FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of December 2006
Commission File Number 2 - 68279
RICOH COMPANY, LTD.
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(Translation of Registrant's name into English)
13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, Japan
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.)
Form 20-F X Form 40-F __
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): __ )
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): __ )
(Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.)
Yes __ No X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-__ )
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Ricoh Company, Ltd.
------------------------------
(Registrant)
By: /S/ Zenji Miura
------------------------------
Zenji Miura
Director, Chief Financial Officer
Corporate Executive Vice President
Dedember 8, 2006
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RICOH COMPANY, LTD.
Interim Consolidated Financial Statements
For the six months ended September 30, 2006
This is an English translation of the Interim Securities Report (Hanki
Hokokusho) for the six months ended September 30, 2006 pursuant to the
Securities and Exchange Law of Japan.
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30, 2005, 2006 and March 31, 2006
Millions of Yen
-------------------------------------
September 30, September 30, March 31,
ASSETS 2005 2006 2006
--------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 148,010 203,876 187,055
Time deposits 572 1,512 1,470
Marketable securities 145 171 162
Trade receivables-
Notes 71,440 76,029 75,678
Accounts 386,758 390,985 391,972
Less- Allowance for doubtful receivables (16,887) (17,036) (16,031)
Current maturities of long-term finance receivables, net 173,501 192,741 178,882
Inventories-
Finished goods 107,831 112,440 104,218
Work in process and raw materials 59,937 72,301 65,027
Deferred income taxes and other 55,439 59,706 55,110
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Total current assets 986,746 1,092,725 1,043,543
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Property, Plant and Equipment, at cost:
Land 47,371 46,744 46,721
Buildings 210,133 221,988 217,302
Machinery and equipment 627,491 612,801 622,038
Construction in progress 13,642 10,889 11,541
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898,637 892,422 897,602
Less- Accumulated depreciation (641,780) (622,167) (629,359)
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256,857 270,255 268,243
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Investments and Other Assets:
Long-term finance receivables, net 405,788 424,184 415,435
Investment securities 32,315 32,107 36,419
Investments in and advances to affiliates 49,537 54,623 52,028
Goodwill 49,970 51,888 51,934
Other intangible assets 81,766 75,536 79,175
Lease deposits and other 85,608 96,445 94,406
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704,984 734,783 729,397
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1,948,587 2,097,763 2,041,183
==========================================================================================================================
1
Millions of Yen
-------------------------------------
September 30, September 30, March 31,
LIABILITIES AND SHAREHOLDERS' INVESTMENT 2005 2006 2006
--------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Short-term borrowings 61,769 89,404 82,520
Current maturities of long-term indebtedness 85,541 121,607 103,131
Trade payables-
Notes 31,438 25,311 25,591
Accounts 293,067 294,705 313,561
Accrued income taxes 30,852 36,692 40,936
Accrued expenses and other 124,256 134,111 118,289
--------------------------------------------------------------------------------------------------------------------------
Total current liabilities 626,923 701,830 684,028
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Long-term Liabilities:
Long-term indebtedness 224,444 182,713 195,626
Accrued pension and severance costs 92,458 96,637 97,020
Deferred income taxes 47,327 52,890 51,374
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364,229 332,240 344,020
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Minority Interests 51,761 55,281 52,890
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Commitments and Contingent Liabilities (Note 6)
Shareholders' Investment:
Common stock;
Authorized -1,500,000,000 shares as of September 30, 2005, September 30,
2006 and March 31, 2006
Issued - 744,912,078 shares as of September 30, 2005, September 30, 2006
and March 31, 2006 135,364 135,364 135,364
Additional paid-in capital 186,450 186,451 186,450
Retained earnings 620,034 708,675 665,394
Accumulated other comprehensive income (loss) (15,521) 9,331 4,099
Treasury stock at cost; 10,430,377 shares, 15,309,383 shares and 15,359,804
shares as of September 30, 2005, September 30, 2006 and March 31, 2006,
respectively (20,653) (31,409) (31,062)
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Total shareholders' investment 905,674 1,008,412 960,245
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1,948,587 2,097,763 2,041,183
==========================================================================================================================
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
2
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Half Years Ended September 30, 2005, 2006 and Year Ended March 31, 2006
Millions of Yen
------------------------------------------
Half year ended Half year ended Year ended
September 30, September 30, March 31,
2005 2006 2006
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Net Sales:
Products 530,870 553,208 1,108,746
Post sales and rentals 336,379 378,629 693,138
Other revenue 52,620 55,085 107,354
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Total 919,869 986,922 1,909,238
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Cost of Sales:
Products 354,406 369,122 738,962
Post sales and rentals 139,601 166,355 293,559
Other revenue 40,136 43,529 81,717
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Total 534,143 579,006 1,114,238
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Gross profit 385,726 407,916 795,000
Selling, General and Administrative Expenses 320,714 334,753 646,416
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Operating income 65,012 73,163 148,584
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Other (Income) Expenses:
Interest and dividend income 1,384 1,981 2,896
Interest expense (2,196) (3,238) (5,244)
Foreign currency exchange gain (loss), net 2,503 (782) 3,748
Other, net 806 3,144 2,782
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Total 2,497 1,105 4,182
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Income from Continuing Operations before Income Taxes, Minority Interests
and Equity in Earnings of Affiliates 67,509 74,268 152,766
Provision for Income Taxes:
Current 25,890 28,635 60,857
Deferred (1,878) (2,755) (4,692)
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Total 24,012 25,880 56,165
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Minority Interests 2,690 2,881 4,185
Equity in Earnings of Affiliates 935 1,038 2,606
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Income from continuing operations 41,742 46,545 95,022
Income from discontinued operations, net of tax 1,125 5,500 2,035
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Net Income 42,867 52,045 97,057
===================================================================================================================
Yen
-----------------------------------
Per Share of Common Stock:
Income from continuing operations 56.87 63.81 129.56
Income from discontinued operations 1.53 7.54 2.77
Net income 58.40 71.35 132.33
Weighted average common shares outstanding
(Thousand of shares) 734,020 729,483 733,434
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Cash dividends paid per share 10.00 12.00 22.00
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Per American Depositary Share, each representing 5 shares of common stock:
Income from continuing operations 284.35 319.05 647.80
Income from discontinued operations 7.65 37.70 13.85
Net income 292.00 356.75 661.65
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Cash dividends paid per share 50.00 60.00 110.00
===================================================================================================================
The accompanying notes to consolidated financial statements are an integral
part of these statements.
