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 February 2013
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
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Zenji Miura
Deputy President and
Chief Financial Officer
February 13, 2013
RICOH COMPANY, LTD.
Consolidated Financial Statements
For the nine months Ended December 31, 2012
This is an English translation of the Quarterly Securities Report (Shihanki
Hokokusho) for the nine months ended December 31, 2012 pursuant to the Japanese
Financial Instrument and Exchange Law.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, 2012 and December 31, 2012
Millions of Yen
------------------------------
March 31, December 31,
ASSETS 2012 2012
-----------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 156,210 134,408
Time deposits 2,461 4,017
Trade receivables:
Notes 43,921 39,541
Accounts 439,673 456,564
Less- Allowance for doubtful receivables (16,380) (14,847)
Current maturities of long-term finance receivables, net 219,716 228,564
Inventories:
Finished goods 101,165 109,506
Work in process and raw materials 93,844 102,649
Deferred income taxes and other 65,896 63,003
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Total current assets 1,106,506 1,123,405
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Property, plant and equipment, at cost:
Land 45,893 45,683
Buildings 265,843 270,192
Machinery and equipment 659,503 687,395
Construction in progress 9,576 14,953
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Total 980,815 1,018,223
Less- accumulated depreciation (712,288) (736,593)
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Net property, plant and equipment 268,527 281,630
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Investments and other assets:
Long-term finance receivables, net 468,004 482,717
Investment securities 45,470 45,720
Investments in and advances to affiliates 444 1,038
Goodwill 195,251 205,429
Other intangible assets 112,914 106,235
Lease deposits and other 92,242 96,898
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Total investments and other assets 914,325 938,037
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Total assets 2,289,358 2,343,072
===========================================================================================================
1
Millions of Yen
------------------------------
March 31, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2012 2012
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Current liabilities:
Short-term borrowings 111,272 97,689
Current maturities of long-term indebtedness 105,160 126,427
Trade payables:
Notes 11,553 11,440
Accounts 240,656 224,128
Accrued income taxes 13,448 11,792
Accrued expenses and other 190,935 184,937
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Total current liabilities 673,024 656,413
-----------------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term indebtedness 525,435 565,020
Accrued pension and severance costs 164,757 163,354
Deferred income taxes and other 47,124 53,685
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Total long-term liabilities 737,316 782,059
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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 742,549 744,618
Accumulated other comprehensive loss (204,175) (183,302)
Treasury stock at cost (37,117) (37,131)
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Total Ricoh Company, Ltd. shareholders' equity 822,704 845,632
-----------------------------------------------------------------------------------------------------------
Noncontrolling interests 56,314 58,968
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Total equity 879,018 904,600
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Total liabilities and equity 2,289,358 2,343,072
===========================================================================================================
The accompanying notes are an integral part of consolidated financial
statements.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended December 31, 2011 and 2012
Millions of Yen
----------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
-----------------------------------------------------------------------------------------------------------------
Net Sales:
Products 637,467 620,920
Post sales and rentals 680,642 680,676
Other revenue 78,758 85,503
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Total 1,396,867 1,387,099
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Cost of sales:
Products 445,547 448,652
Post sales and rentals 324,590 313,731
Other revenue 58,472 61,314
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Total 828,609 823,697
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Gross profit 568,258 563,402
Selling, general and administrative expenses 577,802 522,919
Loss on impairment of goodwill 27,464 --
-----------------------------------------------------------------------------------------------------------------
Operating income (loss) (37,008) 40,483
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Other (income) expenses:
Interest and dividend income (2,017) (1,916)
Interest expense 4,971 5,047
Foreign currency exchange loss, net 4,336 1,301
Other, net 4,271 (223)
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Total 11,561 4,209
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Income (loss) before income taxes and equity in earnings of (48,569) 36,274
affiliates
Provision for income taxes:
Current 15,752 13,575
Deferred (14,489) 1,935
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Total 1,263 15,510
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Equity in earnings of affiliates 17 47
Consolidated net income (loss) (49,815) 20,811
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Net income attributable to noncontrolling interests 3,370 3,509
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Net income (loss) attributable to Ricoh Company, Ltd. (53,185) 17,302
=================================================================================================================
