Ricoh 2009 Annual Report Download - page 48

47 ANNUAL REPORT 2009
Ricoh sold certain finance lease receivables in prior years through
revolving securitization transactions, which were structured as
special purpose entities (“SPE”). The value assigned to undivided
interests retained in these transactions was based on the fair value
of retained interests as of a transfer of these receivables and was
reflected in its consolidated balance sheets. Ricoh expects certain
unrecoverable amount for lease receivables and reflects such
unrecoverable amount in measuring fair value of retained interest.
Ricoh’s retained interests are subordinate to the investors’
interests. Their value is subject to credit, prepayment and interest
rate risk on the sold financial assets. The investors and SPE that
hold the lease receivables have limited recourse to Ricoh’s retained
interest in such receivables for failure of debtors to pay. Ricoh
determines the fair value of the retained interests by discounting the
future cash flows. Those cash flows are estimated based on credit
losses and other information as available and are discounted at a
rate which Ricoh believes is commensurate with the risk free rate
plus a risk premium. Servicing assets or liabilities related to
securitization transactions initiated were not recorded, because the
servicing fees adequately compensate Ricoh. The amount of lease
receivable transferred, net of retained interest, for the year ended
March 31, 2007, 2008 and 2009 was ¥19,381 million, ¥13,937
million and ¥9,143 million ($92,354 thousand), respectively.
Key economic assumptions used in measuring the fair value of
retained interests related to securitization transactions completed
during the years ended March 31, 2008 and 2009 are as follows:
As of March 31, 2009, the minimum lease payments receivable due
in each of the next five years and thereafter are as follows:
Ricoh Leasing Company, Ltd. has also extended certain other types
of loans as part of its business activity, which are primarily
residential housing loans to current or former employees and
private individuals in Japan secured by the underlying real estate
properties. Loan terms range from 15 years to 30 years with
monthly repayments. The total balance of these loans, net of
allowance for doubtful receivables, as of March 31, 2008 and 2009
was ¥54,863 million and ¥60,781 million ($613,949 thousand),
respectively. The current portion of loans receivable was ¥1,145
million and ¥1,269 million ($12,818 thousand), respectively, as of
March 31, 2008 and 2009, and was included in short-term finance
receivables, net in the accompanying consolidated balance sheets.
Loan activity for the years ended March 31, 2007, 2008 and 2009 is
as follows:
5. FINANCE RECEIVABLES
Finance receivables as of March 31, 2008 and 2009 are comprised
primarily of lease receivables and installment loans.
Ricoh’s products are leased to domestic customers primarily
through Ricoh Leasing Company, Ltd., a majority-owned domestic
subsidiary, and to overseas customers primarily through certain
overseas subsidiaries. These leases are accounted for as sales-type
leases in conformity with SFAS 13. Sales revenue from sales-type
leases is recognized at the inception of the leases.
Information pertaining to Ricoh’s lease receivables as of March 31,
2008 and 2009 is as follows:
Thousands of
Millions of Yen U.S. Dollars
2007 2008
2009 2009
Extension of new loans ¥11,883 ¥14,356
¥15,324 $154,788
Repayment of outstanding loans 11,621 12,319
9,670 97,677
2008
2009
Expected credit losses 0.70% –0.95%
1.23% –1.26%
Discount rate 2.00% –3.00%
2.00% –3.00%
Annual prepayment rate 4.01% –5.37%
4.35% –8.76%
Thousands of
Years ending March 31 Millions of Yen U.S. Dollars
2010 ¥219,536 $2,217,535
2011 180,968 1,827,960
2012 130,530 1,318,485
2013 76,480 772,525
2014 30,017 303,202
2015 and thereafter 8,359 84,434
Total ¥645,890 $6,524,141
Thousands of
Millions of Yen U.S.Dullars
2008
2009 2009
Minimum lease payments receivable ¥ 645,198
¥ 645,890 $ 6,524,141
Estimated non-guaranteed residual value 6,358
8,303 83,869
Unearned income (56,408)
(43,701) (441,424)
Allowance for doubtful receivables (9,935)
(10,394) (104,990)
Lease receivables, net 585,213
600,098 6,061,596
Less - Current portion of lease receivable, net (193,497)
(194,348) (1,963,111)
Amounts due after one year, net ¥ 391,716
¥ 405,750 $ 4,098,485