FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November 2012
Commission File Number 2 - 68279
RICOH COMPANY, LTD.
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(Translation of Registrant's name into English)
13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, Japan
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.)
Form 20-F X Form 40-F __
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): __ )
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): __ )
(Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.)
Yes __ No X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-__ )
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Ricoh Company, Ltd.
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(Registrant)
By: /S/ Zenji Miura
------------------------------
Zenji Miura
Deputy President and
Chief Financial Officer
November 13, 2012
RICOH COMPANY, LTD.
Consolidated Financial Statements
For the Six Months Ended September 30, 2012
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the six months ended September 30, 2012 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, 2012 and September 30, 2012
Millions of Yen
------------------------------
March 31, September 30,
ASSETS 2012 2012
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Current assets:
Cash and cash equivalents 156,210 122,965
Time deposits 2,461 3,308
Trade receivables:
Notes 43,921 39,576
Accounts 439,673 413,317
Less- Allowance for doubtful receivables (16,380) (13,675)
Current maturities of long-term finance receivables, net 219,716 221,089
Inventories:
Finished goods 101,165 103,407
Work in process and raw materials 93,844 93,288
Deferred income taxes and other 65,896 65,286
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Total current assets 1,106,506 1,048,561
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Property, plant and equipment, at cost:
Land 45,893 45,606
Buildings 265,843 264,763
Machinery and equipment 659,503 662,823
Construction in progress 9,576 14,739
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Total 980,815 987,931
Less- accumulated depreciation (712,288) (715,945)
-----------------------------------------------------------------------------------------------------------
Net property, plant and equipment 268,527 271,986
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Investments and other assets:
Long-term finance receivables, net 468,004 470,661
Investment securities 45,470 43,421
Investments in and advances to affiliates 444 1,037
Goodwill 195,251 184,187
Other intangible assets 112,914 103,336
Lease deposits and other 92,242 95,326
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Total investments and other assets 914,325 897,968
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Total assets 2,289,358 2,218,515
===========================================================================================================
1
Millions of Yen
------------------------------
March 31, September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2012 2012
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Current liabilities:
Short-term borrowings 111,272 105,168
Current maturities of long-term indebtedness 105,160 119,062
Trade payables:
Notes 11,553 11,625
Accounts 240,656 216,304
Accrued income taxes 13,448 12,473
Accrued expenses and other 190,935 176,342
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Total current liabilities 673,024 640,974
-----------------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness 525,435 518,263
Accrued pension and severance costs 164,757 156,550
Deferred income taxes and other 47,124 43,302
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Total long-term liabilities 737,316 718,115
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Equity:
Ricoh Company, Ltd. shareholders' equity:
Common stock 135,364 135,364
Additional paid-in capital 186,083 186,083
Retained earnings 742,549 748,092
Accumulated other comprehensive loss (204,175) (231,070)
Treasury stock at cost (37,117) (37,120)
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Total Ricoh Company, Ltd. shareholders' equity 822,704 801,349
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Noncontrolling interests 56,314 58,077
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Total equity 879,018 859,426
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Total liabilities and equity 2,289,358 2,218,515
===========================================================================================================
The accompanying notes are an integral part of consolidated financial
statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended September 30, 2011 and 2012
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
-----------------------------------------------------------------------------------------------------------------
Net Sales:
Products 435,174 414,708
Post sales and rentals 451,723 446,207
Other revenue 52,185 56,552
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Total 939,082 917,467
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Cost of sales:
Products 301,323 297,534
Post sales and rentals 212,155 205,185
Other revenue 38,752 40,342
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Total 552,230 543,061
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Gross profit 386,852 374,406
Selling, general and administrative expenses 388,885 347,018
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Operating income (loss) (2,033) 27,388
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Other (income) expenses:
Interest and dividend income 1,503 1,536
Interest expense (3,430) (3,555)
Foreign currency exchange (gain) loss, net (6,052) (960)
Other, net 288 81
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Total (7,691) (2,898)
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Income (loss) before income taxes and equity in earnings of affiliates (9,724) 24,490
Provision for income taxes:
Current 11,498 10,759
Deferred (14,581) (358)
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Total (3,083) 10,401
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Equity in earnings of affiliates (1) 57
Consolidated net income (loss) (6,642) 14,146
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Net income attributable to noncontrolling interests 2,150 2,433
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Net income (loss) attributable to Ricoh Company, Ltd. (8,792) 11,713
=================================================================================================================
Yen Yen
----------------------------------------
Per share of common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
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Basic (12.12) 16.15
Diluted (12.12) --
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Cash dividends paid per share 16.50 8.50
=================================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic (60.60) 80.75
Diluted (60.60) --
-----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 82.50 42.50
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
