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 2013
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
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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
Representative Director, President
and Chief Executive Officer
(principal executive officer)
August 9, 2013
RICOH COMPANY, LTD.
Consolidated Financial Statements
for the First Quarter Ended June 30, 2013
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the first quarter ended June 30, 2013 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, 2013 and June 30, 2013
Millions of Yen
------------------------------
March 31, June 30,
ASSETS 2013 2013
-----------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 117,051 123,550
Time deposits 3,280 4,457
Trade receivables:
Notes 36,772 45,885
Accounts 488,233 496,053
Less- allowance for doubtful receivables (15,424) (15,793)
Current maturities of long-term finance receivables, net 235,889 232,745
Inventories:
Finished goods 101,568 106,215
Work in process and raw materials 93,799 99,226
Deferred income taxes and other 65,051 65,566
-----------------------------------------------------------------------------------------------------------
Total current assets 1,126,219 1,157,904
-----------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 45,809 45,920
Buildings 271,272 274,747
Machinery and equipment 701,590 710,725
Construction in progress 17,891 7,912
-----------------------------------------------------------------------------------------------------------
Total 1,036,562 1,039,304
Less- accumulated depreciation and amortization (745,687) (746,475)
-----------------------------------------------------------------------------------------------------------
Net property, plant and equipment 290,875 292,829
-----------------------------------------------------------------------------------------------------------
Investments and other assets:
Long-term finance receivables, net 466,608 482,071
Investment securities 54,102 57,018
Investments in and advances to affiliates 1,026 1,478
Goodwill 221,217 230,783
Other intangible assets 107,702 107,232
Lease deposits and other 92,948 91,772
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Total investments and other assets 943,603 970,354
-----------------------------------------------------------------------------------------------------------
Total assets 2,360,697 2,421,087
===========================================================================================================
1
Millions of Yen
------------------------------
March 31, June 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2013 2013
-----------------------------------------------------------------------------------------------------------
Current liabilities:
Short-term borrowings 65,219 87,115
Current maturities of long-term indebtedness 161,180 184,843
Trade payables:
Notes 15,197 19,775
Accounts 241,341 227,472
Accrued income taxes 12,091 12,008
Accrued expenses and other 205,339 226,358
-----------------------------------------------------------------------------------------------------------
Total current liabilities 700,367 757,571
-----------------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness, less current maturities 476,381 452,729
Accrued pension and severance costs 164,289 165,644
Deferred income taxes and other 61,002 64,834
-----------------------------------------------------------------------------------------------------------
Total long-term liabilities 701,672 683,207
-----------------------------------------------------------------------------------------------------------
Equity:
Ricoh Company, Ltd. shareholders' equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 759,783 757,979
Accumulated other comprehensive loss (146,088) (123,501)
Treasury stock at cost (37,146) (37,168)
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Total Ricoh Company, Ltd. shareholders' equity 897,996 918,757
-----------------------------------------------------------------------------------------------------------
Noncontrolling interests 60,662 61,552
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Total equity 958,658 980,309
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Total liabilities and equity 2,360,697 2,421,087
===========================================================================================================
The accompanying notes are an integral part of consolidated financial
statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
For the First Quarter Ended June 30, 2012 and 2013
Millions of Yen
-------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
--------------------------------------------------------------------------------------------------------------------
Net sales:
Products 205,360 234,546
Post sales and rentals 225,565 257,179
Other revenue 28,462 29,982
--------------------------------------------------------------------------------------------------------------------
Total 459,387 521,707
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Cost of sales:
Products 143,926 169,822
Post sales and rentals 105,402 116,547
Other revenue 20,161 21,220
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Total 269,489 307,589
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Gross profit 189,898 214,118
Selling, general and administrative expenses 175,617 195,049
--------------------------------------------------------------------------------------------------------------------
Operating income 14,281 19,069
--------------------------------------------------------------------------------------------------------------------
Other (income) expenses:
Interest and dividend income (842) (517)
Interest expense 1,521 1,415
Foreign currency exchange (gain) loss, net 1,315 (57)
Other, net 12 (312)
--------------------------------------------------------------------------------------------------------------------
Total 2,006 529
--------------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in earnings of affiliates 12,275 18,540
Provision for income taxes:
Current 2,983 3,370
Deferred 1,686 3,607
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Total 4,669 6,977
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Equity in earnings of affiliates 41 (17)
Consolidated net income 7,647 11,546
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Net income attributable to noncontrolling interests 1,110 1,387
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Net income attributable to Ricoh Company, Ltd. 6,537 10,159
====================================================================================================================
Yen
-------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
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Per share of common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------------------
Basic 9.02 14.01
--------------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 8.50 16.50
====================================================================================================================
Per American Depositary Share, each representing 5 shares of common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------------------
Basic 45.10 70.05
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Cash dividends paid per share 42.50 82.50
====================================================================================================================
Diluted net income per share attributable to Ricoh Company, Ltd. for the first
quarter ended June 30, 2012 and the first quarter ended June 30, 2013 is omitted
because the Company did not have potentially dilutive common shares that were
outstanding for the period.
