Ricoh 1998 Annual Report Download - page 37

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Ricoh Company, Ltd. and Consolidated Subsidiaries
Ricoh distributes its products primarily through domestic and foreign
sales subsidiaries. Overseas, Ricoh distributes not only Ricoh brand prod-
ucts but also other brands, such as Gestetner and Savin.
Ricoh manufactures its products primarily in 16 plants in Japan and 8
plants overseas, which are located in the United States, United Kingdom,
France, and China.
1. NATURE OF OPERATIONS
Ricoh Company, Ltd. (the “Company”), was established in 1936. The
Company and significant subsidiaries (“Ricoh” as a consolidated group) is
one of the world’s leading suppliers of office automation equipment,
including copiers, facsimile machines, data processing systems, printers
and related supplies. Ricoh is also well known for its state-of-the-art elec-
tronic devices, photographic equipment and others.
N OTES TO C ONSOLIDATED F INANCIAL S TATEMENTS
2. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
The cost of the securities sold was computed based on the average
cost of each security held at the time of sale.
(e) Inventories
Inventories are stated at the lower of average cost or market. Inventory
costs include raw materials, labor and manufacturing overhead.
(f) Plant and Equipment
Depreciation of plant and equipment is computed principally by using the
declining-balance method over the estimated useful lives. Most of the for-
eign subsidiaries have adopted the straight-line method for computing
depreciation, which currently accounts for approximately 29% of the con-
solidated depreciation expense.
Effective rates of depreciation for the three years ended March 31,
1998 are summarized below:
The accompanying consolidated financial statements of the Company and
its consolidated subsidiaries have been prepared in conformity with
accounting principles generally accepted in the United States of America,
modified for the accounting for stock splits (see (m) below). Significant
accounting and reporting policies are summarized below:
(a) Principles of Consolidation
The consolidated financial statements include the accounts of Ricoh.
Investments in generally 20% to 50% owned companies are accounted for
on the equity basis. All significant intercompany balances and transactions
have been eliminated in consolidation.
(b) Translation of Foreign Currency Accounts
Under the provisions of Statement of Financial Accounting Standards
(“SFAS”) No. 52, “Foreign Currency Translation,” 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 accumulated in a separate component of shareholders’ investment.
(c) Derivatives
Gains and losses on hedges of existing assets or liabilities are included in
the carrying amounts of those assets or liabilities and are ultimately
recognized in income as part of those carrying amounts. Gains and losses
related to qualifying hedges of firm commitments and anticipated transac-
tions are deferred and recognized in income, or as adjustments of carrying
amounts, when the hedged transaction occurs.
(d) Securities
Ricoh conforms to SFAS No. 115, “Accounting for Certain Investments
in Debt and Equity Securities,” which requires certain investments in
debt and equity securities to be classified as held-to-maturity, trading, or
available-for-sale securities. As of March 31, 1997 and 1998, a substantial
part of Ricoh’s investments in debt and equity securities is classified to
available-for-sale securities. Those classified as available-for-sale are
reported at fair value with unrealized gains and losses, net of related taxes,
excluded from earnings and reported in a separate component of
shareholders’ investment.
Thousands of
U.S. dollars
1998
$ 48,220
19,826
Millions of yen
Aggregate cost
Accumulated depreciation ¥ 6,365
2,617
¥ 4,679
2,189
19981997
Certain leased buildings, machinery and equipment are accounted for
as capital leases in conformity with SFAS No. 13, “Accounting for
Leases.” The aggregate cost included in plant and equipment and related
accumulated depreciation as of March 31, 1997 and 1998 were as follows:
7.9%
36.8
1997
7.7%
36.2
1996
8.0%
40.5
1998
Buildings
Machinery and equipment
The related future minimum lease payments and the present value of
the net minimum lease payments as of March 31, 1998 were ¥4,906 million
($37,167 thousand) and ¥3,784 million ($28,667 thousand), respectively.
Ordinary maintenance and repairs are charged to income 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 dif-
ferences are included in other income or expenses.