3
For the Three Months Ended September 30, 2011 and 2012
Millions of Yen
----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
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Net Sales:
Products 223,161 209,348
Post sales and rentals 222,168 220,642
Other revenue 26,360 28,090
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Total 471,689 458,080
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Cost of sales:
Products 154,970 153,608
Post sales and rentals 108,014 99,783
Other revenue 19,444 20,181
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Total 282,428 273,572
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Gross profit 189,261 184,508
Selling, general and administrative expenses 202,620 171,401
-----------------------------------------------------------------------------------------------------------------
Operating income (loss) (13,359) 13,107
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Other (income) expenses:
Interest and dividend income 896 694
Interest expense (1,967) (2,034)
Foreign currency exchange (gain) loss, net (4,867) 355
Other, net 286 93
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Total (5,652) (892)
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Income (loss) before income taxes and equity in earnings of
affiliates (19,011) 12,215
Provision for income taxes:
Current 4,570 7,776
Deferred (10,824) (2,044)
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Total (6,254) 5,732
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Equity in earnings of affiliates 7 16
Consolidated net income (loss) (12,750) 6,499
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Net income attributable to noncontrolling interest 975 1,323
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Net income (loss) attributable to Ricoh Company, Ltd. (13,725) 5,176
=================================================================================================================
Yen Yen
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Per share of common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic (18.92) 7.13
Diluted (18.92) --
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Cash dividends paid per share -- --
=================================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic (94.60) 35.65
Diluted (94.60) --
-----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share -- --
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Six Months Ended September 30, 2011 and 2012
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
-----------------------------------------------------------------------------------------------------------------
Consolidated net income (loss) (6,642) 14,146
Other comprehensive income (loss) , net of tax:
Net unrealized holding losses on available-for-sale securities (2,435) (1,489)
Pension liability adjustments (556) 3,448
Net unrealized losses on derivative instruments (27) (292)
Foreign currency translation adjustments (44,954) (28,848)
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Total (47,972) (27,181)
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Comprehensive loss (54,614) (13,035)
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Comprehensive income attributable to noncontrolling interests 2,006 2,147
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Comprehensive loss attributable to Ricoh Company, Ltd. (56,620) (15,182)
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
For the Three Months Ended September 30, 2011 and 2012
Millions of Yen
----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
-----------------------------------------------------------------------------------------------------------------
Consolidated net income (loss) (12,750) 6,499
Other comprehensive income (loss) , net of tax:
Net unrealized holding losses on available-for-sale securities (1,738) (790)
Pension liability adjustments (1,304) 3,703
Net unrealized gains (losses) on derivative instruments 502 (3)
Foreign currency translation adjustments (38,663) 807
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Total (41,203) 3,717
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Comprehensive income (loss) (53,953) 10,216
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Comprehensive income attributable to noncontrolling interests 891 1,299
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Comprehensive income (loss) attributable to Ricoh Company, Ltd. (54,844) 8,917
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
5
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 2011 and 2012
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
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CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss) (6,642) 14,146
Adjustments to reconcile consolidated net income to net cash
provided by operating activities
Depreciation and amortization 43,981 43,000
Equity in earnings of affiliates, net of dividends received 1 (57)
Deferred income taxes (14,581) (358)
Pension and severance costs, less payment (8,321) (2,876)
Changes in assets and liabilities, net of effects from acquisition-
Decrease in trade receivables 17,220 11,496
Increase in inventories (27,963) (9,097)
Increase in finance receivables (10,617) (11,720)
Decrease in trade payables (1,311) (19,866)
Increase (Decrease) in accrued income taxes and
accrued expenses and other 8,626 (2,353)
Other, net 15,177 6,149
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Net cash provided by operating activities 15,570 28,464
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 565 639
Expenditures for property, plant and equipment, including
interest capitalized (36,885) (41,381)
Expenditures for intangible asset (8,375) (6,200)
Payments for purchases of available-for-sale securities (122) (98)
Proceeds from sales of available-for-sale securities 10 25
Increase in time deposits, net (400) (1,000)
Other, net (7,754) (4,597)
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Net cash used in investing activities (52,961) (52,612)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 23,386 31,300
Repayment of long-term indebtedness (29,671) (24,534)
Increase (Decrease) in short-term borrowings, net 24,680 (3,593)
Repayment of long-term debt securities (231) --
Dividends paid (11,971) (6,163)
Payment for purchase of treasury stock (14) (8)
Other, net (294) (381)
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Net cash provided by (used in) financing activities 5,885 (3,379)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (7,105) (5,718)
-------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (38,611) (33,245)
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CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 172,221 156,210
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CASH AND CASH EQUIVALENTS AT END OF PERIOD 133,610 122,965
===================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
6
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 six months ended
September 30, 2012 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.
