Ricoh 2000 Annual Report Download - page 35

33
Ricoh Company, Ltd. and Consolidated Subsidiaries
Ricoh distributes its products primarily through domestic (Japanese) and for-
eign sales subsidiaries. Overseas, Ricoh owns and distributes not only Ricoh brand
products but also other brands, such as Gestetner and Savin.
Ricoh manufactures its products primarily in 15 plants in Japan and eight
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, and is head-
quartered in Tokyo, Japan. The Company and significant subsidiaries (“Ricoh” as
a consolidated group) is a worldwide supplier of office automation equipment, in-
cluding copiers, facsimile machines, data processing systems, printers and related
supplies. Ricoh is also well known for its state-of-the-art electronic devices, photo-
graphic equipment and others.
Notes to Consolidated Financial Statements
2. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
(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 foreign
subsidiaries have adopted the straight-line method for computing depreciation,
which currently accounts for approximately 26% of the consolidated depreciation
expense.
Effective rates of depreciation for the three years ended March 31, 2000 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 2 (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 as part of other compre-
hensive income (loss) included in shareholders’ investment.
(c) Derivatives
Ricoh enters into foreign currency contracts and interest rate swap agreements to
manage risk exposure. Gains and losses on hedges of existing assets or liabilities
are included in the carrying amounts of those assets or liabilities and are ulti-
mately recognized in income as part of those carrying amounts. Gains and losses
related to qualifying hedges of firm commitments and anticipated transactions
are deferred and recognized in income, or as adjustments of carrying amounts,
when the hedged transaction occurs.
(d) Securities
Ricoh conforms with 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 either held-to-maturity, trading, or available-for-sale
securities. As of March 31, 1999 and 2000, a substantial part of Ricoh’s invest-
ments 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
accumulated other comprehensive income (loss).
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 in-
clude raw materials, labor and manufacturing overheads.
Thousands of
U.S. dollars
2000
$ 64,544
32,893
Millions of yen
Aggregate cost
Accumulated depreciation
¥ 6,648
3,388
¥ 6,958
3,083
2000
1999
Certain leased buildings, machinery and equipment are accounted for as
capital leases in conformity with SFAS No. 13, “Accounting for Leases.” The ag-
gregate cost included in plant and equipment and related accumulated
depreciation as of March 31, 1999 and 2000 were as follows:
7.9%
37.6
1999
8.0%
38.3
1998
7.9%
36.8
2000
Buildings
Machinery and equipment
The related future minimum lease payments and the present value of
the net minimum lease payments as of March 31, 2000 were ¥4,355 million
($42,282 thousand) and ¥3,900 million ($37,864 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 ac-
counts are relieved of the applicable amounts, and any differences are included in
other income or expenses.
(g) Goodwill
Ricoh has classified as goodwill the cost in excess of fair value of the net assets of
major companies acquired in purchase transactions. Goodwill is being amortized
on a straight-line method over the estimated periods benefited, not to exceed 20
years.
(h) Pension and Retirement Allowances Plans
Ricoh conforms with SFAS No. 87, “Employers’ Accounting for Pensions” in ac-
counting for pension and retirement allowances plans.
In the year ended March 31, 1999, Ricoh adopted SFAS No. 132, “Employers’
Disclosure about Pensions and Other Postretirement Benefits,” which revised SFAS
No. 87 for disclosures about pension and retirement allowance plans.