Ricoh 2001 Annual Report Download - page 35

3 3
Ricoh Company, Ltd. and Consolidated Subsidiaries
Ricoh distributes its products primarily through dom estic ( Japanese) and for-
eign sales subsidiaries. Overseas, Ricoh owns and distributes not only Ricoh brand
products but also other brands, such as Gestetner, Lanier and Savin.
Ricoh m anufactures its products prim arily in 15 plants in Japan and seven
plants overseas, which are located in the United States, United Kingdom , France,
and China.
1 . NATURE OF OPERATIONS
Ricoh Company, Ltd. ( the “Com pany”) , 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 autom ation equipment, in -
cluding copiers, facsim ile m achines, 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.
N o t e s t o C o n s o lid a t e d F in a n c ia l S t a t e m e n t s
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 approxim ately 28% of the consolidated depreciation
expense.
Effective rates of depreciation for the three years ended March 31, 2001 are
summarized below:
The accom panying consolidated financial statements of the Com pany and its
consolidated subsidiaries have been prepared in conformity with accounting
principles generally accepted in the United States of America, m odified 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 statem ents include the accounts of Ricoh. Investm ents
in 20% to 50% owned companies are accounted for on the equity basis. All signifi-
cant intercompany balances and transactions have been elim inated in consolida-
tion.
( 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 accum ulated as part of other compre-
hensive incom e ( loss) included in shareholders’ investment.
( c) Derivatives
Ricoh enters into foreign currency contracts and interest rate swap agreem ents to
manage risk exposure. Gains and losses on hedges of existing assets or liabilities
are included in the carrying am ounts of those assets or liabilities and are ulti-
mately recognized in income as part of those carrying am ounts. Gains and losses
related to qualifying hedges of firm comm itm ents and anticipated transactions
are deferred and recognized in incom e, or as adjustments of carrying amounts,
when the hedged transaction occurs.
( d) Securities
Ricoh conform s with SFAS No.115, “Accounting for Certain Investm ents in Debt
and Equity Securities,” which requires certain investm ents in debt and equity
securities to be classified as either held-to-m aturity, trading, or available-for-sale
securities. As of March 31, 2000 and 2001, 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
accum ulated 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) Inventor ies
Inventories are stated at the lower of average cost or m arket. Inventory costs in-
clude raw materials, labor and m anufacturing overheads.
Thousands of
U.S. dollars
2 0 0 1
$5 0 ,8 9 7
2 7 ,3 6 5
Millions of yen
Aggregate cost
Accum ulated depreciation
¥ 6,4 1 3
3 ,4 4 8
¥6,648
3,388
2 0 0 1
2000
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, 2000 and 2001 were as follows:
8 .0 %
3 6 .6
2000
7.9%
37.6
1999
8.0%
38.3
2 0 0 1
Buildings
Machinery and equipment
The related future m inim um lease paym ents and the present value of
the net minimum lease payments as of March 31, 2001 were ¥3,693 million
( $29,310 thousand) and ¥3,317 million ( $26,325 thousand) , respectively.
Ordinary m aintenance and repairs are charged to income as incurred. Major
replacements and im provem ents are capitalized. When properties are retired or
otherwise disposed of, the property and related accum ulated depreciation ac-
counts are relieved of the applicable am ounts, 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
maj or 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 conform s with SFAS No. 87, “Em ployers’ Accounting for Pensions,” in ac-
counting for pension and retirem ent allowances plans.