3
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the Half Years Ended September 30, 2005, 2006 and Year Ended March 31, 2006
Half year ended September 30, 2005 (Millions of Yen)
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Accumulated
Additional other Total
Common paid-in Retained comprehensive Treasury shareholders'
stock capital earnings income (loss) stock investments
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Beginning balance 135,364 186,551 584,515 (21,963) (21,469) 862,998
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Loss on disposal of treasury stock (101) (101)
Dividends declared and approved (7,348) (7,348)
Comprehensive income
Net income 42,867 42,867
Net unrealized holding gains on available-for-sale
securities 1,832 1,832
Pension liability adjustments 439 439
Net unrealized gains on derivative instruments 66 66
Cumulative translation adjustments 4,105 4,105
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Total comprehensive income 49,309
Purchase of treasury stock, net 816 816
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Ending balance 135,364 186,450 620,034 (15,521) (20,653) 905,674
======================================================================================================================
Half year ended September 30, 2006 (Millions of Yen)
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Accumulated
Additional other Total
Common paid-in Retained comprehensive Treasury shareholders'
stock capital earnings income stock investments
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Beginning balance 135,364 186,450 665,394 4,099 (31,062) 960,245
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Gain on disposal of treasury stock 1 1
Dividends declared and approved (8,764) (8,764)
Comprehensive income
Net income 52,045 52,045
Net unrealized holding losses on available-for-sale
securities (2,485) (2,485)
Pension liability adjustments 830 830
Net unrealized losses on derivative instruments (123) (123)
Cumulative translation adjustments 7,010 7,010
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Total comprehensive income 57,277
Purchase of treasury stock, net (347) (347)
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Ending balance 135,364 186,451 708,675 9,331 (31,409) 1,008,412
=======================================================================================================================
4
Year ended March 31, 2006 (Millions of Yen)
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Accumulated
Additional other Total
Common paid-in Retained comprehensive Treasury shareholders'
stock capital earnings income (loss) stock investments
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Beginning balance 135,364 186,551 584,515 (21,963) (21,469) 862,998
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Loss on disposal of treasury stock (101) (101)
Dividends declared and approved (16,178) (16,178)
Comprehensive income
Net income 97,057 97,057
Net unrealized holding gains on available-for-sale
securities 4,137 4,137
Pension liability adjustments 7,009 7,009
Net unrealized gains on derivative instruments 40 40
Cumulative translation adjustments 14,876 14,876
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Total comprehensive income 123,119
Purchase of treasury stock, net (9,593) (9,593)
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Ending balance 135,364 186,450 665,394 4,099 (31,062) 960,245
=======================================================================================================================
The accompanying notes to consolidated financial statements are an integral
part of these statements.