Yen Yen
-----------------------------------------
Per share of common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic (73.31) 23.86
Diluted (73.31) --
----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 33.00 21.00
=================================================================================================================
Per American Depositary Share, each representing 5 shares of common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
----------------------------------------------------------------------------------------------------------------
Basic (366.55) 119.30
Diluted (366.55) --
----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 165.00 105.00
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
3
For the Three Months Ended December 31, 2011 and 2012
Millions of Yen
----------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
----------------------------------------------------------------------------------------------------------------
Net Sales:
Products 202,293 206,212
Post sales and rentals 228,919 234,469
Other revenue 26,573 28,951
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Total 457,785 469,632
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Cost of sales:
Products 144,224 151,118
Post sales and rentals 112,435 108,546
Other revenue 19,720 20,972
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Total 276,379 280,636
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Gross profit 181,406 188,996
Selling, general and administrative expenses 188,917 175,901
Loss on impairment of goodwill 27,464 --
-----------------------------------------------------------------------------------------------------------------
Operating income (loss) (34,975) 13,095
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Other (income) expenses:
Interest and dividend income (514) (380)
Interest expense 1,541 1,492
Foreign currency exchange (gain) loss, net (1,716) 341
Other, net 4,559 (142)
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Total 3,870 1,311
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Income (loss) before income taxes and equity in earnings of affiliates (38,845) 11,784
Provision for income taxes:
Current 4,254 2,816
Deferred 92 2,293
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Total 4,346 5,109
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Equity in earnings of affiliates 18 (10)
Consolidated net income (loss) (43,173) 6,665
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Net income attributable to noncontrolling interest 1,220 1,076
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Net income (loss) attributable to Ricoh Company, Ltd. (44,393) 5,589
=================================================================================================================
Yen Yen
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Per share of common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
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Basic (61.19) 7.71
Diluted (61.19) --
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Cash dividends paid per share 16.50 12.50
=================================================================================================================
Per American Depositary Share, each representing 5 shares of
common stock:
Net income (loss) attributable to Ricoh Company, Ltd.
-----------------------------------------------------------------------------------------------------------------
Basic (305.95) 38.55
Diluted (305.95) --
-----------------------------------------------------------------------------------------------------------------
Cash dividends paid per share 82.50 62.50
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Nine Months Ended December 31, 2011 and 2012
Millions of Yen
----------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
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Consolidated net income (loss) (49,815) 20,811
Other comprehensive income (loss) , net of tax:
Net unrealized holding losses on available-for-sale securities (1,265) (449)
Pension liability adjustments (1,589) (747)
Net unrealized losses on derivative instruments (283) (117)
Foreign currency translation adjustments (46,188) 22,028
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Total (49,325) 20,715
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Comprehensive gain (loss) (99,140) 41,526
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Comprehensive income attributable to noncontrolling interests 3,209 3,351
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Comprehensive gain (loss) attributable to Ricoh Company, Ltd. (102,349) 38,175
=================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
For the Three Months Ended December 31, 2011 and 2012
Millions of Yen
----------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
-----------------------------------------------------------------------------------------------------------------
Consolidated net income (loss) (43,173) 6,665
Other comprehensive income (loss) , net of tax:
Net unrealized holding gains on available-for-sale securities 1,170 1,040
Pension liability adjustments (1,033) (4,195)
Net unrealized gains (losses) on derivative instruments (256) 175
Foreign currency translation adjustments (1,234) 50,876
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Total (1,353) 47,896
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Comprehensive income (loss) (44,526) 54,561
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Comprehensive income attributable to noncontrolling interests 1,203 1,204
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Comprehensive income (loss) attributable to Ricoh Company, Ltd. (45,729) 53,357
=================================================================================================================
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 Nine Months Ended December 31, 2011 and 2012
Millions of Yen
