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 2011
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
Director, Chief Financial Officer
Corporate Executive Vice President
August 12, 2011
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RICOH COMPANY, LTD.
Consolidated Financial Statements
for the First Quarter Ended June 30, 2011
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the first quarter ended June 30, 2011 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, 2011 and June 30, 2011
Millions of Yen
---------------------
March 31, June 30,
ASSETS 2011 2011
------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 179,169 168,468
Time deposits 2,010 2,244
Trade receivables:
Notes 46,355 43,719
Accounts 419,351 411,303
Less- Allowance for doubtful receivables (16,560) (14,776)
Current maturities of long-term finance receivables, net 208,671 207,826
Inventories:
Finished goods 85,800 97,145
Work in process and raw materials 85,233 89,467
Deferred income taxes and other 63,990 64,734
------------------------------------------------------------------------------------------------
Total current assets 1,074,019 1,070,130
------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 44,444 44,465
Buildings 262,523 267,482
Machinery and equipment 737,270 759,164
Construction in progress 5,230 5,061
------------------------------------------------------------------------------------------------
Total 1,049,467 1,076,172
Less- accumulated depreciation (784,727) (813,478)
------------------------------------------------------------------------------------------------
Net property, plant and equipment 264,740 262,694
------------------------------------------------------------------------------------------------
Investments and other assets:
Long-term finance receivables, net 445,782 446,879
Investment securities 48,909 47,807
Investments in and advances to affiliates 213 336
Goodwill 221,063 219,603
Other intangible assets 130,648 125,168
Lease deposits and other 77,022 84,487
------------------------------------------------------------------------------------------------
Total investments and other assets 923,637 924,280
------------------------------------------------------------------------------------------------
Total assets 2,262,396 2,257,104
================================================================================================
1
Millions of Yen
----------------------
March 31, June 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2011 2011
------------------------------------------------------------------------------------------------
Current liabilities:
Short-term borrowings 39,927 77,324
Current maturities of long-term indebtedness 111,096 108,672
Trade payables:
Notes 12,216 12,557
Accounts 238,267 228,046
Accrued income taxes 13,414 10,396
Accrued expenses and other 199,780 197,878
------------------------------------------------------------------------------------------------
Total current liabilities 614,700 634,873
------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness 479,422 466,342
Accrued pension and severance costs 140,975 141,961
Deferred income taxes and other 44,535 47,322
------------------------------------------------------------------------------------------------
Total long-term liabilities 664,932 655,625
------------------------------------------------------------------------------------------------
Equity:
Ricoh Company, Ltd. shareholders' equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 815,970 807,440
Accumulated other comprehensive loss (170,702) (178,946)
Treasury stock at cost (36,838) (36,834)
------------------------------------------------------------------------------------------------
Total Ricoh Company, Ltd. shareholders' equity 929,877 913,107
------------------------------------------------------------------------------------------------
Noncontrolling interests 52,887 53,499
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Total equity 982,764 966,606
------------------------------------------------------------------------------------------------
Total liabilities and equity 2,262,396 2,257,104
================================================================================================
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, 2010 and 2011
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2010 June 30, 2011
--------------------------------------------------------------------------------------------------------------
Net Sales:
Products 218,672 211,565
Post sales and rentals 238,943 228,758
Other revenue 25,339 25,825
--------------------------------------------------------------------------------------------------------------
Total 482,954 466,148
--------------------------------------------------------------------------------------------------------------
Cost of sales:
Products 147,257 147,126
Post sales and rentals 111,690 105,618
Other revenue 19,689 19,308
--------------------------------------------------------------------------------------------------------------
Total 278,636 272,052
--------------------------------------------------------------------------------------------------------------
Gross profit 204,318 194,096
Selling, general and administrative expenses 182,471 184,089
--------------------------------------------------------------------------------------------------------------
Operating income 21,847 10,007
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Other (income) expenses:
Interest and dividend income (597) (608)
Interest expense 1,854 1,460
Foreign currency exchange (gain) loss, net 5,276 507
Other, net (178) 125
--------------------------------------------------------------------------------------------------------------
Total 6,355 1,484
--------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in earnings of affiliates 15,492 8,523
Provision for income taxes:
Current 9,026 6,835
Deferred (1,730) (2,941)
--------------------------------------------------------------------------------------------------------------
Total 7,296 3,894
--------------------------------------------------------------------------------------------------------------
Equity in earnings of affiliates (7) (8)
Consolidated net income 8,189 4,621
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Net income attributable to noncontrolling interests 856 1,175
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Net income attributable to Ricoh Company, Ltd. 7,333 3,446
==============================================================================================================
Yen Yen
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Per share of common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------------
Basic 10.11 4.75
Diluted 9.83 4.74
--------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 16.50 16.50
==============================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income attributable to Ricoh Company, Ltd.