During the fiscal year ended March 31, 2012, certain subsidiaries of the Company
changed their fiscal year-ends from December 31 to March 31. Prior-year
consolidated financial statements have been retrospectively adjusted in order to
reflect the elimination of the lag period.
The effect of the retrospective application was as follows.
Millions of Yen
------------------------------------------
Six months ended September 30, 2011
------------------------------------------
As originally reported As adjusted
------------------------------------------------------------------------------------------------------------
Net loss attributable to Ricoh Company, Ltd. (7,363) (8,792)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-basic(yen) (10.15) (12.12)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-diluted (yen) (10.15) (12.12)
============================================================================================================
Millions of Yen
------------------------------------------
Three months ended September 30, 2011
------------------------------------------
As originally reported As adjusted
------------------------------------------------------------------------------------------------------------
Net loss attributable to Ricoh Company, Ltd. (10,809) (13,725)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-basic(yen) (14.90) (18.92)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-diluted (yen) (14.90) (18.92)
============================================================================================================
7
(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.
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) in equity.
All foreign currency transaction gains and losses are included in other income
and expenses in the period incurred.
8
(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 7, Ricoh manages its exposure to certain market
risks, primarily foreign currency and interest rate risks, through the use of
derivative instruments. As a matter of policy, Ricoh does not enter into
derivative contracts for trading or speculative purposes.
Ricoh recognizes all derivative instruments as either assets or liabilities in
the consolidated balance sheets and measures those instruments at fair value.
When Ricoh enters into a derivative contract, it makes a determination as to
whether or not for accounting purposes the derivative is part of a hedging
relationship. In general, a derivative may be designated as either (1) a hedge
of the fair value of a recognized asset or liability or an unrecognized firm
commitment ("fair value hedge"), (2) a hedge of the variability of the expected
cash flows associated with an existing asset or liability or a forecasted
transaction ("cash flow hedge"), or (3) a foreign currency fair value or cash
flow hedge ("foreign currency hedge"). Ricoh formally documents all
relationships between hedging instruments and hedged items, as well as its
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.
9
(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).
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
Depreciation of property, plant and equipment is computed principally over the
estimated useful lives. Most of the foreign subsidiaries have adopted the
straight-line method for computing depreciation. The Company and its domestic
subsidiaries have adopted using the declining-balance method for computing
depreciation, but the Company reviewed the method of depreciating fixed assets,
triggered by the group-wide reorganization of its domestic manufacturing
functions based on the changes in the economic environment. As a result, the
Company decided that the straight-line method is more appropriate to reflect the
expected pattern of consumption of property, plant and equipment because the
change in assets structure due to the recent increase of the capital
expenditures for new manufacturing technology gives equalization of the pattern
of consumption of the future benefits to be derived from those assets.
On April 1, 2012, the Company and its domestic subsidiaries changed their
depreciation method from the declining-balance method to the straight-line
method.
In accordance with ASC 250, "Accounting Changes and Error corrections",
the effects of the change are accounted for prospectively beginning with the
period of change, as a change in accounting estimate. Management believes that
this change did not make a material effect on Ricoh's consolidated financial
statements.
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 10 years.
10
(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 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 sheets, with a
corresponding adjustment to accumulated other comprehensive income (loss), net
of tax. The expected long-term rate of return on plan assets used for pension
accounting is determined based on the historical long-term rate of return on
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.
Ricoh recognizes interest and penalties related to unrecognized tax benefits in
provision for 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.
(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.
11
(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, 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 ASC 220 as from April 1 2012, which was revised based on
Accounting Standards Update (ASU) 2011-05 and 2011-12. ASU 2011-05 requires an
entity to present net income and other comprehensive income either in a single
continuous statement or in two separate, but consecutive, statements. This ASU
also requires separate presentation in both net income and other comprehensive
income of reclassification adjustments for items that are reclassified from
other comprehensive income to net income. ASU 2011-12 defers the effective date
for only the presentation requirements related to reclassifications in ASU
2011-05.
Ricoh has presented this requirement in two separate, but consecutive
statements. Management believes this adoption has not made a material effect on
Ricoh's consolidated financial statements.
