity
-----------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period 975,373 48,977 1,024,350 973,341 50,533 1,023,874
-----------------------------------------------------------------------------------------------------------------------
Cumulative effect of a change in
accounting principle - adoption of
accounting guidance for a variable
interest entity, net of tax -- -- -- (410) (392) (802)
-----------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period as adjusted 975,373 48,977 1,024,350 972,931 50,141 1,023,072
-----------------------------------------------------------------------------------------------------------------------
Net income 903 637 1,540 7,333 856 8,189
Unrealized gains (losses) on
securities 3,472 43 3,515 (2,098) (6) (2,104)
Pension liability adjustments 2,800 25 2,825 145 (4) 141
Unrealized losses on derivatives (351) (1) (352) (444) (18) (462)
Foreign currency translation
adjustments 5,779 24 5,803 (40,008) 340 (39,668)
-----------------------------------------------------------------------------------------------------------------------
Comprehensive income(loss) 12,603 728 13,331 (35,072) 1,168 (33,904)
-----------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (10,885) -- (10,885) (11,972) -- (11,972)
Distributions to Noncontrolling
interests -- (282) (282) -- (331) (331)
Payment to acquire Treasury stock (23) -- (23) (24) -- (24)
Other (2) -- (2) -- -- --
-----------------------------------------------------------------------------------------------------------------------
Equity, End of Period 977,066 49,423 1,026,489 925,863 50,978 976,841
=======================================================================================================================
13
5. DIVIDENDS
Cash dividends paid during the first quarter ended June 30, 2010 is as follows:
Resolved at the General meetings of Shareholders on June 25, 2010
------------------------------------------------------------------------------
Total amount of dividends (million of yen) 11,972
Dividend per share of common stock (yen) 16.50
Record date March 31, 2010
Effective date June 28, 2010
Resource for dividend Retained earnings
==============================================================================
6. PER SHARE DATA
Ricoh shareholders' equity per share was Yen 1,276.04 and Yen 1,341.45 as of
June 30, 2010 and March 31, 2010, respectively. Dividends per share shown in the
consolidated statement of income are computed based on dividends paid for the
first quarter ended June 30, 2010 and the year ended March 31, 2010.
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
---------------------------------------
First quarter ended First quarter ended
June 30, 2009 June 30, 2010
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,680 725,580
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 19,741
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 745,421 745,321
======================================================================================================
14
Millions of Yen
---------------------------------------
First quarter ended First quarter ended
June 30, 2009 June 30, 2010
----------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 903 7,333
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (6) (6)
----------------------------------------------------------------------------------------------------
Diluted net income attributable to Ricoh Company, Ltd. 897 7,327
====================================================================================================
Yen
---------------------------------------
First quarter ended First quarter ended
June 30, 2009 June 30, 2010
----------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. per share:
Basic:
Basic: Net income attributable to Ricoh Company, Ltd. 1.24 10.11
Diluted:
Diluted: Net income attributable to Ricoh Company,
Ltd. 1.20 9.83
====================================================================================================
15
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 first quarter ended June 30, 2010 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 first quarter ended June 30, 2010 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 28 million of the balance
of accumulated other comprehensive income as of June 30, 2010.
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.