3
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the First Quarter Ended June 30, 2012 and 2013
Millions of Yen
-------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
--------------------------------------------------------------------------------------------------------------------
Consolidated net income 7,647 11,546
Other comprehensive income (loss) , net of tax:
Net unrealized holding gains (losses) on securities (699) 1,950
Pension liability adjustments (255) (582)
Net unrealized gains and losses on derivative instruments (289) 399
Foreign currency translation adjustments (29,655) 20,666
--------------------------------------------------------------------------------------------------------------------
Total (30,898) 22,433
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Comprehensive income (loss) (23,251) 33,979
--------------------------------------------------------------------------------------------------------------------
Comprehensive income attributable to noncontrolling interests 848 1,233
--------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) attributable to Ricoh Company, Ltd. (24,099) 32,746
====================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
4
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
For the First Quarter Ended June 30, 2012 and 2013
Millions of Yen
-------------------------------------------
First Quarter ended First Quarter ended
June 30, 2012 June 30, 2013
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income 7,647 11,546
Adjustments to reconcile consolidated net income to net cash
provided by operating activities
Depreciation and amortization 20,891 23,158
Equity in earnings of affiliates, net of dividends received (41) 17
Deferred income taxes 1,686 3,607
Pension and severance costs, less payment (1,734) (464)
Changes in assets and liabilities, net of effects from acquisition-
(Increase) Decrease in trade receivables 1,037 (2,168)
Increase in inventories (11,384) (4,373)
Increase in finance receivables (5,384) (8,818)
Decrease in trade payables (13,189) (12,880)
Increase in accrued income taxes and
accrued expenses and other 4,312 10,368
Other, net 5,020 (1,810)
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Net cash provided by operating activities 8,861 18,183
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 582 103
Expenditures for property, plant and equipment, including
interest capitalized (19,195) (18,715)
Expenditures for intangible asset (3,609) (3,397)
Payments for purchases of available-for-sale securities (8) (7)
Proceeds from sales of available-for-sale securities -- 415
Increase in time deposits, net (2,028) (984)
Other, net 97 (1,023)
--------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (24,161) (23,608)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (repayments) of debt with original maturities of three
months or less (15,182) 12,214
Proceeds from debt with original maturities of more than three months 53,601 40,525
Repayments of debt with original maturities of more than three months (19,501) (30,840)
Dividends paid (6,163) (11,963)
Payment for purchase of treasury stock (5) (20)
Other, net (327) (343)
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Net cash provided by financing activities 12,423 9,573
--------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (4,832) 2,351
--------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,709) 6,499
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CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 156,210 117,051
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CASH AND CASH EQUIVALENTS AT END OF PERIOD 148,501 123,550
====================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
5
Ricoh Company, Ltd. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
According to the article 95 of the "Regulations Regarding Terms, Forms and
Preparation of Interim Consolidated Financial Statements" (Cabinet office
Ordinance No.64, 2007), the accompanying consolidated financial statements of
Ricoh (Ricoh Company, Ltd. and its consolidated subsidiaries) have been prepared
in conformity with U.S. generally accepted accounting principles. Significant
accounting and reporting policies are summarized below:
The accompanying consolidated financial statements for the first quarter ended
June 30, 2013 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 ("U.S. GAAP").
(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.
(B) REVENUE RECOGNITION
Ricoh generates revenue principally through the sale of equipment, supplies and
related services under separate contractual arrangements for each. Ricoh
recognizes revenue when (1) it has a firm contract, (2) the product has been
shipped to and accepted by the customer or the service has been provided, (3)
the sales price is fixed or determinable and (4) amounts are reasonably assured
of collection.
Products sales are recognized at the time of delivery and installation at the
customer location. Equipment revenues are based on established prices by product
type and model and are net of discounts. A sales return is accepted only when
the equipment is defective and does not meet Ricoh's product performance
specifications. Other than installation, there are no customer acceptance
clauses in the sales contract.
Post sales and rentals result primarily from maintenance contracts that are
normally entered into at the time the equipment is sold. Standard service fee
prices are established depending on equipment classification and include a cost
value for the estimated services to be performed based on historical experience
plus a profit margin thereon. As a matter of policy, Ricoh does not discount
such prices. On a monthly basis, maintenance service revenues are earned and
recognized by Ricoh and billed to the customer in accordance with the contract
and include a fixed monthly fee plus a variable amount based on usage. The
length of the contract ranges up to five years; however, most contracts are
cancelable at any time by the customer upon a short notice period. Leases not
qualifying as sales-type leases or direct financing leases are accounted for as
operating leases and related revenue is recognized over the lease term.
6
Ricoh enters into arrangements with multiple elements, which may include any
combination of products, equipment, installation and maintenance. Consideration
in a multiple-element arrangement is allocated at the inception of the
arrangement to all deliverables on the basis of the relative selling price if
both of the following criteria are met: the delivered item(s) has value to the
customer on a stand-alone basis; and the delivery of the undelivered item must
be probable and controlled by Ricoh if the arrangement includes the right of
return. If these criteria are not met, revenue is deferred until the undelivered
elements are fulfilled and accounted for as a single unit of accounting.
Revenue from the sale of equipment under sales-type leases is recognized as
product sales at the inception of the lease. Other revenue consists primarily of
interest income on sales-type leases and direct-financing leases, which are
recognized as other revenue over the life of each respective lease using the
interest method.
(C) FOREIGN CURRENCY TRANSLATION
For foreign operations with functional currencies other than the Japanese yen,
assets and liabilities are translated at the exchange rates in effect at each
fiscal year-end, and income and expenses are translated at the average rates of
exchange prevailing during each fiscal year. The resulting translation
adjustments are included as a part of accumulated other comprehensive income
(loss) and noncontrolling interests in equity.
All foreign currency transaction gains and losses are included in other income
and expenses in the period incurred.
7
(D) CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments such as certificates
of deposits (CD) and time deposits with maturities of three months or less.
In addition, short term investments such as money management funds (MMF) and
free financial funds (FFF) with maturities of three months or less are also
classified into cash and cash equivalents, as they are readily convertible to
cash and present insignificant risk of changes in value.
(E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
As discussed further in Note 8, Ricoh manages its exposure to certain market
risks, primarily foreign currency and interest rate risks, through the use of
derivative instruments. As a matter of policy, Ricoh does not enter into
derivative contracts for trading or speculative purposes.
Ricoh recognizes all derivative instruments as either assets or liabilities in
the consolidated balance sheets and measures those instruments at fair value.
When Ricoh enters into a derivative contract, it makes a determination as to
whether or not for accounting purposes the derivative is part of a hedging
relationship. In general, a derivative may be designated as either (1) a hedge
of the fair value changes of a recognized asset or liability or an unrecognized
firm commitment ("fair value hedge"), (2) a hedge of the variability of the
expected cash flows associated with an existing asset or liability or a
forecasted transaction ("cash flow hedge"), or (3) a foreign currency fair value
or cash flow hedge ("foreign currency hedge"). Ricoh formally documents all
relationships between hedging instruments and hedged items, as well as its
risk-management objective and strategy for undertaking various hedge
transactions. This process includes linking all derivatives that are designated
as fair value, cash flow, or foreign currency hedges to specific assets and
liabilities on the consolidated balance sheets or to specific firm commitments
or forecasted transactions.