(T) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In December 2011, the FASB issued ASU 2011-11. This ASU requires an entity to
disclose information about offsetting and related arrangements to enable users
of financial statements to understand the effect of those arrangements on its
financial position, and to allow investors to better compare financial
statements prepared under U.S. GAAP with financial statements prepared under
International Financial Reporting Standards (IFRS). It is effective for fiscal
years beginning on or after January 1, 2013 and interim periods within those
annual periods. Retrospective application is required and early adoption is
permitted. Management believes the adoption of ASU 2011-11 will not have a
material effect on Ricoh's consolidated financial position.
12
(U) RECLASSIFICATIONS
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
13
2. SECURITIES
Investment securities as of March 31, 2012 and September 30, 2012 consist of the
following:
Millions of Yen
----------------------------------
March 31, 2012 September 30, 2012
--------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 43,633 41,386
Non-marketable equity securities 1,837 2,035
--------------------------------------------------------------------------------
45,470 43,421
================================================================================
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, 2012 and September 30, 2012 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
March 31, 2012 September 30, 2012
----------------------------------------- -----------------------------------------
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 35,489 6,590 225 41,854 35,468 5,418 1,188 39,698
Corporate debt
securities 1,697 82 -- 1,779 1,556 132 -- 1,688
----------------------------------------------------------------------------------------------------------
37,186 6,672 225 43,633 37,024 5,550 1,188 41,386
==========================================================================================================
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, 2012
and September 30, 2012 are as follows:
Millions of Yen
----------------------------------------------------------------------------------
March 31, 2012
----------------------------------------------------------------------------------
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 781 129 467 96 1,248 225
==============================================================================================================
Millions of Yen
----------------------------------------------------------------------------------
September 30, 2012
----------------------------------------------------------------------------------
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 23,248 829 856 359 24,104 1,188
===============================================================================================================
Gross unrealized holding losses of available-for-sale securities as of March 31,
2012 and September 30, 2012 consist of 29 and 37 kinds of securities. Ricoh
judged the decline in fair value of investment securities at period end to be
temporary, with considering such factors as financial and operating conditions
of issuer, the industry in which the issuer operates and other relevant factors.
14
The contractual maturities of debt securities classified as available-for-sale
as of September 30, 2012 are as follows:
Millions of Yen
---------------------
Cost Fair value
------------------------------------------------------------------------------
Due after one year through five years 469 475
Over five years 1,087 1,213
------------------------------------------------------------------------------
1,556 1,688
==============================================================================
There were no significant proceeds from the sales of available-for-sale
securities for the six months ended September 30, 2011 and 2012.
There were no significant realized gains or losses on sales of
available-for-sale securities for the six months ended September 30, 2011 and
2012.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the six months ended September 30, 2011 and
2012.
3. PENSION AND RETIREMENT ALLOWANCE PLANS
The net periodic benefit costs of the pension plans consist of the following
components:
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
-------------------------------------------------------------------------------------------------------------
Service cost 6,141 6,222
Interest cost 7,121 6,477
Expected return on plan assets (4,456) (5,255)
Net amortization 1,092 1,839
-------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 9,898 9,283
=============================================================================================================
Millions of Yen
----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
-------------------------------------------------------------------------------------------------------------
Service cost 3,102 3,100
Interest cost 3,553 3,202
Expected return on plan assets (2,218) (3,042)
Net amortization 542 934
-------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 4,979 4,194
=============================================================================================================
15
4. EQUITY
The change in Ricoh shareholders' equity, noncontrolling interests and total
equity for the six months ended September 30, 2011 and 2012 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
Six months ended September 30, 2011 Six months ended September 30, 2012
---------------------------------------- ----------------------------------------
Ricoh Ricoh
Shareholders' Noncontrolling Total Shareholders' Noncontrolling Total
Equity Interests Equity Equity Interests Equity
----------------------------------------------------------------------------------------------------------------------
Equity, Beginning of Period 925,243 52,887 978,130 822,704 56,314 879,018
----------------------------------------------------------------------------------------------------------------------
Net income (loss) (8,792) 2,150 (6,642) 11,713 2,433 14,146
Unrealized losses on securities (2,426) (9) (2,435) (1,484) (5) (1,489)
Pension liability adjustments (560) 4 (556) 3,446 2 3,448
Unrealized gains (losses) on
derivatives (29) 2 (27) (180) (112) (292)
Foreign currency translation
adjustments (44,813) (141) (44,954) (28,677) (171) (28,848)
----------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) (56,620) 2,006 (54,614) (15,182) 2,147 (13,035)
----------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (11,971) -- (11,971) (6,163) -- (6,163)
Distributions to Noncontrolling
interests -- (305) (305) -- (384) (384)
Net changes in treasury stock 8 -- 8 (3) -- (3)
Wholly owned subsidiaries -- (198) (198) -- -- --
Other (11) -- (11) (7) -- (7)
----------------------------------------------------------------------------------------------------------------------
Equity, End of Period 856,649 54,390 911,039 801,349 58,077 859,426
----------------------------------------------------------------------------------------------------------------------
16
5. DIVIDENDS
Cash dividends paid during the six months ended September 30, 2011 is as
follows:
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
=============================================================================
Cash dividends to be paid for the six months ended September 30, 2011, of which
effective date is after September 30, 2011.