----------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
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CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss) (49,815) 20,811
Adjustments to reconcile consolidated net income (loss) to net cash
provided by operating activities
Depreciation and amortization 65,887 62,918
Equity in earnings of affiliates, net of dividends received (17) (47)
Deferred income taxes (14,489) 1,935
Loss on impairment of long-lived assets 9,898 420
Loss on impairment of securities 5,024 120
Loss on impairment of goodwill 27,464 --
Pension and severance costs, less payment (5,535) (2,843)
Changes in assets and liabilities, net of effects from acquisition-
Decrease (Increase) in trade receivables 16,436 (4,714)
Increase in inventories (32,466) (9,259)
Increase in finance receivables (13,229) (12,800)
Decrease in trade payables (22,075) (15,464)
Decrease in accrued income taxes and
accrued expenses and other (27,672) (17,068)
Other, net 14,952 4,331
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Net cash provided by (used in) operating activities (25,637) 28,340
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 826 1,399
Expenditures for property, plant and equipment, including
interest capitalized (53,968) (61,156)
Expenditures for intangible assets (10,664) (8,340)
Payments for purchases of available-for-sale securities (127) (91)
Proceeds from sales of available-for-sale securities 32 64
Increase in time deposits, net (631) (1,276)
Purchase of business, net of cash acquired (15,089) (2,118)
Other, net (9,278) (4,768)
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Net cash used in investing activities (88,899) (76,286)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 81,396 68,441
Repayment of long-term indebtedness (59,102) (29,673)
Decrease (Increase) in short-term borrowings, net 105,094 (17,436)
Proceeds from issuance of long-term debt securities -- 20,000
Repayment of long-term debt securities (226) --
Dividends paid (23,942) (15,226)
Payment for purchase of treasury stock (20) (8)
Other, net (585) (694)
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Net cash provided by financing activities 102,615 25,404
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (8,413) 740
-------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (20,334) (21,802)
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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 151,887 134,408
===================================================================================================================
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 93 of the "Regulations Regarding Terms, Forms and
Preparation of Interim Consolidated Financial Statements" (Cabinet office
Ordinance No.64, 2007), the accompanying consolidated financial statements of
Ricoh (Ricoh Company, Ltd. and its consolidated subsidiaries) have been prepared
in conformity with U.S. generally accepted accounting principles. Significant
accounting and reporting policies are summarized below:
The accompanying consolidated financial statements for the nine months ended
December 31, 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
------------------------------------------
Nine months ended December 31, 2011
------------------------------------------
As originally reported As adjusted
------------------------------------------------------------------------------------------------------------
Net loss attributable to Ricoh Company, Ltd. (52,135) (53,185)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-basic(yen) (71.86) (73.31)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-diluted (yen) (71.86) (73.31)
============================================================================================================
Millions of Yen
------------------------------------------
Three months ended December 31, 2011
------------------------------------------
As originally reported As adjusted
------------------------------------------------------------------------------------------------------------
Net loss attributable to Ricoh Company, Ltd. (44,772) (44,393)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-basic(yen) (61.71) (61.19)
Net loss attributable to Ricoh Company, Ltd. shareholders
per share-diluted (yen) (61.71) (61.19)
============================================================================================================
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 Ricoh Company, Ltd. shareholders' 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.
10
(J) CAPITALIZED SOFTWARE COSTS
Ricoh capitalizes certain internal and external costs incurred to acquire or
create internal use software during the application development stage as well as
upgrades and enhancements that result in additional functionality. The
capitalized software is amortized on a straight line basis generally from 3
years to 5 years.
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill is not amortized and is required to be tested at least annually for
impairment. Acquired intangible assets with a definite useful life are amortized
over their respective estimated useful lives and reviewed for impairment when an
indication of impairment is identified. Other intangible assets with definite
useful lives, consisting primarily of software, customer relationships and
trademarks are amortized on a straight line basis over 1 year to 20 years. Any
acquired intangible assets determined to have an indefinite useful life are not
amortized, but instead are tested annually for impairment based on its fair
value until its life would be determined to no longer be indefinite. In
performing the goodwill impairment test, Ricoh utilizes the two-step approach
prescribed. The first step requires a comparison of the carrying amount of the
reporting units to the fair value of these units. If the carrying amount of a
reporting unit exceeds its fair value, Ricoh will perform the second step of the
goodwill impairment test to measure the amount of impairment loss, if any.