For derivative contracts that are designated and qualify as fair value hedges
including foreign currency fair value hedges, the derivative instrument is
marked-to-market with gains and losses recognized in current period earnings to
offset the respective losses and gains recognized on the change in fair value of
the hedged item. For derivative contracts that are designated and qualify as
cash flow hedges including foreign currency cash flow hedges, the effective
portion of gains and losses on these contracts is reported as a component of
accumulated other comprehensive income (loss) and noncontrolling interests in
equity, and reclassified into earnings in the same period the hedged item or
transaction affects earnings. Any hedge ineffectiveness on cash flow hedges is
immediately recognized in earnings. For all derivative instruments that are not
designated as part of a hedging relationship and for designated derivative
instruments that do not qualify for hedge accounting, the contracts are recorded
at fair value with the gain or loss recognized in current period earnings.
(F) ALLOWANCE FOR DOUBTFUL TRADE RECEIVABLES AND FINANCE RECEIVABLES
Ricoh records allowances for doubtful receivables that are based upon historical
experience and specific customer collection issues. The estimated amount of
probable credit losses in its existing receivables is determined from write-off
history adjusted to reflect current economic conditions and specific allowances
for receivables including nonperforming leases, impaired loans or other accounts
for which Ricoh has concluded it will be unable to collect all amounts due
according to original terms of the lease or loan agreement. Account balances net
of expected recovery from available collateral are charged-off against the
allowances when collection is considered remote.
8
(G) SECURITIES
Ricoh's investments in debt and marketable equity securities are classified as
available-for-sale securities. Available-for-sale securities are reported at
fair value with unrealized gains and losses, net of related taxes, reported in
accumulated other comprehensive income (loss) and noncontrolling interests in
equity.
Individual securities classified as available-for-sale securities are reduced to
fair market value by a charge to income for other than temporary declines in
value. Factors considered in assessing whether an indication of other than
temporary impairment exists with respect to available-for-sale securities
include: financial condition and near term prospects of issuer and intent and
ability of Ricoh to retain its investments for a period of time sufficient to
allow for any anticipated recovery in market value.
The cost of the securities sold is computed based on the average cost of each
security held at the time of sale.
Investments in affiliated companies over which Ricoh has the ability to exercise
significant influence, but does not hold a controlling financial interest, are
accounted for by the equity method.
Non-marketable equity securities owned by Ricoh primarily relate to less than
20% owned companies and funds are stated at cost unless indication of impairment
exist, which require the investment to be written down to its estimated fair
value.
(H) INVENTORIES
Inventories are mainly stated at the lower of average cost or net realizable
values. Inventory costs include raw materials, labor and manufacturing
overheads.
(I) PROPERTY, PLANT AND EQUIPMENT
The depreciation of property, plant and equipment is computed principally by
using the straight-line method over the estimated useful lives. 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.
9
(J) CAPITALIZED SOFTWARE COSTS
Ricoh capitalizes certain internal and external costs incurred to acquire or
create internal use software during the application development stage as well as
upgrades and enhancements that result in additional functionality. The
capitalized software is amortized on a straight line basis generally from 3
years to 10 years.
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill is not amortized and is required to be tested at least annually for
impairment. Acquired intangible assets with a definite useful life are amortized
over their respective estimated useful lives and reviewed for impairment when an
indication of impairment is identified. Other intangible assets with definite
useful lives, consisting primarily of software, customer relationships and
trademarks are amortized on a straight line basis over 3 years 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 goodwill impairment 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) and
noncontrolling interests, net of tax. The expected long-term rate of return on
plan assets used for pension accounting is determined based on the historical
long-term rate of return on plan assets. The discount rate is determined based
on the rates of return of high-quality fixed-income investments currently
available and expected to be available during the period to maturity of the
pension benefits.
(M) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences and carryforwards are
expected to be realized or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income for the period that includes
the enactment date.
Ricoh recognizes the effects of tax positions when it is expected to be more
likely than not, based on the technical merits, that the tax positions will be
sustained upon examination by the tax authority. Tax benefits that meet the more
likely than not recognition threshold are measured at the largest amount that is
greater than 50% likely of being realized upon settlement. Interest and
penalties accrued related to unrecognized tax benefits are included in income
taxes in the consolidated statements of operations.
(N) RESEARCH AND DEVELOPMENT EXPENSES AND ADVERTISING COSTS
Research and development expenses and advertising costs are expensed as
incurred.
10
(O) SHIPPING AND HANDLING COSTS
Shipping and handling costs, which mainly include transportation to customers,
are included in selling, general and administrative expenses in the consolidated
statements of operations.
(P) IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
Long-lived assets and acquired intangible assets with definite lives are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset or asset group may not be recoverable.
Recoverability of assets to be held and used is assessed by comparing the
carrying amount of an asset or asset group to the expected future undiscounted
net cash flows of the asset or asset group. If an asset or asset group is
considered to be impaired, the impairment charge to be recognized is measured as
the amount by which the carrying amount of the asset or asset group exceeds fair
value. Long-lived assets meeting the criteria to be considered as held for sale
are reported at the lower of their carrying amount or fair value less costs to
sell.
(Q) NET INCOME ATTRIBUTABLE TO RICOH COMPANY, LTD. PER SHARE
Basic net income attributable to Ricoh Company, Ltd. per share of common stock
is calculated by dividing net income attributable to Ricoh Company, Ltd. by the
weighted-average number of shares of common stock outstanding during the period.
The calculation of diluted net income attributable to Ricoh Company, Ltd. per
share of common stock is similar to the calculation of basic net income
attributable to Ricoh Company, Ltd. per share, except that the weighted-average
number of shares outstanding includes the additional dilution from potential
common stock equivalents such as convertible bonds.