--------------------------------------------------------------------------------------------------------------
Basic 50.55 23.75
Diluted 49.15 23.70
--------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 82.50 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, 2010 and 2011
Millions of Yen
---------------------------------------
First Quarter ended First Quarter ended
June 30, 2010 June 30, 2011
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income 8,189 4,621
Adjustments to reconcile consolidated net income to net cash
provided by operating activities
Depreciation and amortization 22,412 22,176
Equity in earnings of affiliates, net of dividends received 7 8
Deferred income taxes (1,730) (2,942)
Losses on disposals and sales of property, plant and equipment 443 100
Pension and severance costs, less payment 1,692 711
Changes in assets and liabilities, net of effects from acquisition-
Decrease in trade receivables 16,795 8,667
Increase in inventories (11,333) (17,623)
Decrease (Increase) in finance receivables 7,320 (2,351)
Decrease in trade payables (26,347) (9,853)
Increase (Decrease) in accrued income taxes and
accrued expenses and other 21,579 (1,322)
Other, net 2,387 3,509
------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 41,414 5,701
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 16 137
Expenditures for property, plant and equipment, including
interest capitalized (15,803) (16,642)
Expenditures for intangible asset (3,511) (3,252)
Payments for purchases of available-for-sale securities (57) (59)
Proceeds from sales of available-for-sale securities 4 10
Increase in time deposits, net (243) (266)
Other, net (1,272) (4,787)
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Net cash used in investing activities (20,866) (24,859)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 15,971 2,569
Repayment of long-term indebtedness (23,693) (17,358)
Increase(Decrease) in short-term borrowings, net (27,314) 38,242
Proceeds from issuance of long-term debt securities 79,741 --
Repayment of long-term debt securities -- (237)
Dividends paid (11,972) (11,971)
Payment for purchase of treasury stock (29) (5)
Other, net (301) (301)
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Net cash provided by financing activities 32,403 10,939
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (8,839) (2,482)
------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 44,112 (10,701)
------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 242,165 179,169
------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 286,277 168,468
==================================================================================================================
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, 2011 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 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 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.
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) 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,
9
realizability of deferred tax assets, the valuation of assets and liabilities in
business combinations and pension accounting.
(S) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In June 2011, the FASB issued Accounting Standards Update ("ASU") 2011-05. This
ASU requires entities to present comprehensive income in either: (i) one
continuous financial statement or (ii) two separate but consecutive statements
that display net income and the components of other comprehensive income. Totals
and individual components of both net income and other comprehensive income must
be included in either presentation. It is effective for fiscal years beginning
on or after December 16, 2011 and early adoption is permitted. This adoption of
ASU 2011-05 will not have any effect on Ricoh's consolidated financial position
and results of operations.
10
2. SECURITIES
Investment securities as of March 31, 2011 and June 30, 2011 consist of the
following:
Millions of Yen
-----------------------------
March 31, 2011 June 30, 2011
--------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 46,938 45,789
Non-marketable equity securities 1,971 2,018
--------------------------------------------------------------------------------
48,909 47,807
================================================================================
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, 2011 and June 30, 2011 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
March 31, 2011 June 30, 2011
----------------------------------------- -----------------------------------------
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 40,765 4,655 327 45,093 40,842 4,175 1,020 43,997
Corporate debt
securities 1,802 43 -- 1,845 1,733 59 -- 1,792
----------------------------------------------------------------------------------------------------------
42,567 4,698 327 46,938 42,575 4,234 1,020 45,789
==========================================================================================================
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, 2011
and June 30, 2011 are as follows:
Millions of Yen
----------------------------------------------------------------------------------
March 31, 2011
----------------------------------------------------------------------------------
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 1,341 261 238 66 1,579 327
==============================================================================================================
Millions of Yen
----------------------------------------------------------------------------------
June 30, 2011
----------------------------------------------------------------------------------
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 33,308 742 1,194 278 34,502 1,020
==============================================================================================================
11
Gross unrealized holding losses of available-for-sale securities as of March 31,
2011 and June 30, 2011 consist of 39 and 41 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, 2011 are as follows:
Millions of Yen
---------------------
Cost Fair value
------------------------------------------------------------------------------
Due after one year through five years 614 624
Over five years 1,119 1,168
------------------------------------------------------------------------------
1,733 1,792
==============================================================================
There were no significant proceeds from the sales of available-for-sale
securities for the first quarter ended June 30, 2010 and 2011, respectively.