(L) PENSION AND RETIREMENT ALLOWANCES PLANS
Ricoh recognizes the overfunded or underfunded status of the defined benefit
plans as an asset or liability in the consolidated balance sheet, with a
corresponding adjustment to accumulated other comprehensive income (loss), 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.
12
(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.
In February 2013, FASB issued ASU 2013-02. This ASU requires an entity to report
the effect of reclassifications out of accumulated other comprehensive income.
This ASU is effective prospectively for reporting periods after December 15,
2012.
Management believes that the adoption of ASU 2013-02 will not have a material
effect on Ricoh's consolidated financial position.
(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 December 31, 2012 consist of the
following:
Millions of Yen
---------------------------------
March 31, 2012 December 31, 2012
--------------------------------------------------------------------------------
Investment securities:
Available-for-sale securities 43,633 43,508
Non-marketable equity securities 1,837 2,212
--------------------------------------------------------------------------------
45,470 45,720
================================================================================
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 December 31, 2012 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
March 31, 2012 December 31, 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 35,383 6,692 408 41,667
Corporate debt
securities 1,697 82 -- 1,779 1,720 121 -- 1,841
----------------------------------------------------------------------------------------------------------
37,186 6,672 225 43,633 37,103 6,813 408 43,508
==========================================================================================================
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 December 31, 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
----------------------------------------------------------------------------------
December 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 23,596 138 656 270 24,252 408
--------------------------------------------------------------------------------------------------------------
14
Gross unrealized holding losses of available-for-sale securities as of March 31,
2012 and December 31, 2012 consist of 29 and 27 kinds of securities. Ricoh
judged the decline in fair value of investment securities at period end to be
temporary, with considering such factors as financial and operating conditions
of issuer, the industry in which the issuer operates and other relevant factors.
The contractual maturities of debt securities classified as available-for-sale
as of December 31, 2012 are as follows:
Millions of Yen
---------------------
Cost Fair value
------------------------------------------------------------------------------
Due after one year through five years 612 619
Over five years 1,108 1,222
------------------------------------------------------------------------------
1,720 1,841
==============================================================================
There were no significant proceeds from the sales of available-for-sale
securities for the nine months ended December 31, 2011 and 2012.
There were no significant realized gains or losses on sales of
available-for-sale securities for the nine months ended December 31, 2011 and
2012.
For the nine months ended December 31, 2011 and three months ended December 31,
2011, the losses on impairment of available-for-sale securities were Yen 5,024
million and Yen 4,952 million respectively. The losses on impairment were
included in other expense in the consolidated statement of income during the
corresponding period. The number of impaired available-for-sale securities were
16 and 5 for the nine months ended December 31, 2011 and three months ended
December 31, 2011. The impairment was caused by the decline in the stock market
during the corresponding period.
There were no significant realized gains or losses on valuation of
available-for-sale securities for the nine months ended December 31, 2012.