(R) USE OF ESTIMATES
Management of Ricoh has made a number of estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses and the
disclosures of fair value of financial instruments and contingent assets and
liabilities, to prepare these financial statements in conformity with U.S.
generally accepted accounting principles. Actual results could differ from those
estimates.
Ricoh has identified seven areas where it believes assumptions and estimates are
particularly critical to the consolidated financial statements. These are
determination of the allowance for doubtful receivables, impairment of
securities, impairment of long-lived assets including goodwill, uncertain tax
positions, realizability of deferred tax assets, the valuation of assets and
liabilities in business combinations and pension accounting.
(S) RECENTLY ADOPTED NEW ACCOUNTING STANDARDS
Ricoh adopted retroactively Accounting Standards Update (ASU) 2011-11 and ASU
2013-01 from April 1 2013. ASU 2011-11 requires an entity to disclose
information about offsetting and related arrangements. ASU 2013-01 replaced ASU
2011-11. The updates create new disclosure requirements requiring entities to
disclose both gross and net information for derivatives and other financial
instruments that are either offset in the Statement of assets and liabilities or
subject to an enforceable master netting arrangement or similar agreement. These
ASU's impact disclosures only and will have no impact on Ricoh's consolidated
financial position.
Ricoh adopted ASU 2013-02 from April 1 2013. This ASU requires an entity to
report the effect of reclassifications out of accumulated other comprehensive
income. This ASU's impact disclosures only and will have no impact on Ricoh's
consolidated financial position.
11
(T) RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements to conform with the current year's presentation.
12
2. SECURITIES
Investment securities as of March 31, 2013 and June 30, 2013 consist of the
following:
Millions of Yen
---------------------------------
March 31, 2013 June 30, 2013
--------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 52,319 55,157
Non-marketable equity securities 1,783 1,861
--------------------------------------------------------------------------------
Total 54,102 57,018
================================================================================
The noncurrent security types of available-for-sale securities, and the
respective cost, gross unrealized holding gains, gross unrealized holding losses
and fair value as of March 31, 2013 and June 30, 2013 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
March 31, 2013 June 30, 2013
----------------------------------------- ----------------------------------------
Gross Gross Gross Gross
unrealized unrealized unrealized unrealized
holding holding Fair holding holding Fair
Cost gains losses value Cost gains losses value
----------------------------------------------------------------------------------------------------------
Noncurrent:
Equity securities 35,378 15,058 69 50,367 35,219 18,096 77 53,238
Corporate debt
securities 1,836 116 -- 1,952 1,892 27 -- 1,919
----------------------------------------------------------------------------------------------------------
Total 37,214 15,174 69 52,319 37,111 18,123 77 55,157
==========================================================================================================
Gross unrealized holding losses and the fair value of available-for-sale
securities, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position at March 31, 2013
and June 30, 2013 are as follows:
Millions of Yen
----------------------------------------------------------------------------------
March 31, 2013
----------------------------------------------------------------------------------
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 61 5 288 64 349 69
-----------------------------------------------------------------------------------------------------------------
Millions of Yen
----------------------------------------------------------------------------------
June 30, 2013
----------------------------------------------------------------------------------
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 49 9 254 68 303 77
-----------------------------------------------------------------------------------------------------------------
13
Gross unrealized holding losses of available-for-sale securities as of June 30,
2013 consist of 14 security holdings. Ricoh concluded that 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. Ricoh judged the degree of
decline in fair value of investment securities against the fair value to be
immaterial.
The contractual maturities of debt securities classified as available-for-sale
as of June 30, 2013 are as follows:
Millions of Yen
---------------------
Cost Fair value
------------------------------------------------------------------------------
Due after one year through five years 755 751
Over five years 1,137 1,168
------------------------------------------------------------------------------
Total 1,892 1,919
==============================================================================
There were no significant proceeds from the sales of available-for-sale
securities for the first quarter ended June 30, 2012. Proceeds from the sales of
available-for-sale securities were Yen 415 million for the first quarter ended
June 30, 2013.
There were no significant realized gains or losses on sales of
available-for-sale securities for the first quarter ended June 30, 2012 and
2013.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the first quarter ended June 30, 2012 and
2013.
3. PENSION AND RETIREMENT ALLOWANCE PLANS
The net periodic pension costs of the pension plans consist of the following
components:
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
---------------------------------------------------------------------------------------------------------------
Service cost 3,122 3,198
Interest cost 3,275 3,493
Expected return on plan assets (2,213) (3,562)
Net amortization 905 960
---------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 5,089 4,089
===============================================================================================================
14
4. EQUITY
The change in Ricoh shareholders' equity, noncontrolling interests and total
equity for the first quarter ended June 30, 2012 and 2013 is as follows:
Millions of Yen
-----------------------------------------------------------------------------------
First quarter ended June 30, 2012 First quarter ended June 30, 2013
---------------------------------------- ----------------------------------------
Ricoh Ricoh
Shareholders' Noncontrolling Total Shareholders' Noncontrolling Total
Equity Interests Equity Equity Interests Equity
----------------------------------------------------------------------------------------------------------------------
Equity: Beginning balance 822,704 56,314 879,018 897,996 60,662 958,658
----------------------------------------------------------------------------------------------------------------------
Net income 6,537 1,110 7,647 10,159 1,387 11,546
Unrealized gains (losses)
on securities (695) (4) (699) 1,942 8 1,950
Pension liability adjustments (235) (20) (255) (481) (101) (582)
Unrealized gains (losses) on
derivatives (228) (61) (289) 286 113 399
Foreign currency translation
adjustments (29,478) (177) (29,655) 20,840 (174) 20,666
----------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) (24,099) 848 (23,251) 32,746 1,233 33,979
----------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (6,163) -- (6,163) (11,963) -- (11,963)
Distributions to Noncontrolling
interests -- (328) (328) -- (343) (343)
Net changes in treasury stock (2) -- (2) (22) -- (22)
Other (2) -- (2) -- -- --
----------------------------------------------------------------------------------------------------------------------
Ending balance 792,438 56,834 849,272 918,757 61,552 980,309
----------------------------------------------------------------------------------------------------------------------
5. OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) during the first
quarter ended June 30, 2013 is as follows:
Millions of Yen
-------------------------------------------------------------------------------------
First quarter ended June 30, 2013
-------------------------------------------------------------------------------------
Unrealized Pension Unrealized Foreign currency
gains (losses) liability gains (losses) translation
on securities adjustments on derivatives adjustments Total
-------------------------------------------------------------------------------------------------------------------------
Beginning balance 8,665 (64,266) (861) (89,626) (146,088)
-------------------------------------------------------------------------------------------------------------------------
Other comprehensive income
before reclassifications 2,038 (1,179) 376 20,666 21,901
Reclassifications from other
comprehensive income (88) 597 23 -- 532
-------------------------------------------------------------------------------------------------------------------------
Other comprehensive income 1,950 (582) 399 20,666 22,433
-------------------------------------------------------------------------------------------------------------------------
Less: Other comprehensive
income attributable to
noncontrolling interests 8 (101) 113 (174) (154)
-------------------------------------------------------------------------------------------------------------------------
Ending balance 10,607 (64,747) (575) (68,786) (123,501)
-------------------------------------------------------------------------------------------------------------------------
15
Tax effects allocated to other comprehensive income (loss) before
reclassifications resulting from unrealized gains (losses) on securities,
pension liability adjustments, unrealized gains (losses) on derivatives and
foreign currency translation adjustments are Yen (1,045) million, Yen 708
million, Yen (230) million and Yen (151) million, respectively.