Resolved at the Board meeting on October 28, 2011
-----------------------------------------------------------------------------
Total amount of dividends (millions of yen) 11,970
Dividend per share of common stock (yen) 16.50
Record date September 30, 2011
Effective date December 1, 2011
Resource for dividend Retained earnings
=============================================================================
Cash dividends paid during the six months ended September 30, 2012 is 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
=============================================================================
Cash dividends to be paid for the six months ended September 30, 2012, of which
effective date is after September 30, 2012.
Resolved at the Board meeting on October 30, 2012
-----------------------------------------------------------------------------
Total amount of dividends (millions of yen) 9,063
Dividend per share of common stock (yen) 12.50
Record date September 30, 2012
Effective date December 3, 2012
Resource for dividend Retained earnings
=============================================================================
17
6. PER SHARE DATA
Ricoh shareholders' equity per share was Yen 1,134.64 and Yen 1,105.21 as of
March 31, 2012 and September 30, 2012, respectively. Dividends per share shown
in the consolidated statements of operations are computed based on dividends
paid for the year ended March 31, 2012 and the six months ended September 30,
2012.
A reconciliation of the numerator and the denominators of the basic and diluted
per share computations for net income attributable to Ricoh Company, Ltd. are as
follows:
Thousands of shares
---------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,501 725,074
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 725,501 725,074
======================================================================================================
Millions of Yen
---------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. (8,792) 11,713
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted net income (loss) attributable to Ricoh Company, Ltd. (8,792) 11,713
======================================================================================================
Yen
---------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd.
per share:
Basic:
Basic: Net income (loss) attributable to Ricoh
Company, Ltd. (12.12) 16.15
Diluted:
Diluted: Net income (loss) attributable to Ricoh
Company, Ltd. (12.12) --
======================================================================================================
Thousands of shares
---------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,499 725,070
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 725,499 725,070
======================================================================================================
18
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. (13,725) 5,176
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted net income (loss) attributable to Ricoh Company, Ltd. (13,725) 5,176
======================================================================================================
Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company,
Ltd. per share:
Basic:
Basic: Net income (loss) attributable to Ricoh
Company, Ltd. (18.92) 7.13
Diluted:
Diluted: Net income (loss) attributable to Ricoh
Company, Ltd. (18.92) --
======================================================================================================
Diluted net income (loss) per share attributable to Ricoh Company, Ltd. for the
six months and three months ended September 30, 2012 is omitted because the
Company did not have potentially dilutive common shares that were outstanding
for the period.
Euro Yen Zero Coupon Convertible Bonds was excluded as anti-dilutive for the six
months and three months ended September 30, 2011 due to Ricoh incurring a net
loss attributable to Ricoh Company, Ltd.
7. DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Policy
Ricoh enters into various derivative financial instrument contracts in the
normal course of business in connection with the management of its assets and
liabilities.
Ricoh uses derivative instruments to reduce risk and protect market value of
assets and liabilities in conformity with the Ricoh's policy. Ricoh does not use
derivative financial instruments for trading or speculative purposes, nor is it
a party to leveraged derivatives.
All derivative instruments are exposed to credit risk arising from the inability
of counterparties to meet the terms of the derivative contracts. However, Ricoh
does not expect any counterparties to fail to meet their obligations because
these counterparties are financial institutions with satisfactory credit
ratings. Ricoh utilizes a number of counterparties to minimize the concentration
of credit risk.
19
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 September 30, 2011 and 2012.
Cash Flow Hedges
Changes in the fair value of derivative instruments designated and qualifying as
cash flow hedges are included in accumulated other comprehensive income (loss)
on the consolidated balance sheets. These amounts are reclassified into earnings
as interest on the hedged loans is paid. There is no hedging ineffectiveness nor
are net gains or losses excluded from the assessment of hedge effectiveness for
the six months ended September 30, 2012 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 45 million of the balance of accumulated other comprehensive
income as of September 30, 2012.