There were no significant realized gains or losses on sales of
available-for-sale securities for the first quarter ended June 30, 2010 and
2011.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the first quarter ended June 30, 2010 and
2011.
3. INCOME TAXES
The estimated annual effective tax rate for fiscal year ending March 31, 2012
was approximately 46 percent as of June 30, 2011. 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. PENSION AND RETIREMENT ALLOWANCE PLANS
The net periodic benefit costs of the pension plans consist of the following
components:
Millions of Yen
------------------------------------------
First quarter ended First quarter ended
June 30, 2010 June 30, 2011
--------------------------------------------------------------------------------------------------------------
Service cost 3,184 3,039
Interest cost 3,764 3,568
Expected return on plan assets (2,206) (2,238)
Net amortization 775 550
--------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 5,517 4,919
==============================================================================================================
12
5. EQUITY
The change in Ricoh shareholders' equity, noncontrolling interests and total
equity for the first quarter ended June 30, 2010 and 2011 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
-----------------------------------------------------------------------------------
First quarter ended June 30, 2010 First quarter ended June 30, 2011
---------------------------------------- ----------------------------------------
Ricoh Ricoh
Shareholders' Noncontrolling Total Shareholders' Noncontrolling Total
Equity Interests Equity Equity Interests Equity
----------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period 973,341 50,533 1,023,874 929,877 52,887 982,764
----------------------------------------------------------------------------------------------------------------------
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 972,931 50,141 1,023,072 929,877 52,887 982,764
----------------------------------------------------------------------------------------------------------------------
Net income 7,333 856 8,189 3,446 1,175 4,621
Unrealized losses on securities (2,098) (6) (2,104) (696) (1) (697)
Pension liability adjustments 145 (4) 141 782 3 785
Unrealized losses on
derivatives (444) (18) (462) (522) (7) (529)
Foreign currency translation
adjustments (40,008) 340 (39,668) (7,808) (55) (7,863)
----------------------------------------------------------------------------------------------------------------------
Comprehensive income(loss) (35,072) 1,168 (33,904) (4,798) 1,115 (3,683)
----------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (11,972) -- (11,972) (11,971) -- (11,971)
Distributions to Noncontrolling
interests -- (331) (331) -- (305) (305)
Net changes in treasury stock (24) -- (24) 4 -- 4
Wholly owned subsidiaries -- (198) (198)
Other -- -- -- (5) -- (5)
----------------------------------------------------------------------------------------------------------------------
Equity, End of Period 925,863 50,978 976,841 913,107 53,499 966,606
======================================================================================================================
6. DIVIDENDS
Cash dividends paid during the first quarter ended June 30, 2010 and 2011 are 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, 2011
Resource for dividend Retained earnings
=============================================================================
Resolved at the General meetings of Shareholders on June 24, 2011
-----------------------------------------------------------------------------
Total amount of dividends (million of yen) 11,971
Dividend per share of common stock (yen) 16.50
Record date March 31, 2011
Effective date June 27, 2011
Resource for dividend Retained earnings
=============================================================================
13
7. PER SHARE DATA
Ricoh shareholders' equity per share was Yen 1281.70 and Yen 1258.59 as of March
31, 2011 and June 30, 2011, 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 2011.
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, 2010 June 30, 2011
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,580 725,503
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 19,741 793
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 745,321 726,296
======================================================================================================
Millions of Yen
---------------------------------------
First quarter ended First quarter ended
June 30, 2010 June 30, 2011
------------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. 7,333 3,446
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 (6) 0
------------------------------------------------------------------------------------------------------
Diluted net income attributable to Ricoh Company, Ltd. 7,327 3,446
======================================================================================================
Yen
---------------------------------------
First quarter ended First quarter ended
June 30, 2010 June 30, 2011
------------------------------------------------------------------------------------------------------
Net income attributable to Ricoh Company, Ltd. per share:
Basic:
Basic: Net income attributable to Ricoh Company, Ltd. 10.11 4.75
Diluted:
Diluted: Net income attributable to Ricoh Company,
Ltd. 9.83 4.74
======================================================================================================
14
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 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, 2011 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, 2011 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 30 million of the balance of accumulated other
comprehensive income as of June 30, 2011.
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.