Reclassifications out of accumulated other comprehensive income (loss) during
the first quarter ended June 30, 2013 is as follows:
Millions of Yen
-------------------------------------------------
First quarter ended June 30, 2013
-------------------------------------------------------------------------------------------------------------
Reclassification out
of Accumulated other Affected line items in
comprehensive consolidated statement of
income operations
-------------------------------------------------------------------------------------------------------------
Unrealized gains and losses on securities:
142 Other, net
(54) Provision for income taxes
--------------------
88 Consolidated net income
--------------------
Pension liability adjustments:
(960) (b)
363 Provision for income taxes
--------------------
(597) Consolidated net income
--------------------
Unrealized gains and losses on derivatives: (37) Interest expense
14 Provision for income taxes
--------------------
(23) Consolidated net income
--------------------
Total reclassification adjustments, net of tax (532)
====================
(a) Amounts in parentheses indicate losses in consolidated statements of
operations.
(b) This accumulated other comprehensive income (loss) component is included in
the computation of net periodic pension cost. (See Note 3 for the information.)
6. DIVIDENDS
Cash dividends paid during the first quarter ended June 30, 2012 and 2013 are as
follows:
Resolved at the General meetings of Shareholders on June 26, 2012
-----------------------------------------------------------------------------
Total amount of dividends (million of yen) 6,163
Dividend per share of common stock (yen) 8.50
Record date March 31, 2012
Effective date June 27, 2012
Resource for dividend Retained earnings
=============================================================================
Resolved at the General meetings of Shareholders on June 21, 2013
-----------------------------------------------------------------------------
Total amount of dividends (million of yen) 11,963
Dividend per share of common stock (yen) 16.5
Record date March 31, 2013
Effective date June 24, 2013
Resource for dividend Retained earnings
=============================================================================
16
7. PER SHARE DATA
Ricoh shareholders' equity per share was Yen 1,238.55 and Yen 1,267.22 as of
March 31, 2013 and June 30, 2013, respectively. Dividends per share shown in the
consolidated statement of operations are computed based on dividends paid for
the first quarter ended June 30, 2012 and 2013.
Reconciliations of the numerator and the denominators of the basic and diluted
per share computations for net income attributable to Ricoh Company, Ltd. are as
follows:
Thousands of shares
-------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
--------------------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,077 725,027
Millions of Yen
-------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
--------------------------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 6,537 10,159
Yen
-------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
--------------------------------------------------------------------------------------------------------------------
Basic: Net income attributable to Ricoh Company, Ltd. 9.02 14.01
Diluted net income per share attributable to Ricoh Company, Ltd. for the first
quarter ended June 30, 2012 and the first quarter ended June 30, 2013 is omitted
because the Company did not have potentially dilutive common shares that were
outstanding for the period.
17
8. DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Policy
Ricoh enters into various derivative financial instrument contracts in the
normal course of business in connection with the management of its assets and
liabilities.
Ricoh uses derivative instruments to reduce risk and protect market value of
assets and liabilities in conformity with the Ricoh's policy. Ricoh does not use
derivative financial instruments for trading or speculative purposes, nor is it
a party to leveraged derivatives.
All derivative instruments are exposed to credit risk arising from the inability
of counterparties to meet the terms of the derivative contracts. However, Ricoh
does not expect any counterparties to fail to meet their obligations because
these counterparties are financial institutions with satisfactory credit
ratings. Ricoh utilizes a number of counterparties to minimize the concentration
of credit risk.
Foreign Exchange Risk Management
Ricoh conducts business on a global basis and holds assets and liabilities
denominated in foreign currencies. Ricoh enters into foreign exchange contracts
and foreign currency options to hedge against the potentially adverse impacts of
foreign currency fluctuations on these assets and liabilities denominated in
foreign currencies.
Interest Rate Risk Management
Ricoh enters into interest rate swap agreements (including interest rate and
currency swap agreements) to hedge against the potential adverse impacts of
changes in fair value or cash flow fluctuations on interest of its outstanding
debt.
Fair Value Hedges
Changes in the fair value of derivative instruments and the related hedged items
designated and qualifying as fair value hedges are included in other (income)
expenses in the consolidated statements of operations. There were no fair value
hedges as of June 30, 2012 and 2013.
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)
and noncontrolling interests 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, 2013 as
the critical terms of the interest rate swap match the terms of the hedged debt
obligations. Ricoh expects that it will reclassify into earnings through other
expenses during the next 12 months approximately Yen 64 million gain of the
balance of accumulated other comprehensive income (loss) as of June 30, 2013.
