Ricoh 2002 Annual Report Download - page 38

35
of their dom icile.
The accom panying financial statements are presented on a consolidated ba-
sis and reflect certain adjustm ents, not recorded in the Ricoh’s books, to present
them in conform ity with accounting principles generally accepted in the United
States of Am erica, m odified for the accounting for stock splits ( see Note 2( o) ) .
The principal accounting adjustm ents relate to bonds with detachable stock pur-
chase warrants, im pairment of long-lived assets and for long-lived assets to be
disposed of, accrued pension and severance costs and certain other accrued ex-
penses, sales-type leases, derivatives and providing for the income tax effect of
such adjustments.
3 . BASIS OF PRESENTING FINANCIAL STATEMENTS
The accounts of the Com pany and its dom estic subsidiaries are m aintained in
yen. The accom panying consolidated financial statements as of March 31, 2001
and 2002 and for the years ended March 31, 2000, 2001 and 2002 have been pre-
sented in yen, and for the convenience of the reader the consolidated financial
statem ents as of March 31, 2002 and for the year then ended have also been pre-
sented in U.S. dollars by arithm etically translating all yen amounts by using the
exchange rate of ¥133 to US $1 in effect at March 31, 2002.
The books of the Com pany and its domestic subsidiaries are m aintained in
conformity with Japanese accounting principles and accounting practices. For-
eign subsidiaries m aintain their books in conform ity with those of the countries
Millions of yen
Conversion of
convertible bonds
Capital lease obligations
incurred
Transfer of securities
to pension fund
Assets and liabilities of
Lanier Worldwide, Inc., in 2001:
Fair value of assets acquired
Liabilities assum ed
Thousands of
U.S. dollars
2 0 0 2
$267,820
3 ,3 4 6
—
—
—
2 0 0 2
¥35,620
445
—
—
—
¥ 1,088
289
—
134,586
104,623
¥ 4,676
1,426
20,760
—
—
20012000
( q) Use of Estimates
Management of the Company has made a num ber of estim ates and assum ptions
that affect the reported am ounts of assets, liabilities, revenues and expenses, in-
cluding impairm ent losses of long-lived assets and the disclosures of fair value of
financial instruments and contingent assets and liabilities, to prepare these fi-
nancial statements in conform ity with generally accepted accounting principles.
Actual results could differ from those estimates.
The Company has identified four areas where it believes assumptions and es-
timates are particularly critical to the financial statements. These are the determ i-
nation of the allowance for doubtful receivables, impairm ent on long-lived assets
and goodwill, realizability of deferred incom e tax assets and pension accounting.
( r) New Accounting Standards
In June 2001, the Financial Accounting Standards Board ( “FASB”) issued SFAS
No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other In-
tangible Assets.” SFAS No. 141 requires the use of only the purchase method of ac-
counting for business com binations and prohibits the use of the pooling of
interests m ethod. SFAS No. 141 also refines the definition of intangible assets ac-
quired in a purchase business com bination. As a result, the purchase price alloca-
tion of future business com binations m ay be different from the allocation that
would have resulted under the old rules. Business combinations m ust be account-
ed for using SFAS No. 141 beginning on July 1, 2001.
SFAS No. 142 elim inates the am ortization of goodwill, requires annual im -
pairm ent testing of goodwill and introduces the concept of indefinite life intangi-
ble assets. It will be adopted on April 1, 2002.
These new requirem ents will im pact future period net income by an am ount
equal to the discontinued goodwill am ortization offset by goodwill impairm ent
charges, if any, and adjusted for any differences between the old and new rules for
defining intangible assets on future business com binations. A transitional impair-
ment test of goodwill is required as of April 1, 2002, the date of adoption. Ricoh is
currently assessing the im pact the new impairm ent testing requirem ents may
have on its consolidated financial position and results of operations.
In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retire-
ment Obligations.” This statem ent addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The new standard will be adopted on April 1,
2003, and is not expected to have a material effect on Ricoh’s consolidated finan-
cial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, “Accounting for the Im pair-
ment or Disposal of Long-Lived Assets.” SFAS No. 144 addresses significant issues
relating to the implem entation of SFAS No. 121, and develops a single accounting
model, based on the fram ework established in SFAS No. 121 for long-lived assets
to be disposed of by sale, whether such assets are or are not deem ed to be a busi-
ness. SFAS No. 144 also m odifies the accounting and disclosure rules for discon-
tinued operations. The new standard will be adopted on April 1, 2002, and is not
expected to have a m aterial effect on Ricoh’s consolidated financial position or
results of operations.
4 . ACQUISITION
In January 2001, Ricoh completed a take-over bid ( “TOB”) for Lanier Worldwide,
Inc. ( “Lanier”) . As a result of this acquisition, Lanier becam e a wholly-owned
subsidiary that distributes Lanier brand nam e office equipment products in the
global m arketplace.
The acquisition was accounted for as a purchase transaction. The excess of
purchase price over the estim ated fair value of the net assets acquired is being
amortized over 20 years. As of April 1, 2002, Ricoh adopted new authoritative ac-
counting guidance relating to both the initial recording and subsequent impair-
ment testing of goodwill and other intangible assets, and remaining goodwill is
no longer am ortized ( see Note 2( r) ) .
The post-acquisition period for the two m onths ended March 31, 2001, was
consolidated in the accompanying financial statements. The following unaudited
pro forma inform ation presents the consolidated results of operations for the
years ended March 31, 2000 and 2001, as if the acquisition had occurred as of the
beginning of each year presented: