March 25, 2013
VIA EDGAR AND OVERNIGHT DELIVERY
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Mr. Kevin L. Vaughn
Accounting Branch Chief
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-3628
Re: Ricoh Company, Ltd.
Form 20-F for the Fiscal Year Ended March 31, 2012
Filed July 19, 2012
File No. 002-68279
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Dear Mr. Vaughn:
In connection with the comments regarding the annual report of Ricoh
Company, Ltd. ("Ricoh") on Form 20-F for the fiscal year ended March 31, 2012 in
your letter dated February 18, 2013, we offer the following responses. For the
convenience of the staff of the United States Securities and Exchange Commission
(the "Commission"), we have reproduced the comments set forth in your letter in
boldface type, which is followed by our responses.
FORM 20-F FOR THE YEAR ENDED MARCH 31, 2012
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GENERAL
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1. YOU STATED IN YOUR LETTER TO US DATED APRIL 10, 2009 THAT YOU HAD
UNAFFILIATED DISTRIBUTORS IN IRAN, SUDAN, AND SYRIA, AND THAT YOU DID NOT
ANTICIPATE ANY MATERIAL CHANGE IN THE EXTENT OR NATURE OF YOUR ACTIVITIES
IN THOSE COUNTRIES IN THE NEAR FUTURE. AS YOU KNOW, IRAN, SUDAN, AND SYRIA
ARE IDENTIFIED BY THE U.S. DEPARTMENT OF STATE AS STATE SPONSORS OF
TERRORISM, AND ARE SUBJECT TO U.S. ECONOMIC SANCTIONS AND EXPORT CONTROLS.
YOUR FORM 20-F DOES NOT INCLUDE DISCLOSURE REGARDING CONTACTS WITH IRAN,
SUDAN, AND SYRIA. PLEASE DESCRIBE TO US THE NATURE AND EXTENT OF YOUR PAST,
CURRENT, AND ANTICIPATED CONTACTS WITH IRAN, SUDAN, AND SYRIA, WHETHER
THROUGH DIRECT OR INDIRECT ARRANGEMENTS, SINCE THE REFERENCED LETTER. YOUR
RESPONSE SHOULD DESCRIBE ANY PRODUCTS, EQUIPMENT, COMPONENTS, TECHNOLOGY,
AND SERVICES YOU HAVE PROVIDED TO THOSE COUNTRIES, AND ANY AGREEMENTS,
ARRANGEMENTS, OR OTHER CONTACTS YOU HAVE HAD WITH THE GOVERNMENTS OF THOSE
COUNTRIES OR ENTITIES THEY CONTROL.
RESPONSE:
As stated in our April 10, 2009 letter to you, Ricoh does not have any
direct or indirect subsidiaries or affiliates in Iran, Sudan or Syria, nor
does it have any factories or other properties located in such countries.
Ricoh's indirect non-U.S. subsidiary, Ricoh International B.V. (a company
organized under the laws of the Netherlands) sells Ricoh products to
certain unaffiliated distributors (including those that are listed on
Ricoh's website) in Iran, Sudan and Syria. In addition, as discussed below,
such subsidiary also sells and rents Ricoh products to offices of certain
international organizations located in Sudan. The products so sold or
rented in Iran, Sudan and Syria are not sold or rented by Ricoh's
subsidiaries or affiliates organized in the United States, and Ricoh and
its subsidiaries and affiliates have in place appropriate policies and
procedures to ensure that permissible transactions are conducted in full
compliance with applicable laws and regulations.
For the fiscal years ended March 31, 2010, 2011 and 2012, Ricoh's total
consolidated net sales were Yen 2,015.8 billion, Yen 1,941.3 billion and
Yen 1,903.4 billion, respectively. Ricoh's limited business contact with
each country is discussed below. The financial figures provided below for
each country is based primarily on information provided to us by the
indirect subsidiary noted above in response to inquiries we initiated to
respond to your queries. As you will note, however, the business with these
countries continues to be de minimis and not material, either individually
or in the aggregate, to Ricoh.
Iran
----
As noted above, Ricoh's indirect non-U.S. subsidiary sells MFPs
(multifunctional printers), copiers, laser printers, digital duplicators,
facsimile, and related parts and supplies of such products to certain
unaffiliated distributors in Iran.
For the fiscal years ended March 31, 2010, 2011 and 2012, consolidated net
sales to Iran were approximately Yen 483.1 million, Yen 905.4 million and
Yen 916.4 million, respectively. As a percentage of total consolidated net
sales, consolidated net sales to Iran for the fiscal years ended March 31,
2010, 2011, 2012 comprised approximately 0.024%, 0.047% and 0.048%,
respectively. Ricoh does not have any plans to increase its unaffiliated
distributor base in Iran and does not anticipate any material change in the
extent or nature of its activities in Iran in the near future.