5
Ricoh Company, Ltd. and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Half Years Ended September 30, 2005, 2006 and Year Ended March 31, 2006
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 42,867 52,045 97,057
Income from discontinued operations, net of tax (1,125) (5,500) (2,035)
----------------------------------------------------
Income from continuing operations 41,742 46,545 95,022
Adjustments to reconcile net income to net cash provided by
operating activities--
Depreciation and amortization 39,627 42,851 84,089
Equity in earnings of affiliates, net of dividends received (110) (209) (1,431)
Deferred income taxes (1,878) (2,755) (4,692)
Losses on disposals and sales of property, plant and equipment 1,059 988 920
Pension and severance costs, less payment (148) (701) 3,340
Changes in assets and liabilities, net of effects from
acquisition--
Decrease in trade receivables 15,514 7,057 13,411
(Increase) decrease in inventories 1,624 (12,693) 3,726
Increase in finance receivables (17,194) (14,045) (30,029)
Decrease in trade payables (12,389) (20,354) (4,442)
(Decrease) increase in accrued income taxes and
accrued expenses and other (556) 4,608 2,505
Other, net 4,443 332 11,060
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Net cash provided by operating activities 71,734 51,624 173,479
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 312 265 3,085
Expenditures for property, plant and equipment (58,034) (39,089) (101,788)
Payments for purchases of available-for-sale securities (60,213) (49,036) (138,607)
Proceeds from sales of available-for-sale securities 62,788 48,006 141,620
(Increase) decrease in time deposits, net 718 (43) (136)
Proceeds from sales of discontinued operation - 12,000 -
Other, net (7,580) (11,362) (24,225)
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Net cash used in investing activities (62,009) (39,259) (120,051)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term indebtedness 35,776 42,885 63,751
Repayment of long-term indebtedness (54,169) (20,861) (93,752)
Increase in short-term borrowings, net 20,654 6,633 39,618
Proceeds from issuance of long-term debt securities - - 10,000
Repayment of long-term debt securities (44,000) (18,000) (52,000)
Dividend paid (7,348) (8,764) (16,178)
Payment for purchase of treasury stock (237) (355) (10,653)
Other, net (471) (437) (775)
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Net cash provided by (used in) financing activities (49,795) 1,101 (59,989)
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CASH FLOWS OF DISCONTINUED OPERATIONS (Revised - Note 1 (T)):
Operating cash flows: 1,663 838 3,390
Investing cash flows: 93 (13) (14)
Financing cash flows: - - -
Effect of exchange rate on cash and cash equivalents from
discontinued operation - - -
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Net cash provided by discontinued operation 1,756 825 3,376
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (533) 2,530 3,383
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (38,847) 16,821 198
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 186,857 187,055 186,857
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CASH AND CASH EQUIVALENTS AT END OF PERIOD 148,010 203,876 187,055
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6
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR-
Interest 2,850 3,620 5,717
Income taxes 20,958 38,105 44,854
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The accompanying notes to consolidated financial statements are an integral
part of these statements.
7
Ricoh Company, Ltd. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
According to the article 87 of the "Regulations Regarding Terms, Forms and
Preparation of Interim Consolidated Financial Statements"(Ministry of Finance
Ordinance No.24, 1999), the accompanying consolidated financial statements of
Ricoh (Ricoh Company, Ltd. and its consolidated subsidiaries) have been
prepared in conformity with U.S. generally accepted accounting principles.
Significant accounting and reporting policies are summarized below:
The accompanying consolidated financial statements for the half years ended
September 30, 2005, 2006 and for the year ended March 31, 2006 are presented in
Japanese yen, the functional currency of the Company and its domestic
subsidiaries.
The books of the Company and its domestic subsidiaries are maintained in
conformity with Japanese accounting principles and practices, while foreign
subsidiaries maintain their books in conformity with the standards of their
country of domicile.
The accompanying consolidated financial statements reflect necessary
adjustments, not recorded in the books, to present them in conformity with
U.S. generally accepted accounting principles.
(A) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Ricoh. Investments in entities in which Ricoh has the ability to exercise
significant influence over the entities' operating and financial policies
(generally 20 to 50 percent ownership) are accounted for on an equity basis.
All significant intercompany balances and transactions have been eliminated in
consolidation.
The accounts of certain consolidated subsidiaries have been included on the
basis of fiscal periods ended within three months prior to September 30.
(B) REVENUE RECOGNITION
Ricoh generates revenue principally through the sale of equipment, supplies and
related services under separate contractual arrangements for each. Ricoh
recognizes revenue when (1) it has a firm contract, (2) the product has been
shipped to and accepted by the customer or the service has been provided,
(3) the sales price is fixed or determinable and (4) amounts are reasonably
assured of collection.
Products sales is recognized at the time of delivery and installation at the
customer location. Equipment revenues are based on established prices by
product type and model and are net of discounts. A sales return is accepted
only when the equipment is defective and does not meet Ricoh's product
performance specifications. Other than installation, there are no customer
acceptance clauses in the sales contract.
Post sales and rentals result primarily from maintenance contracts that are
normally entered into at the time the equipment is sold. Standard service fee
prices are established depending on equipment classification and include a cost
value for the estimated services to be performed based on historical experience
plus a profit margin thereon. As a matter of policy, Ricoh does not discount
such prices. On a monthly basis, maintenance service revenues are earned and
recognized by Ricoh and billed to the customer in accordance
8
with the contract and include a fixed monthly fee plus a variable amount based
on usage. The length of the contract ranges up to five-years, however, most
contracts are cancelable at any time by the customer upon a short notice
period. Leases not qualifying as sales-type leases or direct financing leases
are accounted for as operating leases and related revenue is recognized over
the lease term.
