Ricoh 2002 Annual Report Download - page 51

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48
1 6 . COMMITMENTS AND CONTINGENT LIABILITIES
As of March 31, 2002, Ricoh had outstanding contractual comm itments for ac-
quisition or construction of plant, equipment and other assets aggregating ¥706
million ( $5,308 thousand) .
Ricoh was contingently liable for discounted trade notes receivable on a full
recourse basis with banks of ¥98 m illion ( $737 thousand) as of March 31, 2002.
As of March 31, 2002, Ricoh was also contingently liable as guarantor for em -
ployees’ housing loans of ¥640 m illion ( $4,812 thousand) .
Ricoh m ade rental payments totaling ¥43,797 million, ¥39,956 million and
¥46,426 m illion ( $349,068 thousand) for the years ended March 31, 2000, 2001
and 2002, respectively, under operating lease agreements for office space and ma-
chinery and equipment, which are prim arily cancelable and renewable.
As of March 31, 2002, the Com pany and certain of its subsidiaries were par-
ties to litigation involving routine m atters, such as patent rights. In the opinion
of m anagement, the ultim ate liability, if any, resulting from such litigation will
not m aterially affect the consolidated financial position or the results of opera-
tions of Ricoh.
1 7 . DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
( a) Cash and cash equivalents, Time deposits, Trade r eceivables,
Short-term borrowings, Current maturities of long-ter m indebted-
ness, Trade payables and Accr ued expenses
The carrying am ounts approximate fair values because of the short m aturities of
these instruments.
( b) Marketable securities and Investment securities
The fair value of the m arketable securities and investm ent securities is principally
based on quoted market price.
( c) Long-term indebtedness
The fair value of each of the long-term indebtedness instruments is based on the
quoted price in the most active market or the present value of future cash flows
associated with each instrument discounted using the current borrowing rate for
sim ilar instruments of com parable m aturity.
( d) Interest r ate swap agr eements
The fair value of interest rate swap agreements is estim ated by obtaining quotes
from brokers.
( e) Foreign currency contracts and Foreign currency options
The fair value of foreign currency contracts and foreign currency options used for
hedging purposes is estimated by obtaining quotes from brokers.
The estim ated fair value of the financial instruments as of March 31, 2001
and 2002 is sum marized as follows:
Millions of yen
Marketable securities and Investm ent securities
Long-term indebtedness
Interest rate swap agreem ents, net
Foreign currency contracts, net
Foreign currency options, net
2002
Estim ated
fair value
$ 5 9 7 ,6 3 2
( 2 ,5 3 8 ,8 7 2 )
3 0 ,6 8 4
( 6 2 ,4 3 6 )
( 2 ,3 6 1 )
Carrying
am ount
$ 5 9 7 ,6 3 2
( 2 ,5 0 3 ,7 2 2 )
3 0 ,6 8 4
( 6 2 ,4 3 6 )
( 2 ,3 6 1 )
Estim ated
fair value
¥ 7 9 ,4 8 5
( 3 3 7 ,6 7 0 )
4 ,0 8 1
( 8 ,3 0 4 )
( 3 1 4 )
Carrying
am ount
¥ 7 9 ,4 8 5
(332,995)
4,081
( 8 ,3 0 4 )
( 3 1 4 )
Estim ated
fair value
¥ 111,289
(252,964)
4,480
(3,068)
(292)
Carrying
am ount
¥ 111,289
(217,743)
189
(386)
—
2001
2002
Thousands of
U.S. dollars
Limitations
Fair value estimates are m ade at a specific point in time, based on relevant mar-
ket information and inform ation about the financial instrum ent. These estimates
are subj ective in nature and involve uncertainties and m atters of significant judg-
ment and therefore cannot be determ ined with precision. Changes in assum p-
tions could significantly affect the estim ates.
pects that it will reclassify into earnings through other ( income) expenses during
the next 12 months approximately ¥18 m illion ( $135 thousand) of the balance of
accum ulated other com prehensive loss as of March 31, 2002.
Derivative instruments not designated as hedging instrum ents are held to re-
duce the risk relating to the variability in exchange rates on assets and liabilities
denom inated in foreign currencies. Changes in the fair value of these instrum ents
are included in other ( income) expenses on the consolidated statements of
income.
All derivative instruments are exposed to credit risk arising from the inability
of counterparties to meet the term s of the derivative contracts. However, Ricoh
does not expect any counterparties to fail to meet their obligations because these
counterparties are financial institutions with high credit ratings. Ricoh utilizes
num erous counterparties to minimize the concentration of credit risk.