Undesignated Derivative Instruments
Derivative instruments not designated as hedging instruments are held mainly 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
statements of operations.
Contract amounts of derivative instruments at March 31, 2012 and September 30,
2012 are shown in the following tables:
Millions of Yen
------------------------------------------
March 31, 2012 September 30, 2012
--------------------------------------------------------------------------------
Interest rate swap agreements 339,234 348,883
Foreign currency contracts 190,543 175,622
Foreign currency options 27,657 34,368
================================================================================
20
The location and fair value amounts of derivatives in the consolidated balance
sheets 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, September 30, March 31, September 30,
Asset Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Deferred income Lease deposits
taxes and other -- -- and other 45 14
======================================================================================================================
March 31, September 30, March 31, September 30,
Liability Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------------------------------------------------
Interest rate swap agreements Accrued expenses Deferred income
and other 452 306 taxes and other 1,526 2,063
======================================================================================================================
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, September 30, March 31, September 30,
Asset Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------------------------------------------------
Foreign currency contracts Deferred income Lease deposits
taxes and other 389 2,182 and other 79 1,567
Foreign currency options 36 180 -- --
----------------------------------------------------------------------------------------------------------------------
Total 425 2,362 79 1,567
======================================================================================================================
March 31, September 30, March 31, September 30,
Liability Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------------------------------------------------
Interest rate swap agreements 27 19 222 235
Foreign currency contracts Accrued expenses Deferred income
and other 3,112 494 taxes and other 3,188 314
Foreign currency options 1,056 228 -- --
----------------------------------------------------------------------------------------------------------------------
Total 4,195 741 3,410 549
======================================================================================================================
Total fair value amounts of derivatives
Millions of
Yen
-----------------------
Fair value
-------------------------------------------------------------------------------
March 31, September 30,
2012 2012
-------------------------------------------------------------------------------
Total Asset Derivatives 549 3,943
Total Liability Derivatives 9,583 3,659
-------------------------------------------------------------------------------
21
The location and amount of gains and losses related to derivatives reported in
the consolidated statements of operations for the six months ended September 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 (121) Interest expense (92) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2011
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (132)
Foreign currency contracts Foreign currency exchange (gain) loss, net 3,997
Foreign currency options Foreign currency exchange (gain) loss, net 426
---------------------------------------------------------------------------------------------
Total 4,291
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statements of operations for the three months ended
September 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 466 Interest expense (27) -- --
===========================================================================================================================
22
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2011
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (82)
Foreign currency contracts Foreign currency exchange (gain) loss, net (873)
Foreign currency options Foreign currency exchange (gain) loss, net 350
---------------------------------------------------------------------------------------------
Total (605)
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statements of operations for the Six months ended September 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 (201) Interest expense (21) -- --
===========================================================================================================================
23
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2012
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (5)
Foreign currency contracts Foreign currency exchange (gain) loss, net 8,773
Foreign currency options Foreign currency exchange (gain) loss, net 972
---------------------------------------------------------------------------------------------
Total 9,740
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statements of operations for the three months ended September
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 46 Interest expense (2) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
September 30, 2012
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net 7
Foreign currency contracts Foreign currency exchange (gain) loss, net 1,661
Foreign currency options Foreign currency exchange (gain) loss, net (320)
---------------------------------------------------------------------------------------------
Total 1,348
=============================================================================================
24
8. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees housing
loans of Yen 11 million as of September 30, 2012.
As of September 30, 2012 the Company and certain of its subsidiaries were
parties to litigation involving routine matters, such as patent rights. In the
opinion of management, the ultimate liability, if any, resulting from such
litigation will not materially affect the consolidated financial position or the
results of operations of Ricoh.
9. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
(A) CASH AND CASH EQUIVALENTS, TIME DEPOSITS, TRADE RECEIVABLES, SHORT-TERM
BORROWINGS, CURRENT MATURITIES OF LONG-TERM INDEBTEDNESS, TRADE PAYABLES
AND ACCRUED EXPENSES
The carrying amounts approximate fair values because of the short maturities of
these instruments.
(B) 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 1,837 million and Yen 2,035 million as of March 31, 2012
and September 30, 2012, 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. Installment loans using inputs described above are classified as Level
2 under the Fair Value Measurement and Disclosure framework. The 3 levels of
inputs that are used to measure the fair values are defined in Note 10.
(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 is estimated by obtaining quotes from brokers or
suitable valuation method based on available data.