Ricoh enters into arrangements with multiple elements, which may include any
combination of products, equipment, installation and maintenance. Ricoh
allocates revenue to each element based on its relative fair value if such
element meets the criteria for treatment as a separate unit of accounting as
prescribed in the Emerging Issues Task Force Issue 00-21("EITF 00-21"),
"Revenue Arrangements with Multiple Deliverables". Pursuant to EITF 00-21, the
delivered item in a multiple element arrangement should be considered a
separate unit of accounting if all of the following criteria are met: (1) a
delivered item has value to customers on a stand-alone basis, (2) there is
objective and reliable evidence of fair value of an undelivered item, and
(3) the delivery of the undelivered item must be probable and controlled by
Ricoh if the arrangement includes the right of return. The price charged when
the element is sold separately generally determines fair value. Otherwise,
revenue is deferred until the undelivered elements are fulfilled as a single
unit of accounting.
Revenue from the sale of equipment under sales-type leases is recognized as
product sales at the inception of the lease. Other revenue consists primarily
of interest income on sales-type leases and direct-financing leases, which are
recognized as Other revenue over the life of each respective lease using the
interest method.
(C) FOREIGN CURRENCY TRANSLATION
For foreign operations with functional currencies other than the Japanese yen,
assets and liabilities are translated at the exchange rates in effect at each
end of the period, and income and expenses are translated at the average rates
of exchange prevailing during each period. The resulting translation
adjustments are included as a part of accumulated other comprehensive income
(loss) in shareholders' investment.
All foreign currency transaction gains and losses are included in other income
and expense in the period incurred.
(D) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with maturities of
three months or less at the date of purchase such as time deposits and
short-term investment securities which are available-for sale at any time,
present insignificant risk of changes in value due to being readily convertible
into cash and have an original maturity of three months or less, such as money
management funds and free financial funds.
(E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
As discussed further in Note 4, Ricoh manages its exposure to certain market
risks, primarily foreign currency and interest rate risks, through the use of
derivative instruments. As a matter of policy, Ricoh does not enter into
derivative contracts for trading or speculative purposes.
In accordance with Statement of Financial Accounting Standards ("SFAS") No.133
as amended, Ricoh recognized all derivative instruments as either assets or
liabilities in the Consolidated Balance Sheets and measures those instruments
at fair value. When Ricoh enters into a derivative contract, it makes a
determination as to whether or not for accounting purposes the derivative is
part of a hedging relationship. In general, a derivative may be designated as
either (1) a hedge of the fair value of a recognized asset or liability or an
unrecognized firm commitment ("fair value hedge"), (2) a hedge of the
variability of the
9
expected cash flows associated with an existing asset or liability or a
forecasted transaction ("cash flow hedge"), or (3) a foreign currency fair
value or cash flow hedge ("foreign currency hedge"). Ricoh formally documents
all relationships between hedging instruments and hedged items, as well as its
risk-management objective and strategy for undertaking various hedge
transactions. This process includes linking all derivatives that are designated
as fair value, cash flow, or foreign currency hedges to specific assets and
liabilities on the consolidated balance sheet or to specific firm commitments
or forecasted transactions.
For derivative contracts that are designated and qualify as fair value hedges
including foreign currency fair value hedges, the derivative instrument is
mark-to-market with gains and losses recognized in current period earnings to
offset the respective losses and gains recognized on the underlying exposure.
For derivative contracts that are designated and qualify as cash flow hedges
including foreign currency cash flow hedges, the effective portion of gains and
losses on these contracts is reported as a component of accumulated other
comprehensive income (loss) and reclassified into earnings in the same period
the hedged item or transaction affects earnings. Any hedge ineffectiveness on
cash flow hedges is immediately recognized in earnings. For all derivative
instruments that are not designated as part of a hedging relationship and for
designated derivative instruments that do not qualify for hedge accounting, the
contracts are recorded at fair value with the gain or loss recognized in
current period earnings.
(F) ALLOWANCE FOR DOUBTFUL TRADE RECEIVABLES AND FINANCE RECEIVABLES
Ricoh records allowances for doubtful receivables that are based upon
historical experience and specific customer collection issues. The estimated
amount of probable credit losses in its existing receivables is determined from
write-off history adjusted to reflect current economic conditions and specific
allowances for receivables including nonperforming leases, impaired loans or
other accounts of which Ricoh has concluded it will be unable to collect all
amounts due according to original terms of the lease or loan agreement. Account
balances net of expected recovery from available collateral are charged-off
against the allowances when collection is considered remote.
(G) SECURITIES
Ricoh conforms with SFAS No.115, "Accounting for Certain Investments in Debt
and Equity Securities" which requires all investments in debt and marketable
equity securities to be classified as either held-to-maturity, trading, or
available-for-sale securities. As of September 30, 2005, 2006 and March 31,
2006, all of Ricoh's investments in debt and marketable equity securities are
classified as available-for-sale securities. Those available-for-sale
securities are reported at fair value with unrealized gains and losses, net of
related taxes, excluded from earnings and reported in accumulated other
comprehensive income (loss). Available-for-sale securities, which mature or are
expected to be sold in one year, are classified as current assets.
