Ricoh 2004 Annual Report Download - page 34

3. ACQUISITION
In December 2002, Ricoh acquired the remaining outstanding shares of
Shanghai Ricoh Facsimile Co., Ltd. (“Shanghai Ricoh”) for ¥1,745
million. The acquisition of the remaining 45% interest in Shanghai Ricoh
was accounted for using the purchase method of accounting and resulted in
goodwill of ¥778 million.
In April 2003, the Company acquired all of the minority interests of its
existing consolidated subsidiary, Tohoku Ricoh Co., Ltd. (“Tohoku Ricoh”)
through the issuance of 2,010,533 shares of treasury stock in
exchange for all the outstanding shares of Tohoku Ricoh’s common stock
not then owned by Ricoh. The cost of acquired minority interests was
¥5,579 million ($53,644 thousand) determined based on the fair value of
the treasury shares issued. The Company has used the purchase method of
accounting to record the transactions in conformity with SFAS 141 and
accordingly, has allocated the purchase price based on estimated fair values
of acquired net assets.
(o) Shipping and Handling Costs
Shipping and handling costs, which mainly include transportation to
customers, are included in selling, general and administrative expenses on
the consolidated statements of income.
(p) Impairment or Disposal of Long-Lived Assets
In August 2001, the FASB issued SFAS No.144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”. SFAS 144 develops a single
accounting model, based on the framework established in SFAS No.121,
“Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of” for long-lived assets to be disposed of by sale, and
broadens the scope of what constitutes a business to be disposed of that
should be reported as a discontinued operation. The new standard was
adopted on April 1, 2002, and did not have a material effect on Ricoh’s
consolidated financial position or results of operations.
SFAS 144 requires that 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 group of
assets 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 group of assets. If
an asset or group of assets 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 group of assets 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.
Prior to the adoption of SFAS 144, Ricoh accounted for long-lived assets
in accordance with SFAS 121.
(q) Earnings Per Share
Basic net income per common share is calculated by dividing net income by
the weighted-average number of shares outstanding during the period. The
calculation of diluted net income per common share is similar to the
calculation of basic net income per share, except that the weighted-average
number of shares outstanding includes the additional dilution from
potential common stock equivalents such as convertible bonds.
Ricoh has no dilutive securities outstanding at March 31, 2004 and
therefore there is no difference between basic and diluted net income per
share.
(r) Non-cash Transactions
The following non-cash transactions have been excluded from the
consolidated statements of cash flows:
(s) Use of Estimates
Management of the Company has made a number of estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, including impairment losses of long-lived assets and the
disclosures of fair value of financial instruments and contingent assets and
liabilities, to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
The Company has identified four 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 on long-lived assets and goodwill, realizability of
deferred tax assets and pension accounting.
33
Millions of yen
Conversion of
convertible bonds
Capital lease obligations incurred
Retirement of treasury stock
Issuance of treasury stock in
exchange for subsidiary’s stock
Transfer of marketable equity
securities to employee retirement
benefit trust
Thousands of
U.S. dollars
2004
$ —
721
—
37,788
35,077
2004
¥ —
75
—
3,930
3,648
¥32,905
1,697
13,328
—
—
¥35,620
445
—
—
—
20032002
4. FINANCE RECEIVABLES
Finance receivables as of March 31, 2003 and 2004 are comprised primarily
of lease receivables and installment loans.
Ricoh’s products are leased to domestic customers primarily through
Ricoh Leasing Company, Ltd., a majority-owned domestic subsidiary and to
overseas customers primarily through certain overseas subsidiaries. These
leases are qualified and are accounted for as sales-type leases in conformity
with SFAS 13. Sales revenue from sales-type leases is recognized at the
inception of the leases.
Information pertaining to Ricoh’s lease receivables as of March 31,
2003 and 2004 is as follows: