Ricoh 2006 Annual Report Download - page 39

The investm ents in and advances to affiliates primarily relate to 20% to
50% owned companies. Included in these com panies is Coca-Cola West
Japan Co., Ltd., a 21.2% owned affiliate. The com mon stock of this
company is publicly traded. The carrying value of the investm ent in
this com pany was equal to its underlying book value and amounted to
¥36,603 m illion and ¥38,214 m illion ( $326,615 thousand) as of March
31, 2005 and 2006, respectively. The quoted m arket value of Ricoh’s
investm ent in this company was ¥46,155 m illion ( $394,487 thousand)
as of March 31, 2006.
Ricoh’s equity in the underlying net book values of the other 20% to
50% owned companies is approximately equal to their individual
carrying values of ¥12,713 m illion and ¥13,814 m illion ( $118,068
thousand) at March 31, 2005 and 2006 respectively.
Sum marized financial information for all affiliates as of March 31,
2005 and 2006 and for the years ended March 31, 2004, 2005 and 2006
is as follows:
Financial Position
Thousands of
Millions of Yen U.S. Dollars
2005 2006 2006
Assets-
Current assets ¥116,247
¥112,312 $ 959,932
Other assets 164,170 174,529 1,491,700
¥280,417 ¥286,841 $2,451,632
Liabilities and shareholders’ investm ent-
Current liabilities ¥ 37,426
¥ 29,084 $ 248,581
Other liabilities 18,512 20,335 173,803
Shareholders’ investm ent 224,479 237,422 2,029,248
¥280,417 ¥286,841 $2,451,632
To Our Shareholders and
Customers
General Information
by Business Area Ricoh's Core Values Solutions Environmental Financial Section
38
ANNUAL REPORT 2006
6 . INVESTMENTS IN AND ADVANCES TO AFFILIATES
Proceeds from the sales of available-for-sale securities were ¥45,464
million, ¥118,120 million and ¥141,620 million ( $1,210,427 thousand)
for the years ended March 31, 2004, 2005 and 2006, respectively.
The realized gain on the sales of available-for-sale securities for the year
ended March 31, 2006 was ¥1,053 m illion ( $9,000 thousand) . There
were no signifcant realized losses of available-for-sale securities for the
year ended March 31, 2006. There were no significant realized gains or
losses of available-for-sale securities for the years ended March 31, 2004
and 2005 except the contributed marketable equity securities to the
Com pany’s employee benefit trust as discussed below.
Effective October 1, 2005, UFJ holdings, Inc. ( “UFJ”) and Mitsubishi
Tokyo Financial Group, Inc. com pleted a m erger, in which the UFJ
shares of com mon stock owned by the Com pany were exchanged for
shares of com mon stock of the newly m erged entity, Mitsubishi UFJ
Financial Group, Inc. ( “MUFG”) . As a result of this merger and
comm on share exchange, the Com pany recognized a gain on securities
of ¥992 million ( $ 8,479 thousand) between the cost of UFJ shares
surrendered and the current m arket value of MUFG shares in “Other,
net” as other ( income) expenses on its consolidated statem ents of
incom e for the year ended March 31, 2006.
In March 2000, the Company contributed certain m arketable equity
securities, not including those of its subsidiaries and affiliated
companies, to its em ployee retirement benefit trust ( the “Trust”) fully
administered and controlled by an independent bank trustee, with no
cash proceeds thereon ( the “2000 Transfer”) . The 2000 Transfer of the
available-for-sale securities was accounted for as a sale in accordance
with SFAS No.125, “Accounting for Transfer and Servicing of Financial
Assets and Extinguishm ents of Liabilities” and accordingly the pension
liability was reduced by the fair m arket value of the transferred
securities. The fair value of these securities at the time of transfer was
¥20,760 m illion. The net unrealized gains on these available-for-sale
securities amounting to ¥13,095 million were initially included in
“Accum ulated other comprehensive income ( loss) ” on the consolidated
balance sheets with the expectation of being reflected in realized gains
in the statements of income upon the future sale of the transferred
securities by the trustee.
In March 2004, the Company contributed certain additional available-
for-sale equity securities, the Trust, with no cash proceeds thereon ( the
“2004 Transfer”) . The fair value and net unrealized gains on these
available-for-sale securities at the tim e of transfer were ¥3,648 m illion
and ¥2,658 m illion, respectively.
In connection with the 2004, Transfer Ricoh changed its accounting
policy with respect to the recognition of unrealized gains and losses as
realized in the statements of income on transfers of m arketable equity
securities to its employee retirem ent benefit trusts. Ricoh concluded
that it is preferable to recognize in the statem ents of income unrealized
gains or losses associated with m arketable equity securities transferred
to the Trust when Ricoh has effectively given up the economic rewards
of ownership, that is, when the assets are no longer considered
corporate assets and when the Trust has the irrevocable and unrestricted
right to realize those benefits as and when it chooses. This generally
occurs at the tim e the assets are transferred to the Trust and not upon
future sale of the assets by the trustee.
Accordingly, Ricoh recognized realized gains in the consolidated
statement of incom e on the transfer of marketable equity securities to
the Trust for fiscal 2004 of ¥2,658 m illion. In addition, Ricoh
recognized in its fiscal 2004 consolidated statement of income a
cum ulative effect of accounting change, net of tax, of ¥7,373 m illion
associated with the 2000 Transfer.