While sales to the unaffiliated distributors in Iran were conducted
pursuant to certain distribution agreements, to the best of Ricoh's
knowledge, it has not directly or indirectly entered into any agreement or
commercial arrangement, nor does it have any direct or indirect contact,
with the government of Iran or any entity controlled by the government of
Iran.
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Sudan
-----
As noted above, Ricoh's indirect non-U.S. subsidiary sells MFPs
(multifunctional printers), copiers, laser printers, digital duplicators,
facsimile, and related parts and supplies of such products to certain
unaffiliated distributors in Sudan. In addition, such non-U.S. subsidiary
also sells and rents these Ricoh products to offices of international
organizations (such as the United Nations Mission in Sudan and the United
Nations Mission in Darfur) located in Sudan.
For the fiscal years ended March 31, 2010, 2011 and 2012, consolidated net
sales to Sudan were approximately Yen 193.2 million, Yen 377.6 million and
Yen 351.7 million, respectively. As a percentage of total consolidated net
sales, consolidated net sales to Sudan for the fiscal years ended March 31,
2010, 2011, 2012 comprised approximately 0.010%, 0.019% and 0.018%,
respectively. Ricoh does not have any plans to increase its unaffiliated
distributor base or its sales or rentals to offices of international
organizations located in Sudan and does not anticipate any material change
in the extent or nature of its activities in Sudan in the near future.
While sales to the unaffiliated distributors in Sudan were conducted
pursuant to certain distribution agreements and sales and rentals to
offices of international organizations located in Sudan were conducted
pursuant to certain sales or rental agreements, to the best of Ricoh's
knowledge, it has not directly or indirectly entered into any agreement or
commercial arrangement, nor does it have any direct or indirect contact,
with the government of Sudan or any entity controlled by the government of
Sudan.
Syria
-----
As noted above, Ricoh's indirect non-U.S. subsidiary sells MFPs
(multifunctional printers), copiers, laser printers, digital duplicators,
and related parts and supplies of such products to certain unaffiliated
distributors in Syria.
For the fiscal years ended March 31, 2010, 2011 and 2012, consolidated net
sales to Syria were approximately Yen 76.2 million, Yen 124.1 million and
Yen 40.6 million, respectively. As a percentage of total consolidated net
sales, consolidated net sales to Syria for the fiscal years ended March 31,
2010, 2011, 2012 comprised approximately 0.004%, 0.006% and 0.002%,
respectively. Ricoh does not have any plans to increase its unaffiliated
distributor base in Syria and does not anticipate any material change in
the extent or nature of its activities in Syria in the near future.
While sales to the unaffiliated distributors in Syria were conducted
pursuant to certain distribution agreements, to the best of Ricoh's
knowledge, it has not directly or indirectly entered into any agreement or
commercial arrangement, nor does it have any direct or indirect contact,
with the government of Syria or any entity controlled by the government of
Syria.
2. PLEASE DISCUSS THE MATERIALITY OF ANY CONTACTS WITH IRAN, SUDAN, AND SYRIA
DESCRIBED IN RESPONSE TO THE FOREGOING COMMENT, AND WHETHER THOSE CONTACTS
CONSTITUTE A MATERIAL INVESTMENT RISK FOR YOUR SECURITY HOLDERS. YOU SHOULD
ADDRESS MATERIALITY IN QUANTITATIVE TERMS, INCLUDING THE APPROXIMATE DOLLAR
AMOUNTS OF ANY ASSOCIATED REVENUES, ASSETS, AND LIABILITIES FOR THE LAST
THREE FISCAL YEARS AND ANY SUBSEQUENT PERIOD. ALSO, ADDRESS MATERIALITY IN
TERMS OF QUALITATIVE FACTORS THAT A REASONABLE INVESTOR WOULD DEEM
IMPORTANT IN MAKING AN INVESTMENT DECISION, INCLUDING THE POTENTIAL IMPACT
OF CORPORATE ACTIVITIES UPON A COMPANY'S REPUTATION AND SHARE VALUE. AS YOU
KNOW, VARIOUS STATE AND MUNICIPAL GOVERNMENTS, UNIVERSITIES, AND OTHER
INVESTORS HAVE PROPOSED OR ADOPTED DIVESTMENT OR SIMILAR INITIATIVES
REGARDING INVESTMENT IN COMPANIES THAT DO BUSINESS WITH U.S.-DESIGNATED
STATE SPONSORS OF TERRORISM. YOUR MATERIALITY ANALYSIS SHOULD ADDRESS THE
POTENTIAL IMPACT OF THE INVESTOR SENTIMENT EVIDENCED BY SUCH ACTIONS
DIRECTED TOWARD COMPANIES THAT HAVE OPERATIONS ASSOCIATED WITH IRAN, SUDAN,
OR SYRIA.
