Ricoh 2010 Annual Report Download - page 28

27 ANNUAL REPORT 2010
Ricoh Is Subject to Government
Regulation That Can Limit Its Activities
or Increase Its Cost of Operations
Ricoh is subject to various governmental regulations and approval
procedures in the countries in which it operates. For example,
Ricoh may be required to obtain approvals for its business and
investment plans, be subject to export regulations and tariffs, as
well as rules and regulations relating to commerce, antitrust,
patent, consumer and business taxation, exchange control, and
environmental and recycling laws. Ricoh has established a
Corporate Social Responsibility Office to heighten awareness of the
importance of corporate social responsibility. Through this office,
Ricoh involves its employees in various activities designed to
ensure compliance with applicable regulations as part of its overall
risk management and compliance program. However, if Ricoh is
unable to comply with any of these regulations or fails to obtain the
requisite approvals, Ricoh’s activities in such countries may be
restricted. In addition, even if Ricoh is able to comply with these
regulations, compliance can result in increased costs. In either
event, Ricoh’s financial results and condition may be adversely
affected.
Ricoh Is Subject to Internal Control
Evaluations and Attestation Over
Financial Reporting under the
Sarbanes-Oxley Act of 2002 of the
United States and the Financial
Instruments and Exchange Act of Japan
The United States Securities and Exchange Commission (the
“SEC”), as required by Section 404 of the Sarbanes-Oxley Act of
2002 of the United States, adopted rules requiring every company
that files reports with the SEC to include a management report on
such company’s internal control over financial reporting in its
annual report. In addition, the company’s independent registered
public accounting firm must publicly attest to the effectiveness of
the company’s internal control over financial reporting.
Furthermore, the Financial Instruments and Exchange Act of Japan
requires Japanese companies whose shares are listed on the
Japanese stock exchanges to submit a report which evaluates
internal control over financial reporting to the commissioner of the
financial bureau of Japan. Ongoing compliance with these
requirements is complex, costly and time-consuming. If Ricoh were
to fail to maintain effective internal control over financial reporting,
Ricoh’s management were to fail to assess on a timely basis the
adequacy of such internal control, or Ricoh’s independent
registered public accounting firm were to fail to attest on a timely
basis to the effectiveness of such internal control or issue a
qualified opinion, Ricoh could be subject to regulatory sanctions or
could face adverse reactions in the financial markets due to loss of
investor confidence.
Ricoh’s Business Depends on Protecting
Its Intellectual Property Rights
Ricoh owns or licenses a number of intellectual property rights in
the field of office equipment automation and, when Ricoh believes it
is necessary or desirable, obtains additional licenses for the use of
other parties’ intellectual property rights. If Ricoh fails to protect,
maintain or obtain such rights, its performance and ability to
compete may be adversely affected. Ricoh has a program in place
under which company employees are compensated for any valuable
intellectual property rights arising out of any inventions developed
by them during the course of their employment with Ricoh. While
unlikely, management believes that there could arise instances in
the future where Ricoh may become the subject of legal actions or
proceedings where claims alleging inadequate compensation are
asserted by company employees.
Ricoh Is Dependent on Securing and
Retaining Specially Skilled Personnel
Ricoh believes that it can continue to remain competitive by
securing and retaining additional personnel who are highly skilled in
the fields of management and information technology. However, the
number of skilled personnel is limited and the competition for
attracting and retaining such personnel is intense, particularly in the
information technology industry. Securing and retaining skilled
personnel in the information technology industry is especially
important for Ricoh to compete effectively with its competitors as
expectations and market standards for office equipment become
more technologically advanced. Ricoh cannot assure that it will be
able to successfully secure and retain additional skilled personnel.
Ricoh May Be Adversely Affected by
Its Employee Benefit Obligations
With respect to its employee benefit obligations and plan assets,
Ricoh accrues the cost of such benefits based on applicable
accounting policies and funds such benefits in accordance with
governmental regulations. Currently, there is no immediate and