3. PENSION AND RETIREMENT ALLOWANCE PLANS
The net periodic benefit costs of the pension plans consist of the following
components:
Millions of Yen
----------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
-------------------------------------------------------------------------------------------------------------
Service cost 9,307 9,370
Interest cost 10,617 9,804
Expected return on plan assets (6,618) (7,942)
Net amortization 1,641 2,768
-------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 14,947 14,000
=============================================================================================================
Millions of Yen
----------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
-------------------------------------------------------------------------------------------------------------
Service cost 3,166 3,148
Interest cost 3,496 3,327
Expected return on plan assets (2,162) (2,687)
Net amortization 549 929
-------------------------------------------------------------------------------------------------------------
Total net periodic pension cost 5,049 4,717
=============================================================================================================
15
4. EQUITY
The change in Ricoh shareholders' equity, noncontrolling interests and total
equity for the nine months ended December 31, 2011 and 2012 are as follows:
Millions of Yen
-----------------------------------------------------------------------------------
Nine months ended December 31, 2011 Nine months ended December 31, 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) (53,185) 3,370 (49,815) 17,302 3,509 20,811
Unrealized losses on securities (1,256) (9) (1,265) (447) (2) (449)
Pension liability adjustments (1,597) 8 (1,589) (761) 14 (747)
Unrealized gains (losses) on
derivatives (313) 30 (283) (115) (2) (117)
Foreign currency translation
adjustments (45,998) (190) (46,188) 22,196 (168) 22,028
----------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) (102,349) 3,209 (99,140) 38,175 3,351 41,526
----------------------------------------------------------------------------------------------------------------------
Cash dividends on Common stock (23,942) -- (23,942) (15,226) -- (15,226)
Distributions to Noncontrolling
interests -- (603) (603) -- (697) (697)
Net changes in Treasury stock 17 -- 17 (14) -- (14)
Wholly owned subsidiaries -- (198) (198) -- -- --
Other (19) -- (19) (7) -- (7)
----------------------------------------------------------------------------------------------------------------------
Equity, End of Period 798,950 55,295 854,245 845,632 58,968 904,600
----------------------------------------------------------------------------------------------------------------------
16
5. DIVIDENDS
Cash dividends paid during the nine months ended December 31, 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
=============================================================================
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 nine months ended December 31, 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
=============================================================================
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 1,166.31 as of
March 31, 2012 and December 31, 2012, respectively. Dividends per share shown in
the consolidated statement of operations are computed based on dividends paid
for the third quarter ended December 31, 2011 and 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
---------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
------------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,501 725,069
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 725,501 725,069
======================================================================================================
Millions of Yen
---------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. (53,185) 17,302
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted net income (loss) attributable to Ricoh Company, Ltd. (53,185) 17,302
======================================================================================================
Yen
---------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
------------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd.
per share:
Basic:
Basic: Net income (loss) attributable to Ricoh
Company, Ltd. (73.31) 23.86
Diluted:
Diluted: Net income (loss) attributable to Ricoh
Company, Ltd. (73.31) --
======================================================================================================
Thousands of shares
---------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
-----------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 725,500 725,059
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted shares of common stock outstanding 725,500 725,059
======================================================================================================
Millions of Yen
---------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
-----------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd. (44,393) 5,589
Effect of dilutive securities:
Euro Yen Zero Coupon Convertible Bonds
- Due December 2011 -- --
------------------------------------------------------------------------------------------------------
Diluted net income attributable to Ricoh Company, Ltd. (44,393) 5,589
======================================================================================================
Yen
---------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
----------------------------------------------------------------------------------------------------
Net income (loss) attributable to Ricoh Company, Ltd.
per share:
Basic:
Basic: Net income (loss) attributable to Ricoh
Company, Ltd. (61.19) 7.71
Diluted:
Diluted: Net income (loss) attributable to Ricoh
Company, Ltd. (61.19) --
======================================================================================================
18
Diluted net income (loss) per share attributable to Ricoh Company, Ltd. for the
nine months and three months ended December 31, 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
nine months and three months ended December 31, 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.
Foreign Exchange Risk Management
Ricoh conducts business on a global basis and holds assets and liabilities
denominated in foreign currencies. Ricoh enters into foreign exchange contracts
and foreign currency options to hedge against the potentially adverse impacts of
foreign currency fluctuations on these assets and liabilities denominated in
foreign currencies.
Interest Rate Risk Management
Ricoh enters into interest rate swap agreements to hedge against the potential
adverse impacts of changes in fair value or cash flow fluctuations on interest
of its outstanding debt.
Fair Value Hedges
Changes in the fair value of derivative instruments and the related hedged items
designated and qualifying as fair value hedges are included in other (income)
expenses in the consolidated statements of operations. There are no Fair Value
Hedges derivative instruments effective at December 31, 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 Nine months ended December 31, 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 18 million loss of the balance of accumulated other
comprehensive income (loss) as of December 31, 2012.
19
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
statement of operations.