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RESPONSE:
As discussed in more detail in the response to Comment 1 above, as a
percentage of total consolidated net sales, Ricoh's consolidated net sales
derived from each of Iran, Sudan and Syria did not exceed 0.05% for each
such country during the fiscal years ended March 31, 2010, 2011 and 2012.
In addition, as a percentage of Ricoh's total consolidated net sales, the
aggregate consolidated net sales derived from Iran, Sudan and Syria
collectively did not exceed 0.08% for any of the fiscal years ended March
31, 2010, 2011 and 2012. Accordingly, Ricoh does not view its business
contracts with Iran, Sudan or Syria to be quantitatively material to Ricoh
or its investors.
In addition, Ricoh does not believe that its limited business contacts with
Iran, Sudan and Syria to be qualitatively material to its reputation or its
share value because (i) Ricoh has in place policies and procedures that
ensure that transactions with Iran, Sudan and Syria are in compliance with
applicable laws and regulations, (ii) Ricoh does not have any subsidiaries
or affiliates, factories or other properties in Iran, Sudan or Syria and
(iii) the agreements entered into by the indirect non-U.S. subsidiary of
Ricoh as they relate to Iran, Sudan or Syria are for the distribution
through unaffiliated distributors, or the sale or rental to offices of
international organizations located in such countries, of a limited
selection of Ricoh products solely for general commercial use. Ricoh
products sold in Iran, Sudan and Syria have strictly non-sensitive
commercial applications; they do not have military or dual-use applications
nor are they the type of products that can contribute to human rights
abuses.
Ricoh recognizes that some institutional and government investors have
announced their concerns about investing in companies that do business with
countries that are U.S.-designated state sponsors of terrorism; and in
addition, various governments, and several universities and asset
management companies have proposed or adopted divestment or similar
initiatives regarding investment in companies that do business with
U.S.-designated state sponsors of terrorism. Ricoh will continue to monitor
such legislation as well as the level of investor concern regarding its
business contacts with those countries.
At the current time, however, given the limited amount of business and the
safeguards for regulatory compliance Ricoh has in place, Ricoh continues to
believe that its limited sales into Iran, Sudan and Syria (i) are not
material to its operations or financial results, (ii) do not present a
material investment risk to its investors and (iii) are not reasonably
likely to have any adverse effect on its reputation or share value. If this
situation were to change, Ricoh will consider including appropriate
disclosure in its Annual Report on Form 20-F and other filings with the
Commission.
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ITEM 5. OPERATING FINANCIAL REVIEW AND PROSPECTS, PAGE 35
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RESTRUCTURING CHARGES, PAGE 47
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3. WE NOTE THAT DURING THE YEAR ENDED MARCH 31, 2012 YOU INCURRED YEN 30.1
BILLION OF RESTRUCTURING CHARGES BUT YOUR DISCUSSION OF YOUR REASONS FOR
THE CHARGE, ITS EXPECTED IMPACT AND THE GOALS OF THE RESTRUCTURING PLAN ARE
UNCLEAR. PLEASE REFER TO THE STAFF'S VIEWS EXPRESSED IN SAB TOPIC 5-P.4 ON
DISCLOSURES RELATING TO RESTRUCTURING PLANS AND IN FUTURE FILINGS PLEASE
REVISE YOUR DISCLOSURE TO ADDRESS THE FOLLOWING:
. DISCLOSE THE SPECIFIC ADVERSE ECONOMIC, BUSINESS, COMPETITIVE, OR OTHER
FACTORS THAT PRECIPITATED THE MATERIAL RESTRUCTURING CHARGES.
. QUANTIFY AND DISCLOSE THE EXPECTED EFFECTS ON FUTURE EARNINGS AND CASH
FLOWS RESULTING FROM THE RESTRUCTURING PLAN (FOR EXAMPLE, REDUCED
DEPRECIATION, REDUCED EMPLOYEE EXPENSE, ETC.), ALONG WITH THE INITIAL
PERIOD IN WHICH THOSE EFFECTS ARE EXPECTED TO BE REALIZED.
. DISCUSS WHETHER THE COST SAVINGS ARE EXPECTED TO BE OFFSET BY
ANTICIPATED INCREASES IN OTHER EXPENSES OR REDUCED REVENUES.
. CLEARLY IDENTIFY THE INCOME STATEMENT LINE ITEMS TO BE IMPACTED (FOR
EXAMPLE, COST OF SALES; MARKETING; SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES; ETC.).
. IN FUTURE PERIODS IF ACTUAL SAVINGS ANTICIPATED BY THE RESTRUCTURING
PLAN ARE NOT ACHIEVED AS EXPECTED OR ARE ACHIEVED IN PERIODS OTHER
THAN AS EXPECTED, MD&A SHOULD DISCUSS THAT OUTCOME, ITS REASONS, AND
ITS LIKELY EFFECTS ON FUTURE OPERATING RESULTS AND LIQUIDITY.