16
Contract amounts of derivative instruments at March 31, 2010 and June 30, 2010
are shown in the following tables:
Millions of Yen
-------------------------------------------------------------------------------
June 30, March 31,
2010 2010
-------------------------------------------------------------------------------
Interest rate swap agreements 296,710 297,501
Foreign currency contracts 160,536 138,283
Foreign currency options 6,559 29,143
===============================================================================
The location and fair value amounts of derivatives in consolidated balance
sheet are shown in the following tables:
Derivatives designated as hedging instruments
Current Long-term
------------------------------------ ------------------------------------
Fair value Fair value
------------------------------------ ------------------------------------
Balance sheet Balance sheet
Location Millions of Yen Location Millions of Yen
-------------------------------------------------------------------------------------------------------------
June 30, March 31, June 30, March 31,
Asset Derivatives 2010 2010 2010 2010
-------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Deferred income Lease deposits
taxes and other Yen 38 Yen 40 and other Yen -- Yen 12
=============================================================================================================
June 30, March 31, June 30, March 31,
Liability Derivatives 2010 2010 2010 2010
-------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Accrued expenses Deferred income
and other Yen 25 Yen 10 taxes and other Yen 3,265 Yen 2,564
=============================================================================================================
Derivatives not designated as hedging instruments
Current Long-term
------------------------------------- -----------------------------------
Fair value Fair value
------------------------------------- -----------------------------------
Balance sheet Balance sheet
Location Millions of Yen Location Millions of Yen
-------------------------------------------------------------------------------------------------------------
June 30, March 31, June 30, March 31,
Asset Derivatives 2010 2010 2010 2010
-------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Yen 15 Yen -- Yen -- Yen --
Foreign currency contracts Deferred income Lease deposits
taxes and other 2,977 356 and other 56 --
Foreign currency options 482 128 -- --
-------------------------------------------------------------------------------------------------------------
Total Yen 3,474 Yen 484 Yen 56 Yen --
=============================================================================================================
June 30, March 31, June 30, March 31,
Liability Derivatives 2010 2010 2010 2010
-------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Yen 72 Yen 46 Yen 134 Yen 117
Foreign currency contracts Accrued expenses Deferred income
and other 4,601 4,076 taxes and other 326 347
Foreign currency options 50 426 -- --
-------------------------------------------------------------------------------------------------------------
Total Yen 4,723 Yen 4,548 Yen 460 Yen 464
=============================================================================================================
17
Total fair value amounts of derivatives
Millions of
Yen
-------------------
Fair value
---------------------------------------------------------------------------
June 30, March 31,
2010 2010
---------------------------------------------------------------------------
Total Asset Derivatives Yen 3,568 Yen 536
Total Liability Derivatives Yen 8,473 Yen 7,586
---------------------------------------------------------------------------
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the first quarter ended June 30, 2009
are shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI Into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (368) Interest expense (16) -- --
===========================================================================================================================
Millions of Yen
------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
------------------------------------------------------------------
Location Amount Location Amount
------------------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest and dividend income 52 Interest expense (91)
======================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
-----------------------------------------------------------
Location Millions of Yen
---------------
June 30, 2009
------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net Yen 23
Foreign currency contracts Foreign currency exchange (gain) loss, net 230
Foreign currency options Foreign currency exchange (gain) loss, net 1,044
------------------------------------------------------------------------------------------
Total Yen 1,297
==========================================================================================
18
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the first quarter ended June 30, 2010
are shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI Into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (480) Interest expense (35) -- --
===========================================================================================================================
Millions of Yen
------------------------------------------------------------------
Gain or (Loss) Recognized Gain or (Loss) on Hedged Item
in Income on Derivative Recognized in Income
------------------------------------ -----------------------------
Location Amount Location Amount
-------------------------------------------------------------------------------------------------
Fair value hedge
Interest rate swap agreements Interest and dividend income 30 Interest expense (39)
=================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
-----------------------------------------------------------
Location Millions of Yen
---------------
June 30, 2010
------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net Yen 92
Foreign currency contracts Foreign currency exchange (gain) loss, net 4,452
Foreign currency options Foreign currency exchange (gain) loss, net 730
------------------------------------------------------------------------------------------
Total Yen 5,274
==========================================================================================
8. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees
housing loans of Yen 213 million as of June 30, 2010.
As of June 30, 2010 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
19
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) INVESTMENT SECURITIES
The fair value of the investment securities is principally based on quoted
market price. Ricoh have not estimated the fair value of non-marketable equity
securities, as it is not practicable. Because there were no quoted market
prices for non-marketable equity securities and each security had different
nature and characteristics, reasonable estimates of fair values could not be
made without incurring excessive costs. The acquisition cost of non-marketable
equity securities was Yen 2,550 million and Yen 2,425 million as of June 30,
2010 and March 31, 2010, respectively.
(C) INSTALLMENT LOANS
The fair value of installment loans is based on the present value of future
cash flows using the current interest rate for similar instruments of
comparable maturity.
