Ricoh 2005 Annual Report Download - page 35

In October 2004, the Company acquired all of the issued and
outstanding capital stock of Hitachi Printing Solutions, Ltd. for total
cash consideration of ¥44,085 million including direct acquisition
costs. The company made the acquisition to strengthen and expand its
printing operations. The acquired company was a non-public
manufacturer and a subsidiary of Hitachi, Ltd. and was renamed Ricoh
Printing Systems, Ltd. ( “RPS”) upon acquisition by the Company.
The Company used the purchase method of accounting to account for
the acquisition of RPS and, accordingly, the purchase price has been
allocated to the tangible and intangible net assets of RPS based on the
estimated fair value of such net assets. The amount of consideration
paid in excess of the estimated fair value of the net assets acquired of
¥19,583 million was recorded as goodwill. Assets, liabilities and
operations of RPS have been included in the accompanying
consolidated financial statements since the acquisition date.
The following table reflects the October 1, 2004 condensed balance
sheet of RPS, as adjusted to give effect to the purchase method
accounting adjustments:
To Our Shareholders
and Customers
Review of Operations
(General Information by Business Area)
Technology Corporate Social
Responsibility Environment Financial Section
34
ANNUAL REPORT 2005
3 . ACQUISITION
Thousands of
Millions of Yen U.S. dollars
Cash and cash equivalents ¥ 2,412 $ 22,542
Receivables and other assets 31,463 294,047
Property and equipment 10,404 97,233
Identifiable intangible assets 20,400 190,654
Goodwill 19,583 183,019
Liabilities ( 40,177) ( 375,486)
¥44,085 $412,009
Identifiable intangible assets of RPS primarily comprise customer
relationships of ¥13,900 million ( $129,907 thousand) , which are
estimated to have a remaining useful life of 5 to 12 years. Goodwill
arising from the acquisition of RPS has all been allocated to the office
equipment segment.
Furthermore, Ricoh acquired other immaterial entities during the year
ended March 31, 2005 for consideration of ¥1,541 million ( $14,402
thousand) , net of cash acquired.
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 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.
Finance receivables as of March 31, 2004 and 2005 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,
2004 and 2005 is as follows:
4 . FINANCE RECEIVABLES
Thousands of
Millions of Yen U.S. Dollars
2004 2005 2005
Minimum lease payments receivable ¥522,056 ¥568,911 $5,316,925
Estimated non-guaranteed residual value 2,432 3,030 28,318
Unearned income ( 47,492) (48,290) (451,308)
Allowance for doubtful receivables ( 14,404) (15,199) (142,047)
Lease receivables, net 462,592 508,452 4,751,888
Less: Current portion of lease receivable, net ( 151,616) (165,295) (1,544,813)
Amounts due after one year, net ¥310,976 ¥343,157 $3,207,075