Ricoh 2006 Annual Report Download - page 35

assets to identify interests that are freestanding derivatives or that are
hybrid financial instruments that contain an em bedded derivative. SFAS
155 is effective for the fiscal years beginning after Septem ber 15, 2006
and is required to be adopted by Ricoh in the fiscal year beginning April
1, 2007. The Com pany is currently evaluating the effect that the
adoption of SFAS 155 will have on its consolidated results of operations
and financial condition but does not expect it to have a m aterial
impact.
In March 2006, the FASB issued SFAS No. 156, “Accounting for
Servicing of Financial Assets - an am endment of FASB Statem ent No.
140”. SFAS 156 amends SFAS 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishm ents of Liabilities” to
clarify the accounting for servicing assets and servicing liabilities.
Among other provisions, the new accounting standard requires all
separately recognized servicing assets and servicing liabilities to be
initially m easured at fair value, if practicable. SFAS 156 is effective for
the fiscal years beginning after Septem ber 15, 2006 and is required to be
adopted by Ricoh in the fiscal year beginning April 1, 2007. The
Com pany is currently evaluating the effect that the adoption of SFAS
156 will have on its consolidated results of operations and financial
condition but does not expect it to have a material impact.
To Our Shareholders and
Customers
General Information
by Business Area Ricoh's Core Values Solutions Environmental Financial Section
34
ANNUAL REPORT 2006
Finance receivables as of March 31, 2005 and 2006 are com prised
primarily of lease receivables and installment loans.
Ricoh’s products are leased to domestic customers primarily through
Ricoh Leasing Com pany, Ltd., a m aj ority-owned dom estic subsidiary
and to overseas custom ers prim arily through certain overseas
subsidiaries. These leases 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.
Inform ation pertaining to Ricoh’s lease receivables as of March 31,
2005 and 2006 is as follows:
4 . FINANCE RECEIVABLES
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 com pany m ade 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 renam ed Ricoh
Printing Systems, Ltd. ( “RPS”) upon acquisition by the Com pany.
The Company used the purchase m ethod 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 am ount of consideration
paid in excess of the estimated fair value of the net assets acquired of
¥19,583 m illion was recorded as goodwill which is not tax deductible.
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:
3 . ACQUISITION
Millions of Yen
Cash and cash equivalents ¥ 2,412
Receivables and other assets 31,463
Property and equipment 10,404
Identifiable intangible assets 20,400
Goodwill 19,583
Liabilities ( 40,177)
¥44,085
Identifiable intangible assets of RPS primarily comprise customer
relationships of ¥13,900 million, 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 Solutions
segm ent. As a result of the goodwill impairm ent test, impairm ent loss
has not been recognized.