(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. Ricoh newly recognized Yen 14,565 million as Long-term
indebtedness conform with adoption of New Accounting Standards, refer to Note
11-variable interest entity.
(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 June 30, 2010 and
March 31, 2010 are summarized as follows:
Millions of Yen
-----------------------------------------
June 30, 2010 March 31, 2010
-------------------- --------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-----------------------------------------------------------------------------
Investment securities 46,544 46,544 49,049 49,049
Installment loans 67,966 67,941 67,505 68,739
Long-term indebtedness (601,235) (586,029) (514,718) (501,311)
Interest rate swap agreements, net (3,443) (3,443) (2,685) (2,685)
Foreign currency contracts, net (1,894) (1,894) (4,067) (4,067)
Foreign currency options, net 432 432 (298) (298)
=============================================================================
20
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
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The three-level fair value hierarchy that prioritizes the
inputs used to measure fair value is established. The three levels of inputs
used to measure fair value are as follows:
Level 1 - Inputs are quoted prices in active markets for identical assets or
liabilities.
Level 2 - Inputs are quoted prices for similar assets or liabilities in an
active market, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than
quoted prices that are observable and market-corroborated inputs
which are derived principally from or corroborated by observable
market data.
Level 3 - Inputs are derived from valuation techniques in which one or more
significant inputs or value drivers are unobservable.
The following tables present the fair-value hierarchy levels of Ricoh's assets
and liabilities that are measured at fair value on a recurring basis as of
June 30, 2010 and March 31, 2010.
Millions of Yen
------------------------------
June 30, 2010
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 35,927 -- -- 35,927
Foreign equity securities 6,244 -- -- 6,244
Foreign corporate bonds 1,823 -- -- 1,823
Derivative instruments
Interest rate swap agreements -- 53 -- 53
Foreign currency contracts -- 3,033 -- 3,033
Foreign currency options -- 482 -- 482
-------------------------------------------------------------------------
Total assets 43,994 3,568 -- 47,562
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 3,496 -- 3,496
Foreign currency contracts -- 4,927 -- 4,927
Foreign currency options -- 50 -- 50
-------------------------------------------------------------------------
Total liabilities -- 8,473 -- 8,473
=========================================================================
21
Millions of Yen
------------------------------
March 31, 2010
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 36,946 -- -- 36,946
Foreign equity securities 7,813 -- -- 7,813
Foreign corporate bonds 1,865 -- -- 1,865
Derivative instruments
Interest rate swap agreements -- 52 -- 52
Foreign currency contracts -- 356 -- 356
Foreign currency options -- 128 -- 128
Other investments -- -- 5,816 5,816
-------------------------------------------------------------------------
Total assets 46,624 536 5,816 52,976
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,737 -- 2,737
Foreign currency contracts -- 4,423 -- 4,423
Foreign currency options -- 426 -- 426
-------------------------------------------------------------------------
Total liabilities -- 7,586 -- 7,586
=========================================================================
Available-for-sale securities
Available-for-sale securities classified Level 1 in the fair value hierarchy
contains marketable securities and bonds. Marketable securities and bonds are
valued using a market approach based on the quoted market prices of identical
instruments in active markets.
Derivative instruments
Ricoh uses foreign exchange contracts, foreign currency options and interest
rate swap agreements to manage exposure to the variability of cash flow. These
derivative instruments are classified as Level 2 in the fair value hierarchy,
since they are valued using observable market data such as LIBOR-based yield
curves.
Other investments
Other investments classified as Level 3 in the fair value hierarchy represent
the retained interests in securitizations of finance lease receivables in which
Ricoh valued using cash flows discounted by an estimated interest rate
reflecting underlying risks till March 31, 2010. Ricoh adopted the FASB New
Accounting Standards as of beginning of fiscal year ending March 31, 2011,
Ricoh consolidated this retained interests by this adoption, and Ricoh offset
and eliminated it. The detail of this New Accounting Standards is summarized as
follow Note 11-variable interest entity.