Individual securities classified as available-for-sale securities are reduced
to fair market value by a charge to income for other than temporary declines in
value. Factors considered in assessing whether an indication of other than
temporary impairment exists with respect to available-for-sale securities
include: length of time and extent of decline, financial condition and near
term prospects of issuer and intent and ability of the Company to retain its
investments for a period of time sufficient to allow for any anticipated
recovery in market value.
The cost of the securities sold is computed based on the average cost of each
security held at the time of sale.
Non-marketable equity securities owned by Ricoh primarily relate to less than
20% owned companies and are stated at cost.
10
(H) INVENTORIES
Inventories are mainly stated at the lower of average cost or net realizable
values. Inventory costs include raw materials, labor and manufacturing
overheads.
(I) PROPERTY, PLANT AND EQUIPMENT
For the Company and its domestic subsidiaries, depreciation of property, plant
and equipment is computed principally by using the declining-balance method
over the estimated useful lives. Most of the foreign subsidiaries have adopted
the straight-line method for computing depreciation, which currently accounts
for approximately 33% of the consolidated depreciation expense. The
depreciation period generally ranges from 5 years to 50 years for buildings and
2 years to 12 years for machinery and equipment.
Effective rates of depreciation for the half years ended September 30, 2005,
2006 and for the year ended March 31, 2006 are summarized below:
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
----------------------------------------------------------------------------
Buildings 4.3% 4.4% 8.9%
Machinery and equipment 21.8 20.0 40.5
----------------------------------------------------------------------------
Ordinary maintenance and repairs are charged to expense as incurred. Major
replacements and improvements are capitalized. When properties are retired or
otherwise disposed of, the property and related accumulated depreciation
accounts are relieved of the applicable amounts, and any differences are
included in earnings.
(J) CAPITALIZED SOFTWARE COSTS
Costs incurred for computer software developed or obtained for internal use are
capitalized and amortized on a straight line basis over their estimated useful
lives in accordance with Statement of Position (SOP) 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use."
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
Ricoh fully adopted the provision of SFAS No.141, "Business Combinations," and
SFAS No.142, "Goodwill and Other Intangible Assets." SFAS No.141 requires the
use of only the purchase method of accounting for business combinations and
refines the definition of intangible assets acquired in a purchase business
combination. SFAS No.142 eliminates the amortization of goodwill and instead
requires annual impairment testing thereof. SFAS No.142 also requires acquired
intangible assets with a definite useful life to be amortized over their
respective estimated useful lives and reviewed for impairment in accordance
with SFAS No.144. Any acquired intangible asset determined to have an
indefinite useful life is not amortized, but instead is tested for impairment
based on its fair value until its life would be determined to no longer be
indefinite.
(L) PENSION AND RETIREMENT ALLOWANCES PLANS
The measurement of pension costs and liabilities is determined in accordance
with SFAS No.87, "Employers' Accounting for Pensions." Under SFAS No.87,
changes in the amount of either the projected
11
benefit obligation or plan assets resulting from actual results different from
that assumed and from changes in assumptions can result in gains and losses not
yet recognized in the consolidated financial statements. Amortization of an
unrecognized net gain or loss is included as a component of the net periodic
benefit plan cost for a year if, as of the beginning of the year, that
unrecognized net gain or loss exceeds 10 percent of the greater of (1) the
projected benefit obligation or (2) the fair value of that plan's assets. In
such case, the amount of amortization recognized is the resulting excess
divided by the average remaining service period of active employees expected to
receive benefits under the plan. The expected long-term rate of return on plan
assets used for pension accounting is determined based on the historical
long-term rate of return on plan assets. The discount rate is determined based
on the rates of return of high-quality fixed-income investments currently
available and expected to be available during the period to maturity of the
pension benefits.
(M) INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences and carryforwards are expected to be
realized or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(N) RESEARCH AND DEVELOPMENT EXPENSES AND ADVERTISING COSTS
Research and development expenses and advertising costs are expensed as
incurred.
(O) SHIPPING AND HANDLING COSTS
Shipping and handling costs, which mainly include transportation to customers,
are included in selling, general and administrative expenses in the
consolidated statements of income.
(P) IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
Long-lived assets and acquired intangible assets with a definite life are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset or group of assets may not be recoverable.
Recoverability of assets to be held and used is assessed by comparing the
carrying amount of an asset or group of assets to the expected future
undiscounted net cash flows of the asset or group of assets. If an asset or
group of assets is considered to be impaired, the impairment charge to be
recognized is measured as the amount by which the carrying amount of the asset
or group of assets exceeds fair value. Long-lived assets meeting the criteria
to be considered as held for sale are reported at the lower of their carrying
amount or fair value less costs to sell.
(Q) EARNINGS PER SHARE
Basic net income per common share is calculated by dividing net income by the
weighted-average number of shares outstanding during the period. The
calculation of diluted net income per common share is similar to the
calculation of basic net income per share, except that the weighted-average
number of shares outstanding includes the additional dilution from potential
common stock equivalents such as convertible bonds.
12
Ricoh has no dilutive securities outstanding as of September 30, 2005, 2006 and
March 31, 2006 and therefore there is no difference between basic and diluted
net income per share.
