Ricoh 2009 Annual Report Download - page 47

46
ANNUAL REPORT 2009
To Our Shareholders
and Customers
Fiscal 2009
Highlights
Progress of the
16th MTP
Creating New
Customer Value
RICOH
Milestones
Sustainable Environ-
mental Management
Corporate Social
Responsibility
Financial
Section
Company, LLC by Ricoh as well as a prepayment for the remaining
49% to be acquired and certain royalties and services to be
provided by IBM to InfoPrint Solutions Company, LLC. Ricoh has
progressively acquired the remaining 49% over the next three years
since the acquisition, approximately 4% per each quarter, as
InfoPrint Solutions Company, LLC becomes a wholly owned
subsidiary. Ricoh had an approximately 80% equity in InfoPrint
Solutions Company, LLC as of March 31, 2009. Ricoh applied the
purchase method of accounting to account for the acquisition.
Final consideration for this transaction will be determined at the end
of the three-year period based upon the participation in the profits
and losses recorded by the equity partners. Therefore, the amount
of goodwill may be adjusted at the determination of final
consideration. Assets, liabilities and operations of InfoPrint
Solutions Company, LLC have been included in the accompanying
consolidated financial statements since the acquisition date.
The following table reflects the condensed balance sheet of
InfoPrint Solutions Company, LLC, as adjusted to give effect to the
purchase method accounting adjustments:
Identifiable intangible assets of InfoPrint Solutions Company, LLC
primarily included trademarks of ¥16,852 million which were
estimated to have remaining useful lives of 5 years to 7 years,
existing maintenance contracts of ¥8,289 million which were
estimated to have remaining useful life of 9 years, outsourcing
agreement of ¥5,162 million which were estimated to have remaining
useful lives of 1 year to 6 years, and other intangible assets of ¥7,788
million. Goodwill arising from the acquisition of InfoPrint Solutions
Company, LLC has been allocated to the Imaging & Solutions
segment, and deductible for tax purposes.
Furthermore, Ricoh acquired other immaterial entities during the year
ended March 31, 2008 for a consideration of ¥3,840 million, net of
cash acquired.
In January 2007, Ricoh Europe B.V., a wholly-owned subsidiary of
the Company, acquired the European operations of Danka Business
Systems PLC (“Danka’s European operations”) for total cash
consideration of ¥27,132 million including direct acquisition costs.
Ricoh made the acquisition to strengthen its sales and service
network in major countries in Europe.
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 Danka’s European operations
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
assets acquired of ¥18,658 million was recorded as goodwill which is
not tax deductible. A part of this acquisition cost was financed with
Euro Yen Zero Coupon Conversion Bonds issued in December 2006.
Assets, liabilities and operations of Danka’s European operations have
been included in the accompanying consolidated financial statements
since the acquisition date.
Identifiable intangible assets of Danka’s European operations
primarily comprised customer relationships of ¥4,700 million,
which were estimated to have a remaining useful life of 10 years to
18 years. Goodwill arising from the acquisition of Danka’s
European operations has been allocated to the Imaging & Solutions
segment.
Summarized selected financial information for the years ended
March 31, 2007 for the discontinued operations is as follows:
4. DISCONTINUED OPERATIONS
Millions of Yen
Cash and cash equivalents ¥ 3,839
Receivables and other assets 22,385
Property and equipment 1,434
Identifiable intangible assets 4,883
Goodwill
18,658
Liabilities (24,067)
Total cash consideration ¥ 27,132
Millions of Yen
2007
Net sales ¥1,487
Income from discontinued operations before gain on
disposal of discontinued operations and provision for income taxes
866
Gain on disposal of discontinued operations 8,830
Provision for income taxes 4,196
Income from discontinued operations, net of tax ¥5,500
Millions of Yen
Receivables and other assets ¥ 18,121
Property and equipment 2,214
Identifiable intangible assets 38,091
Goodwill 50,301
Liabilities (15,772)
Total cash consideration ¥ 92,955