The following table presents the Other investments classified as Level 3 in the
fair value hierarchy as of June 30, 2009.
Millions of Yen
-------------------
First quarter ended
June 30, 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 (4)
-------------------------------------------------------------------------------
Balance at end of period 4,289
===============================================================================
22
11. VARIABLE INTEREST ENTITY
Ricoh sold certain finance lease receivables in prior years through revolving
securitization transactions, which were structured as special purpose entities
("SPE"). The value assigned to undivided interests retained in these
transactions was based on the fair value of retained interests as of a transfer
of these receivables. Ricoh's retained interests were considered as variable
interest, because Ricoh's retained interests were subordinate to the investors'
interests and had the liability with received the potential losses. And, Ricoh
was considered as primary beneficiary, because Ricoh was special servicer for
the program. As a result, Ricoh consolidated the interests as VIE and recorded
the assets and liabilities at their carrying amount as of beginning of fiscal
year ending March 31, 2011. Adoption of the new accounting standards did not
have a material effect on Ricoh's results of operation. The main impact of
adopting the new accounting standards on Ricoh's consolidated financial
position is as follows:
Millions of Yen
-------------------
First quarter ended
June 30, 2010
---------------------------------------------------------------------------
Current maturities of long-term finance receivables,
net 6,794
Long-term finance receivables, net 17,470
Current maturities of long-term indebtedness 5,664
Long-term indebtedness 14,565
===========================================================================
Also, Ricoh decreased at their carrying amount as cumulative effect adjustment
Yen 410 million to the opening balance of Retained earnings, and Yen
392 million to the opening balance of Noncontrolling interests as of April 1,
2010.
23
12. SEGMENT INFORMATION
Ricoh's operating segments are comprised of Imaging & Solutions, including
copiers and related supplies, communications and information systems,
Industrial Products, including thermal media and semiconductors, and Other,
including digital cameras.
Segment Profit (loss) is determined by subtracting cost of sales and selling,
general and administrative expenses from sales, and is used by Ricoh's
management in deciding how to allocate resources and in assessing performance.
Segment Profit (loss) excludes certain corporate expenses, such as costs
related to human resources, legal relations, investor relations, public
relations, corporate planning and environmental activities.
The following tables present certain information regarding Ricoh's operating
segments and by geographic areas for the first quarter ended June 30, 2009 and
2010.
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2009 June 30, 2010
---------------------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 436,820 424,689
Industrial Products 25,648 29,091
Other 29,815 30,360
Intersegment transaction (894) (1,186)
---------------------------------------------------------------------------------------------------------
Total Segment Sales 491,389 482,954
=========================================================================================================
Segment Profit (loss):
Imaging & Solutions 23,859 37,918
Industrial Products (354) 484
Other (278) (128)
---------------------------------------------------------------------------------------------------------
Total Segment Profit (loss) 23,227 38,274
=========================================================================================================
Reconciling Items:
Corporate expenses and Elimination (17,151) (16,427)
Interest and dividend income 583 597
Interest expense (2,103) (1,854)
Foreign currency exchange loss, net (944) (5,276)
Other, net (197) 178
---------------------------------------------------------------------------------------------------------
Income before Income Taxes and Equity in Earnings of Affiliates 3,415 15,492
=========================================================================================================
Intersegment sales represent sales of Industrial Products segment to Imaging &
Solutions segment.
(B) GEOGRAPHIC INFORMATION
Sales which are attributed to countries based on location of customers are as
follows:
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2009 June 30, 2010
-------------------------------------------------------------------------------------------
Sales-
Japan 206,739 212,916
The Americas 142,770 133,410
Europe 113,750 103,117
Other 28,130 33,511
-------------------------------------------------------------------------------------------
Consolidated 491,389 482,954
===========================================================================================
24
13. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF INCOME
The following amounts were charged to selling, general and administrative
expenses for the first quarter ended June 30, 2009 and 2010:
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2009 June 30, 2010
-------------------------------------------------------------------------------------------
Research and development costs 27,280 25,670
Advertising costs 1,981 2,197
Shipping and handling costs 4,266 4,204
===========================================================================================
25