Ricoh 2010 Annual Report Download - page 29

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ANNUAL REPORT 2010
To Our Shareholders
and Customers
Corporate Social
Responsibility
Financial
Section
Fiscal 2010 Highlights
and Progress of MTP
RICOH NOW
significant funding requirement; however, if returns from
investment assets continue to decrease and/or turn to be negative
due to market conditions, such as the fluctuations in the stock or
bond markets, additional funding and accruals may be required.
Such additional funding and accruals may adversely affect Ricoh’s
financial position and results of operations.
Ricoh’s Operations Are Subject to
Environmental Laws and Regulations
Ricoh’s operations are subject to many environmental laws and
regulations governing, among other things, air emissions,
wastewater discharges, the use and handling of hazardous
substances, waste disposal, product recycling, and soil and
ground-water contamination. Ricoh faces risks of environmental
liability in our current and historical manufacturing activities. Costs
associated with future additional environmental compliance or
remediation obligations could adversely affect Ricoh’s business,
operating results, and financial condition.
Risks Associated with Ricoh’s Equipment
Financing Business May Adversely Affect
Ricoh’s Financial Condition
Ricoh provides financing to some of its customers in connection
with its equipment sales and leases. Ricoh evaluates the
creditworthiness and the amount of credit extended to a customer
prior to the financing arrangement and during the financing term on
a regular basis. Depending on such evaluations, Ricoh makes
adjustments to such extensions of credit as it deems necessary to
minimize any potential risks of concentrating credit risk or non-
payment of credit. Despite the application of these monitoring
procedures, no assurances can be made that Ricoh will be able to
fully collect on such extensions of credit due to unforeseeable
defaults by its customers.
In addition, these financing arrangements that Ricoh enters into
with its customers result in long-term receivables bearing a fixed
rate of interest. However, Ricoh finances these financing
arrangements primarily with short-term borrowings subject to a
variable interest rate. Although Ricoh engages in hedging activities,
Ricoh is not able to fully hedge this interest rate mismatch.
If Ricoh is unable to successfully manage these risks associated
with its equipment financing business, Ricoh’s financial results and
condition may be adversely affected.
Ricoh May Be Subject to Product
Liability Claims that Could Significantly
Affect Its Financial Condition
Ricoh may be held responsible for any defects that occur with
respect to its products and services. Based on the defect, Ricoh
may be liable for significant damages, which may adversely affect
its financial results and condition. Furthermore, as Ricoh
increasingly provides products and services utilizing sophisticated
and complex technologies, such defects may occur more
frequently. Such potential increase in defects, which could result in
an increase in Ricoh’s liability, may adversely affect its financial
results and condition.
In addition, negative publicity concerning these defects could make
it more difficult for Ricoh to attract and maintain customers to
purchase Ricoh products and services. As a result, Ricoh’s financial
results and condition may be adversely affected.
Ricoh’s Performance Can Be Affected
by Alliance with, and Strategic
Investments in, Other Entities
Ricoh engages in alliances with other entities to create various
products and services to fulfill customer demands. Ricoh believes
that an alliance is an effective method for timely development of
new technology and products using management resources of both
parties. However, if Ricoh’s interest differs from other parties’
interests due to financial or other reasons, Ricoh may be unable to
maintain the alliance. Ricoh also makes strategic investments to
acquire interests in companies that Ricoh believes would support
existing businesses and/or lead to new businesses. Such strategic
investments may not necessarily lead to the expected outcome or
performance and may result in increased time and expenses being
incurred due to the integration of businesses, technologies,
products and/or personnel necessitated by such investments.
Accordingly, these types of management decisions may have a
significant impact on the future performance of Ricoh. Failure to
maintain an on-going alliance, establish a necessary alliance or
make a strategic investment to acquire an interest in a company
may adversely affect Ricoh’s future financial position and results of
operations.