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 operations.
18
Contract amounts of derivative instruments at March 31, 2013 and June 30, 2013
are shown in the following tables:
Millions of Yen
------------------------------------------
March 31, 2013 June 30, 2013
--------------------------------------------------------------------------------
Interest rate swap agreements 311,883 311,383
Foreign currency contracts 214,512 232,985
Foreign currency options 8,451 12,647
================================================================================
The location and fair value amounts of derivatives in consolidated balance sheet
are shown in the following tables:
Derivatives designated as hedging instruments
Current Long-term
-------------------------------------- ------------------------------------
Fair value Fair value
-------------------------------------- ------------------------------------
Balance sheet Balance sheet
Location Millions of Yen Location Millions of Yen
-------------------------------------------------------------------------- ------------------------------------
March 31, June 30, March 31, June 30,
Asset Derivatives 2013 2013 2013 2013
-------------------------------------------------------------------------- ------------------------------------
Interest rate swap agreements Deferred income Lease deposits
taxes and other -- -- and other 835 1,158
===============================================================================================================
March 31, June 30, March 31, June 30,
Liability Derivatives 2013 2013 2013 2013
-------------------------------------------------------------------------- ------------------------------------
Interest rate swap agreements Accrued expenses Deferred income
and other 217 204 taxes and other 1,781 1,478
===============================================================================================================
Derivatives not designated as hedging instruments
Current Long-term
-------------------------------------- ------------------------------------
Fair value Fair value
-------------------------------------- ------------------------------------
Balance sheet Balance sheet
Location Millions of Yen Location Millions of Yen
-------------------------------------------------------------------------- ------------------------------------
March 31, June 30, March 31, June 30,
Asset Derivatives 2013 2013 2013 2013
-------------------------------------------------------------------------- ------------------------------------
Interest rate swap agreements -- 1 -- --
Foreign currency contracts Deferred income Lease deposits
taxes and other 531 1,070 and other -- 175
Foreign currency options 99 83 -- --
-------------------------------------------------------------------------- ------------------------------------
Total 630 1,154 -- 175
===============================================================================================================
March 31, June 30, March 31, June 30,
Liability Derivatives 2013 2013 2013 2013
-------------------------------------------------------------------------- ------------------------------------
Interest rate swap agreements 3 -- 238 172
Foreign currency contracts Accrued expenses Deferred income
and other 10,114 13,253 taxes and other 10,334 13,181
Foreign currency options 15 71 -- --
-------------------------------------------------------------------------- ------------------------------------
Total 10,132 13,324 10,572 13,353
===============================================================================================================
19
Total fair value amounts of derivatives
Millions of
Yen
-----------------------
Fair value
-------------------------------------------------------------------------------
March 31, June 30,
2013 2013
-------------------------------------------------------------------------------
Total Asset Derivatives 1,465 2,487
Total Liability Derivatives 22,702 28,359
-------------------------------------------------------------------------------
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of operations for the first quarter ended June 30,
2012 are shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (564) Interest expense (60) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
June 30, 2012
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (12)
Foreign currency contracts Foreign currency exchange (gain) loss, net 7,112
Foreign currency options Foreign currency exchange (gain) loss, net 1,292
---------------------------------------------------------------------------------------------
Total 8,392
=============================================================================================
20
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of operations for the first quarter ended June 30,
2013 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 606 Interest expense (37) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
-------------------
June 30, 2013
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net 70
Foreign currency contracts Foreign currency exchange (gain) loss, net (5,272)
Foreign currency options Foreign currency exchange (gain) loss, net (72)
---------------------------------------------------------------------------------------------
Total (5,274)
=============================================================================================
9. COMMITMENTS AND CONTINGENT LIABILITIES
As of June 30, 2013, there were no significant contingent liabilities.
As of June 30, 2013 the Company and its certain subsidiaries were parties to
litigation involving routine matters, such as patent rights. In the opinion of
management, the ultimate liability, if any, resulting from such litigation will
not materially affect the consolidated financial position or the results of
operations of Ricoh.
10. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
(A) CASH AND CASH EQUIVALENTS, TIME DEPOSITS, TRADE RECEIVABLES, SHORT-TERM
BORROWINGS, CURRENT MATURITIES OF LONG-TERM INDEBTEDNESS, TRADE PAYABLES
AND ACCRUED EXPENSES
The following summary excludes cash and cash equivalents, time deposits, trade
receivables, short-term borrowings, current maturities of long-term
indebtedness, trade payables and accrued expenses for which fair values
approximate their carrying amounts because of the short maturities of these
instruments.
21
(B) INVESTMENT SECURITIES
The fair value of the investment securities is principally based on quoted
market price. Ricoh has 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 has different nature and
characteristics, reasonable estimates of fair values could not be made without
incurring excessive costs. The carrying amounts of non-marketable equity
securities were Yen 1,783 million and Yen 1,861 million as of March 31, 2013 and
June 30, 2013, respectively. The following summary excludes non-marketable
equity securities.
(C) INSTALLMENT LOANS
The fair value of installment loans is based on the present value of future cash
flows using the current interest rate for similar instruments of comparable
maturity. Installment loans using inputs described above are classified as Level
2 under the Fair Value Measurement and Disclosure framework. The definition of
the three levels of input used to measure fair value is more fully described in
Note 11.
(D) LONG-TERM INDEBTEDNESS
The fair value of each of the long-term indebtedness instruments is based on the
present value of future cash flows associated with each instrument discounted
using the current borrowing rate for similar instruments of comparable maturity.
Long-term indebtedness using inputs described above are classified as Level 2
under the Fair Value Measurement and Disclosure framework.
(E) INTEREST RATE SWAP AGREEMENTS, FOREIGN CURRENCY CONTRACTS AND FOREIGN
CURRENCY OPTIONS
The fair value of interest rate swap agreements, foreign currency contracts and
foreign currency options are estimated by obtaining quotes from brokers.