(R) NON-CASH TRANSACTIONS
The following non-cash transactions have been excluded from the consolidated
statements of cash flows for the half years ended September 30, 2005, 2006 and
for the year ended March 31, 2006:
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
------------------------------------------------------------------------------------------------------------------
Capital lease obligations incurred 130 14 261
Issuance of treasury stock in exchange for subsidiary's stock 904 - 905
------------------------------------------------------------------------------------------------------------------
(S) USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses,
including impairment losses of long-lived assets and the disclosures of fair
value of financial instruments and contingent assets and liabilities, to
prepare these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.
The Company has identified four areas where it believes assumptions and
estimates are particularly critical to the consolidated financial statements.
These are determination of the allowance for doubtful receivables, impairment
on long-lived assets and goodwill, realizability of deferred tax assets and
pension accounting.
(T) DISCONTINUED OPERATIONS
As a result of a sale of a business, the operating results and cash flows
classified as discontinued operations are separately reported for all period
presented in accordance with SFAS No.144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." Reclassifications have been made to the prior
year's consolidated statements of income and consolidated statements of cash
flows to conform the presentation used for the half year ended September 30,
2006.
13
2. SECURITIES
Marketable securities and investment securities as of September 30, 2005, 2006
and March 31, 2006 consist of the following:
Millions of Yen
-------------------------------------
September 30, September 30, March 31,
2005 2006 2006
--------------------------------------------------------------------------
Marketable securities:
Available-for-sale securities 145 171 162
==========================================================================
Investment securities:
Available-for-sale securities 25,896 25,701 29,934
Non-marketable equity securities 6,419 6,406 6,485
--------------------------------------------------------------------------
32,315 32,107 36,419
==========================================================================
The current and noncurrent security types of available-for-sale securities, and
the respective cost, gross unrealized holding gains, gross unrealized holding
losses and fair value as of September 30, 2005, 2006 and March 31, 2006 are as
follows:
Millions of Yen
-----------------------------------------------------------------------------------------------------------
September 30, 2005 September 30, 2006 March 31, 2006
-----------------------------------------------------------------------------------------------------------
Gross Gross Gross Gross Gross Gross
unrealized unrealized unrealized unrealized unrealized unrealized
holding holding Fair holding holding Fair holding holding Fair
Cost gains losses value Cost gains losses value Cost gains losses value
----------------------------------------------------------------------------------------------------------------------------
Current:
Corporate
debt
securities 144 - - 144 170 - - 170 161 - - 161
Other 1 - - 1 1 - - 1 1 - - 1
----------------------------------------------------------------------------------------------------------------------------
145 - - 145 171 - - 171 162 - - 162
============================================================================================================================
Non-current:
Equity
securities 6,920 12,041 37 18,924 8,563 10,891 53 19,401 8,034 15,716 37 23,713
Corporate
debt
securities 6,000 30 - 6,030 6,000 1 - 6,001 6,000 50 - 6,050
Other 684 258 - 942 299 - - 299 171 0 0 171
----------------------------------------------------------------------------------------------------------------------------
13,604 12,329 37 25,896 14,862 10,892 53 25,701 14,205 15,766 37 29,934
============================================================================================================================
Other non-current securities mainly include investment trusts consisting of
investment in marketable debt and equity securities.
The contractual maturities of debt securities classified as available-for-sale
as of September 30, 2006, regardless of their balance sheet classification, are
as follows:
Millions of Yen
--------------------
Cost Fair value
--------------------------------------------------------------
Due after one year through five years 6,000 6,001
Proceeds from the sales of available-for-sale securities were
Yen 62,788 million, Yen 48,006 million and Yen 141,620 million for the half
years ended September 30, 2005, 2006 and for the year ended March 31, 2006,
respectively.
There were no significant realized gains on sales of available-for-sale
securities for the half years ended September 30, 2005 and 2006. The realized
gain on the sales of available-for-sale securities for the year
14
ended March 31, 2006 was Yen 1,053 million. There were no significant realized
losses on sales of available-for-sale securities for the half years ended
September 30, 2005, 2006 and for the year ended March 31, 2006.
Effective October 1, 2005, UFJ holdings, Inc. ("UFJ") and Mitsubishi Tokyo
Financial Group, Inc. completed a merger, in which the UFJ shares of common
stock owned by the Company were exchanged for shares of common stock of the
newly merged entity, Mitsubishi UFJ Financial Group, Inc. ("MUFG"). As a result
of this merger and common share exchange, the Company recognized a gain on
securities of Yen 992 million between the cost of UFJ shares surrendered and the
current market value of MUFG shares in "Other, net" as other (income) expenses
on its consolidated statements of income for the year ended March 31, 2006.
3. PENSION BENEFIT COSTS
The Company and certain of its subsidiaries have various contributory and
noncontributory employees' pension fund plans in trust covering substantially
all of their employees. Under the plans, employees are entitled to lump-sum
payments at the time of termination or retirement, or to pension payments.
Contributions to above pension plans have been made to provide future pension
payments in conformity with an actuarial calculation determined by the current
basic rate of pay.