25
The estimated fair value of the financial instruments as of March 31, 2012 and
September 30, 2012 are summarized as follows:
Millions of Yen
-------------------------------------------------
March 31, 2012 September 30, 2012
----------------------- -----------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------------------------------------------------------------------------------------
Investment securities 45,470 45,470 43,421 43,421
Installment loans 83,361 84,441 85,807 86,918
Long-term indebtedness (525,435) (524,056) (518,263) (517,736)
Interest rate swap agreements, net (2,182) (2,182) (2,609) (2,609)
Foreign currency contracts, net (5,832) (5,832) 2,941 2,941
Foreign currency options, net (1,020) (1,020) (48) (48)
=====================================================================================
Limitations: Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
10. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The three levels 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, 2012 and September 30, 2012.
26
Millions of Yen
------------------------------
March 31, 2012
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 35,734 -- -- 35,734
Foreign equity securities 6,120 -- -- 6,120
Foreign corporate bonds 1,779 -- -- 1,779
Derivative instruments
Interest rate swap agreements -- 45 -- 45
Foreign currency contracts -- 468 -- 468
Foreign currency options -- 36 -- 36
-------------------------------------------------------------------------
Total assets 43,633 549 -- 44,182
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,227 -- 2,227
Foreign currency contracts -- 6,300 -- 6,300
Foreign currency options -- 1,056 -- 1,056
-------------------------------------------------------------------------
Total liabilities -- 9,583 -- 9,583
=========================================================================
Millions of Yen
------------------------------
September 30, 2012
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 31,725 -- -- 31,725
Foreign equity securities 7,973 -- -- 7,973
Foreign corporate bonds 1,688 -- -- 1,688
Derivative instruments
Interest rate swap agreements -- 14 -- 14
Foreign currency contracts -- 3,749 -- 3,749
Foreign currency options -- 180 -- 180
-------------------------------------------------------------------------
Total assets 41,386 3,943 -- 45,329
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,623 -- 2,623
Foreign currency contracts -- 808 -- 808
Foreign currency options -- 228 -- 228
-------------------------------------------------------------------------
Total liabilities -- 3,659 -- 3,659
=========================================================================
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.
27
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 six months ended September 30, 2011 and 2012.
11. 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.
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
eliminated the retained subordinated beneficial interests on the consolidated
balance sheets. The consolidated assets and liabilities as of March 31, 2012 and
September 30, 2012 are as follows:
Millions of Yen
----------------------------------
March 31, 2012 September 30, 2012
--------------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 15,487 13,817
Long-term finance receivables, net 30,225 26,941
Current maturities of long-term indebtedness 12,487 11,444
Long-term indebtedness 24,371 22,314
============================================================================================
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 as of March 31, 2012 and September 30, 2012 are as follows:
Millions of Yen
----------------------------------
March 31, 2012 September 30, 2012
--------------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 1,397 1,155
Long-term finance receivables, net 6,919 5,897
Current maturities of long-term indebtedness 1,397 1,155
Long-term indebtedness 6,919 5,897
============================================================================================
28
12. 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.
29
Financing receivables and allowance for doubtful receivables as of September 30,
2011 and September 30, 2012 are as follows:
Millions of Yen
---------------------------------------------------
September 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 (1,114) (28) (38) (1,180)
Recoveries -- -- -- --
Provision 1,570 298 73 1,941
Translation adjustment (304) -- (50) (354)
Ending balance 10,679 2,042 2,470 15,191
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 4,452 805 1,251 6,508
Collectively evaluated 6,227 1,237 1,219 8,683
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 67,237 1,061 3,803 72,101
Collectively evaluated 522,827 78,007 47,030 647,864
-------------------------------------------------------------------------------------------------
Total: Financing receivables 590,064 79,068 50,833 719,965
=================================================================================================
Millions of Yen
---------------------------------------------------
September 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 (1,038) (3) (51) (1,092)
Recoveries -- -- -- --
Provision 1,144 (71) (1,186) (113)
Translation adjustment (150) -- -- (150)
Ending balance 8,428 1,673 1,358 11,459
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 2,345 502 776 3,623
Collectively evaluated 6,083 1,171 582 7,836
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 58,693 820 2,873 62,386
Collectively evaluated 555,678 86,660 47,161 689,499
-------------------------------------------------------------------------------------------------
Total: Financing receivables 614,371 87,480 50,034 751,885
=================================================================================================
30
(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,
2012and September 30, 2012 are as follows:
Millions of Yen
---------------------------------------------------
March 31, 2012
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 608,336 84,274 45,049 737,659
Overdue 4,495 834 2,403 7,732
-------------------------------------------------------------------------------------------------
Total: Financing receivables 612,831 85,108 47,452 745,391
=================================================================================================
Millions of Yen
---------------------------------------------------
September 30, 2012
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 609,238 86,915 49,839 745,992
Overdue 5,133 565 195 5,893
-------------------------------------------------------------------------------------------------
Total: Financing receivables 614,371 87,480 50,034 751,885
=================================================================================================
13. 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 six and three months ended September
30, 2011 and 2012, respectively. Intersegment sales are made at arm's-length
prices. No single customer accounted for 10% or more of the total revenues for
the six and three months ended September 30, 2011 and 2012.