The estimated fair value of the financial instruments as of March 31, 2013 and
June 30, 2013 are summarized as follows:
Millions of Yen
-------------------------------------------------
March 31, 2013 June 30, 2013
----------------------- -----------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------------------------------------------------------------------------------------
Investment securities 52,319 52,319 55,157 55,157
Installment loans, net 89,657 90,655 90,165 91,168
Long-term indebtedness (476,381) (475,018) (452,729) (450,386)
Interest rate swap agreements:
assets 835 835 1,159 1,159
liabilities 2,239 2,239 1,854 1,854
Foreign currency contracts:
assets 531 531 1,245 1,245
liabilities 20,448 20,448 26,434 26,434
Foreign currency options:
assets 99 99 83 83
liabilities 15 15 71 71
=====================================================================================
22
Limitations: Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
11. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The three-level fair value hierarchy that prioritizes the
inputs used to measure fair value is established. The three levels of inputs
used to measure fair value are as follows:
Level 1 - Inputs are quoted prices in active markets for identical assets or
liabilities.
Level 2 - Inputs are quoted prices for similar assets or liabilities in an
active market, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted
prices that are observable and market-corroborated inputs which are
derived principally from or corroborated by observable market data.
Level 3 - Inputs are derived from valuation techniques in which one or more
significant inputs or value drivers are unobservable.
The following tables present the fair-value hierarchy levels of Ricoh's assets
and liabilities that are measured at fair value on a recurring basis as of March
31, 2013 and June 30, 2013.
Millions of Yen
------------------------------
March 31, 2013
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 41,622 -- -- 41,622
Foreign equity securities 8,745 -- -- 8,745
Foreign corporate bonds 1,952 -- -- 1,952
Derivative instruments
Interest rate swap agreements -- 835 -- 835
Foreign currency contracts -- 531 -- 531
Foreign currency options -- 99 -- 99
-------------------------------------------------------------------------
Total assets 52,319 1,465 -- 53,784
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,239 -- 2,239
Foreign currency contracts -- 20,448 -- 20,448
Foreign currency options -- 15 -- 15
-------------------------------------------------------------------------
Total liabilities -- 22,702 -- 22,702
=========================================================================
23
Millions of Yen
------------------------------
June 30, 2013
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 43,734 -- -- 43,734
Foreign equity securities 9,504 -- -- 9,504
Foreign corporate bonds 1,919 -- -- 1,919
Derivative instruments
Interest rate swap agreements -- 1,159 -- 1,159
Foreign currency contracts -- 1,245 -- 1,245
Foreign currency options -- 83 -- 83
-------------------------------------------------------------------------
Total assets 55,157 2,487 -- 57,644
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 1,854 -- 1,854
Foreign currency contracts -- 26,434 -- 26,434
Foreign currency options -- 71 -- 71
-------------------------------------------------------------------------
Total liabilities -- 28,359 -- 28,359
=========================================================================
Available-for-sale securities
Available-for-sale securities classified Level 1 in the fair value hierarchy
contains marketable securities and bonds. Marketable securities and bonds are
valued using a market approach based on the quoted market prices of identical
instruments in active markets.
Derivative instruments
Ricoh uses foreign exchange contracts, foreign currency options and interest
rate swap agreements (including interest rate and currency swap agreements) to
manage exposure to the variability of cash flow. These derivative instruments
are classified as Level 2 in the fair value hierarchy, since they are valued
using observable market data such as LIBOR-based yield curves.
Assets and liabilities measured at fair value on a non-recurring basis
There were no material assets and liabilities measured at fair value on a
non-recurring basis during the three months ended June 30, 2012 and 2013.
12. TRANSFER OF FINANCIAL ASSETS
Ricoh Leasing Company, Ltd. transferred its lease receivables to a trust and
received the beneficial interests in the trust originated from the transferred
assets. Subsequently, Ricoh Leasing Company, Ltd. transferred the
non-subordinated beneficial interests to and received cash as consideration from
transferees, such as Special Purpose Entity ("SPE") that are different from the
trust mentioned above, as a part of securitization programs. The retained
subordinated interests were considered as variable interests, since the
subordinated interests had the obligation to absorb the expected loss of the
trust.
24
Ricoh performs a qualitative analysis to determine the primary beneficiary of a
Variable Interest Entity ("VIE"). The primary beneficiary of a VIE has both the:
(1) power to direct the activities of a VIE that most significantly impact the
entity's economic performance and (2) obligation to absorb losses or the right
to receive benefits from the VIE that could potentially be significant to the
VIE.
Ricoh Leasing Company, Ltd. was considered as the primary beneficiary since
Ricoh Leasing Company, Ltd. acted as a special servicer for lease receivables
transferred to the trust and therefore, deemed to meet the criteria (1) and (2)
above.
As a result of the above consideration, Ricoh consolidated the trust and
eliminating the retained subordinated beneficial interests on the consolidated
balance sheet. The consolidated assets and liabilities as of March 31, 2013 and
June 30, 2013 are as follows:
Millions of Yen
-----------------------------
March 31, 2013 June 30, 2013
---------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 12,039 11,368
Long-term finance receivables, net 24,442 23,081
Current maturities of long-term indebtedness 10,161 8,791
Long-term indebtedness 20,624 20,513
=======================================================================================
The transferring of the non-subordinated beneficial interests was recorded as
secured loans, since Ricoh Leasing Company, Ltd. retained subordinated
beneficial interests and such interests did not meet the definition of
participating interest. Lease receivables are only to be used to settle
obligation of the trust's liabilities or transferee's liabilities in
substantially. Servicing assets or liabilities related to securitization
transactions initiated were not recorded, because the servicing fees adequately
compensate Ricoh.
