Ricoh 2009 Annual Report Download - page 46

45 ANNUAL REPORT 2009
In October 2008, Ricoh acquired IKON Office Solutions, Inc. ("IKON")
through the Company's wholly owned U.S. distribution subsidiary,
Ricoh Americas Corporation ("RAC") for total cash consideration of
¥170,310 million ($1,720,303 thousand), including transaction costs.
This acquisition was financed with bank loans. IKON supplies and
services a wide range of office equipment, such as MFPs, fax
machines and printers, in the North America and the Western
European markets. With this acquisition, Ricoh aims to strengthen
and broaden its business opportunities and infrastructure in the
North America and Europe by capitalizing on IKON’s broad sales and
service network and gaining access to IKON’s customer relationships,
which includes large private corporations as well as government and
public sector entities/organizations.
Ricoh applied the purchase method of accounting to account for the
acquisition and, accordingly, the purchase price has been allocated to
the tangible and intangible net assets of IKON based on the estimated
fair value of such net assets. The amount of consideration paid in
excess of the estimated fair value of the net identifiable assets
acquired of ¥143,278 million ($1,447,253 thousand) was recorded as
goodwill that is not tax deductible. Ricoh reflected certain preliminary
estimates with respect to the value of the underlying net assets of
IKON in determining amounts of the goodwill. Therefore, the amount
of intangible assets and goodwill could possibly be adjusted upon the
completion of the purchase price allocation. Assets, liabilities and
operations of IKON has been included in the accompanying
consolidated financial statements since the acquisition date.
In connection with the acquisition of IKON, Ricoh recorded certain
liabilities in accordance with EITF 95-3 “Recognition of Liabilities in
Connection with a Purchase Business Combination.” These
liabilities included those for workforce reductions and facilities
consolidation, intended to align the company’s capacity and
infrastructure, and promote synergies within the business to
provide more effective services to customers. The liabilities include
mainly accrual for severance of ¥2,029 million ($20,495 thousand),
and property exit cost ¥1,008 million ($10,182 thousand)
associated with the acquisition of IKON.
The following table reflects the October 31, 2008 condensed
balance sheet of IKON, as adjusted to give effect to the purchase
method accounting adjustments:
Identifiable intangible assets of IKON included a trademark of
¥1,968 million ($19,879 thousand) which was estimated to have
remaining useful life of 3 years, customer relationships of ¥53,136
million ($536,727 thousand) which were estimated to have
remaining useful life of 10 years to 20 years, and other intangible
assets of ¥462 million ($4,667 thousand). Goodwill arising from
the acquisition of IKON has been allocated to the Imaging &
Solutions segment. The primary items that generated the goodwill
are the value of the synergies between IKON and Ricoh and the
acquired assembled workforce, neither of which qualify as an
(amortizable) intangible asset.
Supplemental unaudited pro forma information, as if the IKON
acquisition were consummated at the beginning of fiscal years
2008 and 2009, is as follows:
The supplemental unaudited pro forma information is based on
estimates and assumptions, which Ricoh believes are reasonable; it
is not necessarily indicative of the consolidated financial position or
results for future periods or the results that actually would have
been realized had IKON has been a combined company as of the
beginning of the periods presented. The unaudited pro forma
results for all periods presented include amortization charges for
acquired intangible assets, eliminations of intercompany
transactions, adjustments to interest expenses and related tax
effects.
Furthermore, Ricoh acquired other immaterial entities during the
year ended March 31, 2009 for a consideration of ¥4,777 million
($48,253 thousand), net of cash acquired.
In June 2007, Ricoh and International Business Machines
Corporation (“IBM”) completed formation of a joint venture
company (now known as InfoPrint Solutions Company, LLC) which
was spun-out from IBM’s Printing Systems Division to provide
output solutions for production printing area. InfoPrint Solutions
Company, LLC has benefited from access to IBM's powerful
worldwide distribution and sales network, as well as extensive
printer development capabilities. The consideration was paid in a
form of cash for the initial 51% acquisition of InfoPrint Solutions
3. ACQUISITION
in the prescribed format on a prospective basis upon adoption. The
principal impact from FSP FAS 132(R)-1 will be to require Ricoh to
expand disclosures regarding benefit plan assets
(y) Reclassifications
Certain reclassifications have been made to the prior years’ financial
statements to conform with the current year’s presentation.
Millions of Yen
2008
2009
Net sales 2,640,126
2,301,087
Net income 112,218
3,326
Yen
2008
2009
Earnings per share:
Basic 153.93
4.59
Diluted 149.84
4.44
Millions of Yen
Thousands of
U.S. Dollars
Receivables and other assets ¥ 138,532 $ 1,399,313
Property and equipment 18,798 189,879
Identifiable intangible assets 55,566 561,273
Goodwill 143,278 1,447,253
Liabilities (185,864) (1,877,415)
Total cash consideration ¥ 170,310 $ 1,720,303