Ricoh 2009 Annual Report Download - page 32

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31 ANNUAL REPORT 2009
Year ended March 31,2009
Thousand of U.S. dollars
Expected maturity date
Notional amounts Average Average Fair
(Millions) Type of swap receive rate pay rate Total 2010 2011 2012 2013 2014 Thereafter Value
¥ 267,800
Receive floating/Pay fixed
1.13% 1.23%
$2,705,051
$151,515 $545,455 $528,283 $252,525 $585,859 $641,414 $ 737
18,000
Receive fixed/Pay floating
2.04 1.09
181,818
101,010 80,808 - - - - 3,960
US$ -
Receive floating/Pay fixed
- % - %
$ -
$ - $ - $ - $ - $ - $ - $ -
1
Receive fixed/Pay fixed
6.00 6.00
990
990 - - - - - (394)
Key Financial Ratios
We have provided the following ratios to facilitate analysis of the
Company’s operations for fiscal 2007, 2008, and 2009.
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 the fiscal year 2009 and there are no material
quantitative changes in market risk exposure at March 31, 2009
when compared to March 31, 2008. 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 above 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. Notional amounts are generally used to calculate the
contractual payments to be exchanged under the contract.
Fiscal 2007 Fiscal 2008
Fiscal 2009
Return on sales 5.4% 4.8%
0.3%
Return on shareholders’
investment 11.0% 9.9%
0.6%
Current ratio 1.63 1.57
1.57
Debt-to-equity ratio
(interest-bearing debt to
shareholders’ investment) 0.39 0.36
0.80
Interest coverage 24.5 38.9
13.6