31
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
----------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 829,309 797,637
Industrial Products 52,853 49,489
Other 59,184 72,393
Intersegment transaction (2,264) (2,052)
------------------------------------------------------------------------------------------
Total Segment Sales 939,082 917,467
==========================================================================================
Segment Profit (loss):
Imaging & Solutions 37,054 59,593
Industrial Products (2,156) (658)
Other (2,485) (743)
------------------------------------------------------------------------------------------
Total Segment Profit (loss) 32,413 58,192
==========================================================================================
Reconciling Items:
Corporate expenses and Elimination (34,446) (30,804)
Interest and dividend income 1,503 1,536
Interest expense (3,430) (3,555)
Foreign currency exchange loss, net (6,052) (960)
Other, net 288 81
------------------------------------------------------------------------------------------
Income (loss) before Income Taxes and Equity in
Earnings of Affiliates (9,724) 24,490
==========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
-------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 415,959 397,087
Industrial Products 26,588 24,981
Other 30,340 37,076
Intersegment transaction (1,198) (1,064)
------------------------------------------------------------------------------------------
Total Segment Sales 471,689 458,080
==========================================================================================
Segment Profit (loss):
Imaging & Solutions 9,004 28,851
Industrial Products (1,675) (240)
Other (2,098) (439)
------------------------------------------------------------------------------------------
Total Segment Profit (loss) 5,231 28,172
==========================================================================================
Reconciling Items:
Corporate expenses and Elimination (18,590) (15,065)
Interest and dividend income 896 694
Interest expense (1,967) (2,034)
Foreign currency exchange loss, net (4,867) 355
Other, net 286 93
------------------------------------------------------------------------------------------
Income (loss) before Income Taxes and Equity in
Earnings of Affiliates (19,011) 12,215
==========================================================================================
Intersegment sales represent sales of Industrial Products segment to Imaging &
Solutions segment.
Certain products were reclassified into Imaging & Solutions and Industrial
Products from Other in this fiscal year. The reclassification was made to the
prior year's figures.
32
(B) GEOGRAPHIC INFORMATION
Sales which are attributed to countries based on location of customers are as
follows:
Millions of Yen
-----------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
-------------------------------------------------------------------------------------------
Sales-
Japan 434,515 430,762
The Americas 234,394 234,319
Europe, Middle East and Africa 207,949 187,163
Other 62,224 65,223
-------------------------------------------------------------------------------------------
Consolidated 939,082 917,467
===========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
-------------------------------------------------------------------------------------------
Sales-
Japan 219,203 215,313
The Americas 120,151 116,852
Europe, Middle East and Africa 100,231 91,910
Other 32,104 34,005
-------------------------------------------------------------------------------------------
Consolidated 471,689 458,080
===========================================================================================
Middle East and Africa were reclassified from Other into Europe in this fiscal
year. The reclassification was made to the prior year's figures.
14. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF OPERATIONS
The following amounts were charged to selling, general and administrative
expenses for the six months and three months ended September 30, 2011 and 2012:
Millions of Yen
-----------------------------------------
Six months ended Six months ended
September 30, 2011 September 30, 2012
-------------------------------------------------------------------------------------------
Research and development costs 59,784 54,770
Advertising costs 5,483 5,668
Shipping and handling costs 11,211 11,314
===========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
September 30, 2011 September 30, 2012
-------------------------------------------------------------------------------------------
Research and development costs 32,101 27,707
Advertising costs 3,110 3,351
Shipping and handling costs 6,275 5,574
===========================================================================================
15. SUBSEQUENT EVENTS
On October 22, 2012, the Company entered into a loan totaling 30,000 million yen
from the Development Bank of Japan Inc. under DBJ Environmental Ratings Loan
Program which is to be given to the companies who has been engaged in advanced
efforts for the environmentally responsible management.
33