The net periodic benefit costs of the pension plans for the half years ended
September 30, 2005, 2006 and for the year ended March 31, 2006 consisted of the
following components:
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
------------------------------------------------------------------------------------
Service cost 7,295 7,558 14,691
Interest cost 4,565 5,459 10,192
Expected return on plan assets (3,282) (4,321) (7,645)
Net amortization 664 (528) 1,833
Settlement benefit - - (140)
------------------------------------------------------------------------------------
Total net periodic pension cost 9,242 8,168 18,931
====================================================================================
4. DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Policy
Ricoh enters into various derivative financial instrument contracts in the
normal course of business in connection with the management of its assets and
liabilities.
Ricoh uses derivative instruments to reduce risk and protect market value of
assets and liabilities in conformity with the Ricoh's policy. Ricoh does not
use derivative financial instruments for trading or speculative purposes, nor
is it a party to leveraged derivatives.
All derivative instruments are exposed to credit risk arising from the
inability of counterparties to meet the terms of the derivative contracts.
However, Ricoh does not expect any counterparties to fail to meet their
obligations because these counterparties are financial institutions with
satisfactory credit ratings. Ricoh utilizes a number of counterparties to
minimize the concentration of credit risk.
15
Foreign Exchange Risk Management
Ricoh conducts business on a global basis and holds assets and liabilities
denominated in foreign currencies. Ricoh enters into foreign exchange contracts
and foreign currency options to hedge against the potentially adverse impacts
of foreign currency fluctuations on these assets and liabilities denominated in
foreign currencies.
Interest Rate Risk Management
Ricoh enters into interest rate swap agreements to hedge against the potential
adverse impacts of changes in fair value or cash flow fluctuations on interest
of its outstanding debt.
Fair Value Hedges
Changes in the fair value of derivative instruments and the related hedged
items designated and qualifying as fair value hedges are included in other
(income) expenses in the consolidated statements of income. There is no hedging
ineffectiveness nor are net gains or losses excluded from the assessment of
hedge effectiveness for the half years ended September 30, 2005, 2006 and for
the year ended March 31, 2006 as the critical terms of the interest rate swap
match the terms of the hedged debt obligations.
Cash Flow Hedges
Changes in the fair value of derivative instruments designated and qualifying
as cash flow hedges are included in accumulated other comprehensive income
(loss) on the consolidated balance sheets. These amounts are reclassified into
earnings as interest on the hedged loans is paid. There is no hedging
ineffectiveness nor are net gains or losses excluded from the assessment of
hedge effectiveness for the half years ended September 30, 2005, 2006 and for
the year ended March 31, 2006 as the critical terms of the interest rate swap
match the terms of the hedged debt obligations. Ricoh expects that it will
reclassify into earnings through other (income) expenses during the next 12
months approximately Yen 28 million of the balance of accumulated other
comprehensive income as of September 30, 2006.
Undesignated Derivative Instruments
Derivative instruments not designated as hedging instruments are held to reduce
the risk relating to the variability in exchange rates on assets and
liabilities denominated in foreign currencies. Changes in the fair value of
these instruments are included in other (income) expenses in the consolidated
statement of income.
5. CREDIT LINES
The Company and certain of its subsidiaries enter into the contracts with
financial institutions regarding lines of credit and overdrawing, and hold the
issuing programs of commercial paper and medium-term notes. The unused lines of
credit amounted to Yen 725,185 million, Yen 703,949 million and
Yen 732,443 million as of September 30, 2005, March 31, 2006 and September 30,
2006, respectively, of which Yen 398,049 million, Yen 407,301 million and
Yen 408,461 million related to commercial paper and medium-term notes programs
at prevailing interest rates.
6. COMMITMENTS AND CONTINGENT LIABILITIES
Ricoh was contingently liable for certain guarantees including employees
housing loans of Yen 1,125 million as of September 30, 2006.
16
As of September 30, 2006, the Company and certain of its subsidiaries were
parties to litigation involving routine matters, such as patent rights. In the
opinion of management, the ultimate liability, if any, resulting from such
litigation will not materially affect the consolidated financial position or
the results of operations of Ricoh.
7. SECURED LOAN AND COLLATERAL
Certain subsidiaries of the company provide their land, buildings and lease
receivables to banks, insurance companies and other financial institutions as
collateral. Secured loan are amounted to Yen 977 million, Yen 795 million and
Yen 712 million as of September 30, 2005, March 31, 2006 and September 30, 2006,
respectively, which are collateralized by land, buildings and lease receivables
with a book value of Yen 3,276 million, Yen 3,167 million and Yen 3,195 million
as of September 30, 2005, March 31, 2006 and September 30, 2006, respectively.
8. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
(A) CASH AND CASH EQUIVALENTS, TIME DEPOSITS, TRADE RECEIVABLES, SHORT-TERM
BORROWINGS, CURRENT MATURITIES OF LONG-TERM INDEBTEDNESS, TRADE PAYABLES
AND ACCRUED EXPENSES
The carrying amounts approximate fair values because of the short maturities of
these instruments.
