Ricoh 2008 Annual Report Download - page 58

57 ANNUAL REPORT 2008
17. COMMITMENTS AND CONTINGENT LIABILITIES
fluctuations on those assets and liabilities denominated in foreign
currencies.
Interest Rate Risk Management
Ricoh enters into interest rate swap agreements to hedge against
the potential adverse impacts of changes in fair value or cash flow
fluctuations on interest of its outstanding debt.
Fair Value Hedges
Changes in the fair value of derivative instruments and the related
hedged items designated and qualifying as fair value hedges are
included in other (income) expenses on the consolidated
statements of income. There is no hedging ineffectiveness nor are
net gains or losses excluded from the assessment of hedge
effectiveness for the years ended March 31, 2006, 2007 and 2008
as the critical terms of the interest rate swap match the terms of the
hedged debt obligations.
Cash Flow Hedges
Changes in the fair value of derivative instruments designated and
qualifying as cash flow hedges are included in accumulated other
comprehensive income (loss) on the consolidated balance sheets.
These amounts are reclassified into earnings as interest on the
hedged loans is paid. There is no hedging ineffectiveness nor are
net gains or losses excluded from the assessment of hedge
effectiveness for the years ended March 31, 2006, 2007 and 2008
as the critical terms of the interest rate swap match the terms of the
hedged debt obligations. Ricoh expects that it will reclassify into
earnings through other expenses during the next 12 months
approximately ¥293 million ($2,930 thousand) of the balance of
accumulated other comprehensive income as of March 31, 2008.
Undesignated Derivative Instruments
Derivative instruments not designated as hedging instruments are
held to reduce the risk relating to the variability in exchange rates
on assets and liabilities denominated in foreign currencies.
Changes in the fair value of these instruments are included in other
(income) expenses on the consolidated statements of income.
As of March 31, 2008, Ricoh had outstanding contractual
commitments for acquisition or construction of property, plant and
equipment and other assets aggregating ¥7,071 million ($70,710
thousand).
As of March 31, 2008, Ricoh was also contingently liable for
certain guarantees including employees housing loans of ¥453
million ($4,530 thousand).
Ricoh made rental payments totaling ¥42,046 million, ¥40,722
million and ¥45,379 million ($453,790 thousand) for the years
ended March 31, 2006, 2007 and 2008, respectively, under
cancelable and non-cancelable operating lease agreements for
office space and machinery and equipment.
The minimum rental payments required under operating lease that
have lease terms in excess of one year as of March 31, 2008 are as
follows:
Thousands of
Years ending March 31 Millions of Yen U.S. Dollars
2009 ¥20,770 $207,700
2010 17,654 176,540
2011 12,452 124,520
2012 8,419 84,190
2013 7,215 72,150
2014 and thereafter 10,989 109,890
Total ¥77,499 $774,990
As of March 31, 2008, the Company and certain of its subsidiaries
were parties to litigation involving routine matters, such as patent
rights. In the opinion of management, the ultimate liability, if any,
resulting from such litigation will not materially affect the
consolidated financial position or the results of operations of
Ricoh.