15
Contract amounts of derivative instruments at March 31, 2011 and June 30, 2011
are shown in the following tables:
Millions of Yen
-------------------------------------------------------------------------------
March 31, June 30,
2011 2011
-------------------------------------------------------------------------------
Interest rate swap agreements 284,444 27,880
Foreign currency contracts 211,249 16,147
Foreign currency options 3,555 33,409
===============================================================================
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 2011 2011 2011 2011
--------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Deferred income Lease deposits
taxes and other Yen 4 Yen -- and other Yen -- Yen --
==============================================================================================================
March 31, June 30, March 31, June 30,
Liability Derivatives 2011 2011 2011 2011
--------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Accrued expenses Deferred income
and other Yen 73 Yen 74 taxes and other Yen 2,766 Yen 2,893
==============================================================================================================
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 2011 2011 2011 2011
-------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Yen -- Yen -- Yen -- Yen --
Foreign currency contracts Deferred income Lease deposits
taxes and other 1,497 3,615 and other -- 434
Foreign currency options 20 229 -- --
-------------------------------------------------------------------------------------------------------------
Total Yen 1,517 Yen 3,844 Yen -- Yen 434
=============================================================================================================
March 31, June 30, March 31, June 30,
Liability Derivatives 2011 2011 2011 2011
-------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Yen 72 Yen 53 Yen 24 Yen 205
Foreign currency contracts Accrued expenses Deferred income
and other 3,087 1,195 taxes and other 477 131
Foreign currency options 64 197 -- --
-------------------------------------------------------------------------------------------------------------
Total Yen 3,223 Yen 1,445 Yen 501 Yen 336
=============================================================================================================
16
Total fair value amounts of derivatives
Millions of
Yen
-------------------
Fair value
---------------------------------------------------------------------------
March 31, June 30,
2011 2011
---------------------------------------------------------------------------
Total Asset Derivatives Yen 1,521 Yen 4,278
Total Liability Derivatives Yen 6,563 Yen 4,748
---------------------------------------------------------------------------
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
==========================================================================================
17
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of income for the first quarter ended June 30, 2011
are shown in the following tables:
Derivatives designated as hedging instruments
Millions of Yen
--------------------------------------------------------------------------------------------
Gain or (Loss)
Recognized in OCI Gain or (Loss) Reclassified from
on Derivative Accumulated OCI into Income Gain or (Loss) Recognized in Income on
(Effective Portion) (Effective Portion) Derivative (Ineffective Portion)
--------------------------------------------------------------------------------------------
Amount Location Amount Location Amount
---------------------------------------------------------------------------------------------------------------------------
Cash flow hedge
Interest rate swap agreements (588) Interest expense (66) -- --
===========================================================================================================================
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 -- Interest expense --
======================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
-----------------------------------------------------------
Location Millions of Yen
---------------
June 30, 2011
------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net Yen (162)
Foreign currency contracts Foreign currency exchange (gain) loss, net 4,790
Foreign currency options Foreign currency exchange (gain) loss, net 76
------------------------------------------------------------------------------------------
Total Yen 4,704
==========================================================================================
9. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees housing
loans of Yen 71 million as of June 30, 2011.
As of June 30, 2011 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
18
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 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 carrying amounts of non-marketable equity
securities were Yen 1,971 million and Yen 2,018 million as of March 31, 2011 and
June 30, 2011, 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.
(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, 2011 and
June 30, 2011 is summarized as follows:
Millions of Yen
-----------------------------------------
March 31, 2011 June 30, 2011
-------------------- --------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------------------------------------------------------------------------------
Investment securities 48,909 48,909 47,807 47,807
Installment loans 72,634 73,769 73,964 75,120
Long-term indebtedness (479,422) (475,116)(466,342) (463,246)
Interest rate swap agreements, net (2,931) (2,931) (3,225) (3,225)
Foreign currency contracts, net (2,067) (2,067) 2,723 2,723
Foreign currency options, net (44) (44) 32 32
==============================================================================
19
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, 2011 and June 30, 2011.