Contract amounts of derivative instruments at March 31, 2012 and December 31,
2012 are shown in the following tables:
Millions of Yen
------------------------------------------
March 31, 2012 December 31, 2012
--------------------------------------------------------------------------------
Interest rate swap agreements 339,234 382,883
Foreign currency contracts 190,543 199,718
Foreign currency options 27,657 42,193
================================================================================
The location and fair value amounts of derivatives in consolidated balance sheet
are shown in the following tables:
Derivatives designated as hedging instruments
Current Long-term
----------------------------------------- ----------------------------------------
Fair value Fair value
----------------------------------------- ----------------------------------------
Balance sheet Balance sheet
Location Millions of Yen Location Millions of Yen
----------------------------------------------------------------------------- ----------------------------------------
March 31, December 31, March 31, December 31,
Asset Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------- ----------------------------------------
Interest rate swap agreements Deferred income Lease deposits
taxes and other -- -- and other 45 489
======================================================================================================================
March 31, December 31, March 31, December 31,
Liability Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------- ----------------------------------------
Interest rate swap agreements Accrued expenses Deferred income
and other 452 313 taxes and other 1,526 2,218
======================================================================================================================
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, December 31, March 31, December 31,
Asset Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------- ----------------------------------------
Foreign currency contracts Deferred income Lease deposits
taxes and other 389 17 and other 79 4
Foreign currency options 36 3 -- --
----------------------------------------------------------------------------- ----------------------------------------
Total 425 20 79 4
======================================================================================================================
March 31, December 31, March 31, December 31,
Liability Derivatives 2012 2012 2012 2012
----------------------------------------------------------------------------------------------------------------------
Interest rate swap agreements 27 12 222 253
Foreign currency contracts Accrued expenses Deferred income
and other 3,112 6,706 taxes and other 3,188 7,299
Foreign currency options 1,056 1,514 -- --
----------------------------------------------------------------------------------------------------------------------
Total 4,195 8,232 3,410 7,552
======================================================================================================================
Total fair value amounts of derivatives
Millions of
Yen
-----------------------
Fair value
-------------------------------------------------------------------------------
March 31, December 31,
2012 2012
-------------------------------------------------------------------------------
Total Asset Derivatives 549 513
Total Liability Derivatives 9,583 18,315
-------------------------------------------------------------------------------
20
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of operations for the nine months ended December 31,
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 (353) Interest expense (40) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
December 31, 2011
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (153)
Foreign currency contracts Foreign currency exchange (gain)loss, net 4,437
Foreign currency options Foreign currency exchange (gain)loss, net 572
---------------------------------------------------------------------------------------------
Total 4,856
=============================================================================================
21
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of operations for the three months ended December 31,
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 (291) Interest expense (7) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
-------------------
December 31, 2011
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net 71
Foreign currency contracts Foreign currency exchange (gain) loss, net 440
Foreign currency options Foreign currency exchange (gain) loss, net 146
---------------------------------------------------------------------------------------------
Total 657
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of operations for the nine months ended December 31,
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 (147) Interest expense (32) -- --
===========================================================================================================================
22
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
December 31, 2012
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (16)
Foreign currency contracts Foreign currency exchange (gain) loss, net (8,157)
Foreign currency options Foreign currency exchange (gain) loss, net (491)
--------------------------------------------------------------------------------------------
Total (8,664)
=============================================================================================
The location and amount of gains and losses related to derivatives reported in
the consolidated statement of operations for the three months ended December 31,
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 54 Interest expense (11) -- --
===========================================================================================================================
Derivatives not designated as hedging instruments
Gain or (Loss) Recognized in Income on Derivative
--------------------------------------------------------------
Location Millions of Yen
------------------
December 31, 2012
---------------------------------------------------------------------------------------------
Interest rate swap agreements Other, net (11)
Foreign currency contracts Foreign currency exchange (gain) loss, net (16,931)
Foreign currency options Foreign currency exchange (gain) loss, net (1,463)
---------------------------------------------------------------------------------------------
Total (18,405)
=============================================================================================
23
8. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees housing
loans of Yen 10 million as of December 31, 2012.
As of December 31, 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 2,212 million as of March 31, 2012 and
December 31, 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.
24
(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.