Apart from the transactions mentioned above, Ricoh's foreign subsidiaries
transferred lease receivables with recourse. Ricoh recorded these transfers as
secured loans, since these transactions did not meet the derecognition criteria
of financial assets. The assets and liabilities that were accounted for as
secured loans are as follows:
Millions of Yen
-----------------------------
March 31, 2013 June 30, 2013
---------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 1,743 1,787
Long-term finance receivables, net 5,575 5,080
Current maturities of long-term indebtedness 1,743 1,787
Long-term indebtedness 5,575 5,080
=======================================================================================
13. CREDIT QUALITY OF FINANCING RECEIVABLES AND THE ALLOWANCE FOR DOUBTFUL
RECEIVABLES
(A) FINANCING RECEIVABLES AND ALLOWANCE FOR DOUBTFUL RECEIVABLES
The financial subsidiaries of the Company have financing receivables and Ricoh
classifies them into three categories; "lease receivables", "installment loans"
and "installment receivables and other". These receivables consist of a large
number of smaller-balance homogenous loans, lease receivables and installment
receivables. Financing receivables classified as "lease receivables" and
"installment receivables and other" are resulting from sale and lease
transactions of mainly office equipment. Financing receivables classified as
"installment loans" are resulting from financial services.
25
Ricoh continuously monitors overdue financing receivables, which Ricoh considers
as uncollectible risk receivables. For financing receivables with specific
customer collection issues, Ricoh individually evaluates their collectability in
order to determine the amount of allowance for doubtful receivables. For other
financing receivables, Ricoh categorizes these receivables into groups by their
nature and characteristics. Ricoh collectively evaluates the collectability by
each group, using its historical experience of write-off and determines the
amount of allowance for doubtful receivables.
Financing receivables and allowance for doubtful receivables as of June 30, 2012
and June 30, 2013 are as follows:
Millions of Yen
---------------------------------------------------
June 30, 2012
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Beginning balance 8,472 1,747 2,595 12,814
-------------------------------------------------------------------------------------------------
Charge-offs (402) (7) (34) (443)
Recoveries -- -- -- --
Provision 683 (64) (9) 610
Translation adjustment (168) -- -- (168)
Ending balance 8,585 1,676 2,552 12,813
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 2,609 623 1,982 5,214
Collectively evaluated 5,976 1,053 570 7,599
=================================================================================================
Financing receivables:
Individually evaluated 60,028 837 5,088 65,953
Collectively evaluated 547,454 84,178 45,381 677,013
-------------------------------------------------------------------------------------------------
Total: Financing receivables 607,482 85,015 50,469 742,966
=================================================================================================
Millions of Yen
---------------------------------------------------
June 30, 2013
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Beginning balance 8,727 1,522 1,265 11,514
-------------------------------------------------------------------------------------------------
Charge-offs (655) (1) (11) (667)
Recoveries (23) -- -- (23)
Provision 367 93 (17) 443
Translation adjustment 51 -- -- 51
Ending balance 8,467 1,614 1,237 11,318
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 2,302 477 619 3,398
Collectively evaluated 6,165 1,137 618 7,920
=================================================================================================
Financing receivables:
Individually evaluated 48,423 592 3,879 52,894
Collectively evaluated 584,695 91,187 54,844 730,726
-------------------------------------------------------------------------------------------------
Total: Financing receivables 633,118 91,779 58,723 783,620
=================================================================================================
26
(B) AGE ANALYSIS
Ricoh ascribes the fact of past due to credit quality indicators and classifies
financing receivables into Overdue and Current.
Analysis of the age of the recorded financing receivables as of March 31, 2013
and June 30, 2013 are as follows:
Millions of Yen
---------------------------------------------------
March 31, 2013
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 616,658 90,606 54,649 761,913
Overdue 4,909 573 1,967 7,449
-------------------------------------------------------------------------------------------------
Total: Financing receivables 621,567 91,179 56,616 769,362
=================================================================================================
Millions of Yen
---------------------------------------------------
June 30, 2013
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 627,629 91,195 56,758 775,582
Overdue 5,489 584 1,965 8,038
-------------------------------------------------------------------------------------------------
Total: Financing receivables 633,118 91,779 58,723 783,620
=================================================================================================
14. SEGMENT INFORMATION
Ricoh's operating segments are comprised of Imaging & Solutions, including
copiers and related supplies, communications and information systems, Industrial
Products, including thermal media and semiconductors, and Other, including
digital cameras.
Segment Profit (loss) is determined by subtracting cost of sales and selling,
general and administrative expenses from sales, and is used by Ricoh's
management in deciding how to allocate resources and in assessing performance.
Segment Profit (loss) excludes certain corporate expenses, such as costs related
to human resources, legal relations, investor relations, public relations,
corporate planning and environmental activities.
The following tables present certain information regarding Ricoh's operating
segments and by geographic areas for the first quarter ended June 30, 2012 and
2013. Intersegment sales are made at arm's-length prices. No single customer
accounted for 10% or more of the total revenues for the first quarter ended June
30, 2012 and 2013.
27
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
--------------------------------------------------------------------------------------------
Segment sales:
Imaging & Solutions 400,550 459,551
Industrial Products 24,508 25,325
Other 35,317 37,800
Intersegment sales (988) (969)
--------------------------------------------------------------------------------------------
Total segment sales 459,387 521,707
============================================================================================
Segment profit (loss):
Imaging & Solutions 30,742 34,723
Industrial Products (418) 871
Other (304) (628)
--------------------------------------------------------------------------------------------
Total segment profit (loss) 30,020 34,966
============================================================================================
Reconciling items:
Corporate expenses and elimination (15,739) (15,897)
Interest and dividend income 842 517
Interest expense (1,521) (1,415)
Foreign currency exchange loss, net (1,315) 57
Other, net (12) 312
--------------------------------------------------------------------------------------------
Income before income taxes and equity in earnings of
affiliates 12,275 18,540
============================================================================================
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, 2012 June 30, 2013
--------------------------------------------------------------------------------------------
Sales:
Japan 215,449 217,776
The Americas 117,467 142,514
Europe, Middle East and Africa 95,253 121,394
Other 31,218 40,023
--------------------------------------------------------------------------------------------
Consolidated 459,387 521,707
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15. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF OPERATIONS
The following amounts were charged to selling, general and administrative
expenses for the first quarter ended June 30, 2012 and 2013:
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2012 June 30, 2013
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Research and development costs 27,063 28,092
Advertising costs 2,317 2,581
Shipping and handling costs 5,740 6,406
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