RESPONSE:
In accordance with your comment, Ricoh will revise the disclosure in future
filings (where appropriate, such as in Item 5 and/or in the footnotes to
its consolidated financial statements) to disclose the items noted above in
connection with Ricoh's restructuring plan and any restructuring charges.
IMAGING AND SOLUTIONS, PAGE 49
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4. WE NOTE THAT YOU RECOGNIZED A YEN 37.0 BILLION IMPAIRMENT LOSS ON YOUR
GOODWILL AND LONG-LIVED ASSETS RELATED TO YOUR PRODUCTION PRINTING
BUSINESS. PLEASE TELL US THE PRIMARY UNDERLYING FACTORS THAT RESULTED IN
THE GOODWILL IMPAIRMENT CHARGES. ALSO, DISCUSS HOW YOUR IMPAIRMENT CHARGES
AFFECTED YOUR EXPECTATIONS REGARDING YOUR FUTURE OPERATING RESULTS AND
LIQUIDITY.
RESPONSE:
The production printing business is one of Ricoh's key strategic business
areas that it plans to continue strengthening. To provide customers with
leading edge products and services to meet and exceed their requirements,
Ricoh has relied increasingly on mergers & acquisitions as one of its key
strategies to increase its presence in the production printing market. For
example, in October 2004 Ricoh acquired Hitachi Printing Solutions, Ltd./1/
from Hitachi, Ltd. and in June 2007 Ricoh formed a joint venture company,
InfoPrint Solutions Company, LLC/2/, with International Business Machines
Corporation.
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/1/ Hitachi Printing Solutions, Ltd. is now known as Ricoh Printing Systems,
Ltd.
/2/ InfoPrint Solutions Company, LLC is now a wholly owned subsidiary of Ricoh
and is known as Ricoh Production Printing Solutions LLC.
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The global financial crisis in the second half of fiscal year 2008 (i.e.,
the fiscal year ended March 31, 2009), which affected particularly the U.S.
market, the Euro crisis from the second half of fiscal year 2009 (i.e., the
fiscal year ended March 31, 2010), which affected particularly the European
market, and the continued strengthening of the Japanese Yen against foreign
currencies throughout this period, resulted in a significant decrease in
demand for production printing products and services, which lingered to a
greater degree than Ricoh anticipated for fiscal year 2011 (i.e., the
fiscal year ended March 31, 2012). While Ricoh was able to increase sales
of cut sheet production printing printers manufactured by companies within
the Ricoh Group to the initially forecasted levels during the three year
period, it struggled to increase sales of continuous feed production
printing printers, the line up of which is comprised mainly of products
manufactured by third parties. Accordingly, as a whole, Ricoh was not able
to achieve its forecasted production printing sales level during this
period and revised the future projection of its production printing
business downward in fiscal year 2011. As a result, the carrying amount of
goodwill assigned to Ricoh's Production Printing reporting unit exceeded
the implied fair value of that goodwill based on an annual impairment test
of goodwill, thus, resulting in a goodwill impairment.
Although Ricoh recorded a goodwill impairment loss for fiscal year 2011,
the production printing business will continue to be one of Ricoh's core
strategic business areas, and Ricoh will continue to steadily increase
sales of its production printing business focusing on cut sheet production
printing printers. Accordingly, Ricoh does not believe that the impairment
loss recorded in fiscal year 2011 will have any significant impact on its
future operations of this business and/or its liquidity. Ricoh is
continually introducing new products along with implementing structural
changes to strengthen its marketing capabilities for this business and it
expects sales in its production printing business to grow in the future.
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* * *
In connection with our response to your comments on our filing, we
acknowledge that (i) Ricoh is responsible for the adequacy and accuracy of
the disclosure in the filings, (ii) staff comments or changes to disclosure
in response to staff comments do not foreclose the Commission from taking
any action with respect to the filings and (iii) Ricoh may not assert staff
comments as a defense in any proceeding initiated by the Commission or any
person under the federal securities laws of the United States.
Should you have any questions regarding our responses, please do not
hesitate to contact my colleague Hisaki Tsunoda, General Manager of
Accounting Department (+81-3-6278-4901; hisaki.tsunoda@nts.ricoh.co.jp) or
myself (+81-3-6278-4600; zenji.miura@nts.ricoh.co.jp) either by phone
and/or email.
Sincerely,
/s/ Zenji Miura
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Zenji Miura
Deputy President and Chief Financial Officer
Representative Director
Ricoh Company, Ltd.
cc: Ms. Eric Atallah, Staff Accountant
United States Securities and Exchange Commission
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