The estimated fair value of the financial instruments as of March 31, 2012 and
December 31, 2012 are summarized as follows:
Millions of Yen
-------------------------------------------------
March 31, 2012 December 31, 2012
----------------------- -----------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------------------------------------------------------------------------------------
Investment securities 45,470 45,470 45,720 45,720
Installment loans 83,361 84,441 88,111 89,252
Long-term indebtedness (525,435) (524,056) (565,020) (562,579)
Interest rate swap agreements, net (2,182) (2,182) (2,307) (2,307)
Foreign currency contracts, net (5,832) (5,832) (13,984) (13,984)
Foreign currency options, net (1,020) (1,020) (1,511) (1,511)
=====================================================================================
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.
25
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 December 31, 2012.
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
------------------------------
December 31, 2012
------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------
Assets:
Available-for-sale securities:
Domestic equity securities 33,677 -- -- 33,677
Foreign equity securities 7,990 -- -- 7,990
Foreign corporate bonds 1,841 -- -- 1,841
Derivative instruments
Interest rate swap agreements -- 489 -- 489
Foreign currency contracts -- 21 -- 21
Foreign currency options -- 3 -- 3
-------------------------------------------------------------------------
Total assets 43,508 513 -- 44,021
=========================================================================
Liabilities:
Derivatives instruments
Interest rate swap agreements -- 2,796 -- 2,796
Foreign currency contracts -- 14,005 -- 14,005
Foreign currency options -- 1,514 -- 1,514
-------------------------------------------------------------------------
Total liabilities -- 18,315 -- 18,315
=========================================================================
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.
Assets and liabilities measured at fair value on a nonrecurring basis
There were no material assets and liabilities measured at fair value on a
non-recurring basis during the nine months ended December 31, 2012.
During the nine months ended December 31, 2011, a part of the long-lived assets
associated with the Production Printing business with a carrying amount of
Yen 9,898 million, and goodwill of the Production Printing business with a
carrying amount of Yen 27,464 million were fully impaired.
These measurements are classified as level 3 since significant unobservable
inputs, such as the conditions of the assets or projections of future cash
flows, were considered in the fair value measurements.
26
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
December 31, 2012 are as follows:
Millions of Yen
----------------------------------
March 31, 2012 December 31, 2012
--------------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 15,487 13,074
Long-term finance receivables, net 30,225 25,493
Current maturities of long-term indebtedness 12,487 8,250
Long-term indebtedness 24,371 23,978
============================================================================================
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 December 31, 2012 are as follows:
Millions of Yen
----------------------------------
March 31, 2012 December 31, 2012
--------------------------------------------------------------------------------------------
Current maturities of long-term finance receivables, net 1,397 1,355
Long-term finance receivables, net 6,919 5,991
Current maturities of long-term indebtedness 1,397 1,355
Long-term indebtedness 6,919 5,991
============================================================================================
27
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.
28
Financing receivables and allowance for doubtful receivables as of December 31,
2011 and December 31, 2012 are as follows:
Millions of Yen
---------------------------------------------------
December 31, 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 (1,694) (48) (46) (1,788)
Recoveries (2) -- -- (2)
Provision 1,613 150 (23) 1,740
Translation adjustment (291) -- (42) (333)
Ending balance 10,153 1,874 2,374 14,401
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 4,040 792 1,176 6,008
Collectively evaluated 6,113 1,082 1,198 8,393
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 62,817 910 3,566 67,293
Collectively evaluated 530,112 82,142 47,266 659,520
-------------------------------------------------------------------------------------------------
Total:Financing receivables 592,929 83,052 50,832 726,813
=================================================================================================
Millions of Yen
---------------------------------------------------
December 31, 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 (1,293) (22) (56) (1,371)
Recoveries -- -- -- --
Provision 1,124 (240) (1,287) (403)
Translation adjustment 128 -- -- 128
Ending balance 8,431 1,485 1,252 11,168
-------------------------------------------------------------------------------------------------
Allowance for doubtful receivables:
Individually evaluated 2,355 422 665 3,442
Collectively evaluated 6,076 1,063 587 7,726
-------------------------------------------------------------------------------------------------
Financing receivables:
Individually evaluated 61,621 461 2,720 64,802
Collectively evaluated 569,980 89,135 47,054 706,169
-------------------------------------------------------------------------------------------------
Total:Financing receivables 631,601 89,596 49,774 770,971
=================================================================================================
29
(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, 2012
and December 31, 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
---------------------------------------------------
December 31, 2012
---------------------------------------------------
Installment
Lease Installment receivables
receivables loans and other Total
-------------------------------------------------------------------------------------------------
Current 625,659 89,025 49,577 764,261
Overdue 5,942 571 197 6,710
-------------------------------------------------------------------------------------------------
Total:Financing receivables 631,601 89,596 49,774 770,971
=================================================================================================
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 nine and three months ended December
31, 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 nine and three months ended December 31, 2011 and 2012.
