Ricoh 2008 Annual Report Download - page 28

Year ended March 31,2008
Thousand of U.S. Dollars
Expected maturity date
Notional amounts Average Average 2014 and Fair
(Millions) Type of swap receive rate pay rate Total 2009 2010 2011 2012 2013 thereafter Value
¥130,000 Receive floating/Pay fixed 1.04% 0.96% $1,300,000 $450,000 $150,000 $540,000 $160,000 $ - $ - $(3,680)
18,000 Receive fixed/Pay floating 2.04 1.08 180,000 - 100,000 80,000 - - - 3,920
US$ 190 Receive floating/Pay fixed 3.00% 4.64% $190,360 $ - $190,360 $ - $ - $ - $ - $(3,800)
4 Receive fixed/Pay fixed 6.00 5.92 3,660 3,660 - - - - - (2,380)
Key Financial Ratios
We have provided the following ratios to facilitate analysis of the
Company’s operations for fiscal years 2006, 2007, and 2008.
Market Risk
MARKET RISK EXPOSURE
Ricoh is exposed to market risks primarily from changes in foreign
currency exchange rates and interest rates, which affect
outstanding debt and certain assets and liabilities denominated in
foreign currencies. To a lesser extent, Ricoh is also exposed to
equity price risk. In order to manage these risks that arise in the
normal course of business, Ricoh enters into various hedging
transactions pursuant to its policies and procedures covering such
areas as counterparty exposure and hedging practices. Ricoh does
not hold or issue derivative financial instruments for trading
purposes or to generate income.
Ricoh regularly assesses these market risks based on the policies
and procedures established to protect against adverse effects of
these risks and other potential exposures, primarily by reference to
the market value of the financial instruments. As a result of the
latest assessment, Ricoh does not anticipate any material losses in
these areas for fiscal year 2008, and there are no material
quantitative changes in market risk exposure at March 31, 2008
when compared to March 31, 2007. In the normal course of
business, Ricoh also faces risks that are either non-financial or
nonquantifiable. Such risks principally include credit risk and legal
risk, and are not represented in the following tables.
FOREIGN CURRENCY RISK
In the ordinary course of business, Ricoh uses foreign exchange
forward contracts to manage the effects of foreign currency
exchange risk on monetary assets and liabilities denominated in
foreign currencies. The contracts with respect to the operating
activities generally have maturities of less than six months, while
the contracts with respect to the financing activities have the same
maturities as the underlying assets and liabilities.
The table below provides information about Ricoh’s material
derivative financial instruments that are sensitive to foreign
currency exchange rates. The table below relating to foreign
exchange forward contracts presents the notional amounts,
weighted average exchange rates and estimated fair value. These
notional amounts generally are used to calculate the contractual
payments to be exchanged under the contracts.
INTEREST RATE RISK
In the ordinary course of business, Ricoh enters into interest rate
swap agreements to reduce interest rate risk and to modify the
interest rate characteristics of its outstanding debt. These
agreements primarily involve the exchange of fixed and floating rate
interest payments over the life of the agreement without the
exchange of the underlying principal amounts.
The table below provides information about Ricoh’s major
derivative and other financial instruments that are sensitive to
changes in interest rates, including interest rate swaps and debt
obligations. For debt obligations, the table presents principal cash
flows by expected maturity date, related weighted average interest
rates and estimated fair value. For interest rate swaps, the table
presents notional amounts by expected maturity date, weighted
average interest rates and estimated fair value. Notional amounts
are generally used to calculate the contractual payments to be
exchanged under the contract.
27 ANNUAL REPORT 2008
2006 2007 2008
Return on sales 5.1% 5.4% 4.8%
Return on shareholders’
investment 10.6% 11.0% 9.9%
Current ratio 1.53 1.63 1.57
Debt-to-equity ratio
(interest-bearing debt to
shareholders’ investment) 0.40 0.39 0.36
Interest coverage 28.9 24.5 38.9
During fiscal year 2007, a subsidiary of the Company sold its content
distribution business. As a result of such sale, the operating results of such
business were reclassified as a discontinued operation. Accordingly, sales
derived from such business were excluded from the above consolidated
financial data for all periods in accordance with SFAS No. 144, “Accounting
for the Impairment or Disposal of Long-Lived Assets.”