Millions of Yen
------------------------------
March 31, 2011
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 38,243 -- -- 38,243
Foreign equity securities 6,850 -- -- 6,850
Foreign corporate bonds 1,845 -- -- 1,845
Derivative instruments
Interest rate swap agreements -- 4 -- 4
Foreign currency contracts -- 1,497 -- 1,497
Foreign currency options -- 20 -- 20
-------------------------------------------------------------------------
Total assets 46,938 1,521 -- 48,459
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,935 -- 2,935
Foreign currency contracts -- 3,564 -- 3,564
Foreign currency options -- 64 -- 64
-------------------------------------------------------------------------
Total liabilities -- 6,563 -- 6,563
=========================================================================
20
Millions of Yen
------------------------------
June 30, 2011
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 37,527 -- -- 37,527
Foreign equity securities 6,470 -- -- 6,470
Foreign corporate bonds 1,792 -- -- 1,792
Derivative instruments
Interest rate swap agreements -- -- -- --
Foreign currency contracts -- 4,049 -- 4,049
Foreign currency options -- 229 -- 229
-------------------------------------------------------------------------
Total assets 45,789 4,278 -- 50,067
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 3,225 -- 3,225
Foreign currency contracts -- 1,326 -- 1,326
Foreign currency options -- 197 -- 197
-------------------------------------------------------------------------
Total liabilities -- 4,748 -- 4,748
=========================================================================
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.
12. 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. 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
-----------------------------
March 31, 2011 June 30, 2011
---------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 8,460 8,476
Long-term finance receivables, net 15,849 15,879
Current maturities of long-term indebtedness 7,044 7,048
Long-term indebtedness 13,197 13,204
=======================================================================================
21
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.
Ricoh continuously monitors overdue financing receivables, which Ricoh considers
as uncollectible risk receivables. For financing receivables with specific
customer collection issues, Ricoh individually evaluates their collectability in
order to determine the amount of allowance for doubtful receivables. For other
financing receivables, Ricoh categorizes these receivables into groups by their
nature and characteristics. Ricoh collectively evaluates the collectability by
each group, using its historical experience of write-off and determines the
amount of allowance for doubtful receivables.
Financing receivables and allowance for doubtful receivables as of June 30, 2011
are as follows:
Millions of Yen
---------------------------------------------------
Jun 30, 2011
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Beginning balance 10,527 1,772 2,485 14,784
-------------------------------------------------------------------------------------------------
Charge-offs (425) (4) (19) (448)
Recoveries (54) 0 0 (54)
Provision 2,570 58 86 2,714
Translation adjustment (35) -- (19) (54)
Ending balance 12,583 1,826 2,533 16,942
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 6,148 743 1,318 8,209
Collectively evaluated 6,435 1,083 1,215 8,733
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 75,931 885 4,079 80,895
Collectively evaluated 517,393 74,905 46,449 638,747
-------------------------------------------------------------------------------------------------
Total: Financing receivables 593,324 75,790 50,528 719,642
=================================================================================================
(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,
2011and June 30, 2011 are as follows:
22
Millions of Yen
---------------------------------------------------
March 31, 2011
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 584,913 74,373 48,544 707,830
Overdue 7,433 33 1,661 9,127
-------------------------------------------------------------------------------------------------
Total: Financing receivables 592,346 74,406 50,205 716,957
=================================================================================================
Millions of Yen
---------------------------------------------------
Jun 30, 2011
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 587,906 75,765 48,821 712,492
Overdue 5,418 25 1,707 7,150
-------------------------------------------------------------------------------------------------
Total: Financing receivables 593,324 75,790 50,528 719,642
=================================================================================================
23
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, 2010 and
2011.
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2010 June 30, 2011
------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 424,689 412,105
Industrial Products 29,091 26,210
Other 30,360 28,899
Intersegment transaction (1,186) (1,066)
------------------------------------------------------------------------------------------
Total Segment Sales 482,954 466,148
==========================================================================================
Segment Profit (loss):
Imaging & Solutions 37,918 26,860
Industrial Products 484 (482)
Other (128) (515)
------------------------------------------------------------------------------------------
Total Segment Profit (loss) 38,274 25,863
==========================================================================================
Reconciling Items:
Corporate expenses and Elimination (16,427) (15,856)
Interest and dividend income 597 608
Interest expense (1,854) (1,460)
Foreign currency exchange loss, net (5,276) (507)
Other, net 178 (125)
------------------------------------------------------------------------------------------
Income before Income Taxes and Equity in Earnings
of Affiliates 15,492 8,523
==========================================================================================
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, 2010 June 30, 2011
------------------------------------------------------------------------------------------
Sales-
Japan 212,916 215,147
The Americas 133,410 115,569
Europe 103,117 102,494
Other 33,511 32,938
------------------------------------------------------------------------------------------
Consolidated 482,954 466,148
==========================================================================================
24
15. 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, 2010 and 2011:
Millions of Yen
----------------------------------------
First quarter ended First quarter ended
June 30, 2010 June 30, 2011
------------------------------------------------------------------------------------------
Research and development costs 25,670 27,683
Advertising costs 2,197 2,373
Shipping and handling costs 4,204 4,936
==========================================================================================
25