30
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
----------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 1,225,716 1,207,241
Industrial Products 78,591 73,401
Other 96,248 109,657
Intersegment transaction (3,688) (3,200)
------------------------------------------------------------------------------------------
Total Segment Sales 1,396,867 1,387,099
==========================================================================================
Segment Profit (loss):
Imaging & Solutions 19,631 91,879
Industrial Products (2,551) (445)
Other (3,049) (2,368)
------------------------------------------------------------------------------------------
Total Segment Profit (loss) 14,031 89,066
==========================================================================================
Reconciling Items:
Corporate expenses and Elimination (51,039) (48,583)
Interest and dividend income 2,017 1,916
Interest expense (4,971) (5,047)
Foreign currency exchange loss, net (4,336) (1,301)
Other, net (4,271) 223
------------------------------------------------------------------------------------------
Income (loss) before Income Taxes and Equity in
Earnings of Affiliates (48,569) 36,274
==========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
-------------------------------------------------------------------------------------------
Segment Sales:
Imaging & Solutions 396,407 409,604
Industrial Products 25,738 23,912
Other 37,064 37,264
Intersegment transaction (1,424) (1,148)
------------------------------------------------------------------------------------------
Total Segment Sales 457,785 469,632
==========================================================================================
Segment Profit (loss):
Imaging & Solutions (17,423) 32,286
Industrial Products (395) 213
Other (564) (1,625)
------------------------------------------------------------------------------------------
Total Segment Profit (loss) (18,382) 30,874
==========================================================================================
Reconciling Items:
Corporate expenses and Elimination (16,593) (17,779)
Interest and dividend income 514 380
Interest expense (1,541) (1,492)
Foreign currency exchange loss, net 1,716 (341)
Other, net (4,559) 142
------------------------------------------------------------------------------------------
Income (loss) before Income Taxes and Equity in
Earnings of Affiliates (38,845) 11,784
==========================================================================================
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.
31
(B) GEOGRAPHIC INFORMATION
Sales which are attributed to countries based on location of customers are as
follows:
Millions of Yen
-----------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
-------------------------------------------------------------------------------------------
Sales-
Japan 645,108 640,902
The Americas 347,156 353,827
Europe, Middle East and Africa 311,360 294,340
Other 93,243 98,030
-------------------------------------------------------------------------------------------
Consolidated 1,396,867 1,387,099
===========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
-------------------------------------------------------------------------------------------
Sales-
Japan 210,593 210,140
The Americas 112,762 119,508
Europe, Middle East and Africa 103,411 107,177
Other 31,019 32,807
-------------------------------------------------------------------------------------------
Consolidated 457,785 469,632
===========================================================================================
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 nine months and three months ended December 31, 2011 and 2012:
Millions of Yen
-----------------------------------------
Nine months ended Nine months ended
December 31, 2011 December 31, 2012
-------------------------------------------------------------------------------------------
Research and development costs 89,313 82,188
Advertising costs 8,639 9,254
Shipping and handling costs 17,327 17,695
===========================================================================================
Millions of Yen
-----------------------------------------
Three months ended Three months ended
December 31, 2011 December 31, 2012
-------------------------------------------------------------------------------------------
Research and development costs 29,529 27,418
Advertising costs 3,156 3,586
Shipping and handling costs 6,116 6,381
===========================================================================================
32