(B) MARKETABLE SECURITIES AND INVESTMENT SECURITIES
The fair value of the marketable securities and investment securities are
principally based on quoted market price.
(C) INSTALLMENT LOANS
The fair value of installment loans is based on the present value of future
cash flows using the current rate for similar instruments of comparable
maturity.
(D) LONG-TERM INDEBTEDNESS
The fair value of each of the long-term indebtedness instruments is based on
the quoted price in the most active market or the present value of future cash
flows associated with each instrument discounted using the current borrowing
rate for similar instruments of comparable maturity.
(E) INTEREST RATE SWAP AGREEMENTS
The fair value of interest rate swap agreements is estimated by obtaining
quotes from brokers.
(F) FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY OPTIONS
The fair value of foreign currency contracts and foreign currency options are
estimated by obtaining quotes from brokers.
The estimated fair value of the financial instruments as of September 30, 2005,
2006 and March 31, 2006 is summarized as follows:
17
Millions of Yen
--------------------------------------------------------------
September 30, 2005 September 30, 2006 March 31, 2006
--------------------------------------------------------------
Carrying Estimated Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value Amount Fair Value
--------------------------------------------------------------------------------------------------------------
Marketable securities and Investment securities 32,460 32,460 32,278 32,278 36,581 36,581
Installment loans 52,103 52,202 51,451 51,539 52,295 52,404
Long-term indebtedness (224,444) (224,312) (182,713) (182,602) (195,626) (195,731)
Interest rate swap agreements, net 1,283 1,283 1,023 1,023 1,175 1,175
Foreign currency contracts, net (917) (917) (616) (616) (1,147) (1,147)
Foreign currency options, net 59 59 (777) (777) (270) (270)
==============================================================================================================
Limitations
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
9. SEGMENT INFORMATION
The operating segments presented below are the segments of Ricoh for which
separate financial information is available and for which a measure of profit
or loss is evaluated regularly by Ricoh's management in deciding how to
allocate resources and in assessing performance. The accounting policies of the
segments are substantially the same as those described in the summary of
significant accounting policies, as discussed in Note 1.
Ricoh's operating segments are comprised of Office Solutions, including copiers
and related supplies, communications and information systems, Industrial
Products, including thermal media and semiconductors, and Other, including
optical discs and digital cameras.
The following tables present certain information regarding Ricoh's operating
segments and operations by geographic areas for the half years ended
September 30, 2005, 2006 and for the year ended March 31, 2006. The operating
results classified as discontinued operations are excluded from segment
information for all period presented in accordance with SFAS No.144.
18
(A) OPERATING SEGMENT INFORMATION
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
--------------------------------------------------------------------------------------------------------------------
Sales-
Office Solutions 786,281 838,090 1,637,228
Industrial Products 59,703 70,581 123,200
Other 75,129 80,576 151,374
Intersegment transaction (1,244) (2,325) (2,564)
--------------------------------------------------------------------------------------------------------------------
Consolidated 919,869 986,922 1,909,238
====================================================================================================================
Operating Expenses-
Office Solutions 695,849 739,320 1,434,279
Industrial Products 59,874 69,687 124,108
Other 74,896 78,678 148,692
Intersegment transaction (1,279) (2,370) (2,594)
Unallocated expense 25,517 28,444 56,169
--------------------------------------------------------------------------------------------------------------------
Consolidated 854,857 913,759 1,760,654
====================================================================================================================
Operating Income-
Office Solutions 90,432 98,770 202,949
Industrial Products (171) 894 (908)
Other 233 1,898 2,682
Elimination 35 45 30
Unallocated expense (25,517) (28,444) (56,169)
--------------------------------------------------------------------------------------------------------------------
Consolidated 65,012 73,163 148,584
====================================================================================================================
Other, net 2,497 1,105 4,182
====================================================================================================================
Income from Continuing Operations before Income Taxes, Minority
Interests and Equity in Earnings of Affiliates 67,509 74,268 152,766
====================================================================================================================
19
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
-------------------------------------------------------------------------------------
Total Assets-
Office Solutions 1,394,012 1,482,251 1,426,635
Industrial Products 73,231 89,724 84,565
Other 115,397 114,341 114,925
Elimination (7,536) (1,924) (2,088)
Corporate assets 373,483 413,371 417,116
-------------------------------------------------------------------------------------
Consolidated 1,948,587 2,097,763 2,041,183
=====================================================================================
Expenditures for segment assets-
Office Solutions 51,456 34,429 90,383
Industrial Products 4,573 2,855 7,451
Other 1,451 1,411 2,361
Corporate assets 684 483 1,854
-------------------------------------------------------------------------------------
Consolidated 58,164 39,178 102,049
=====================================================================================
Depreciation-
Office Solutions 26,320 29,439 57,326
Industrial Products 3,150 2,715 6,631
Other 1,103 980 2,352
Corporate assets 531 604 1,156
-------------------------------------------------------------------------------------
Consolidated 31,104 33,738 67,465
=====================================================================================
Unallocated expense represents expenses for corporate headquarters.
Intersegment sales are not separated by operating segment because they are
immaterial.
Corporate assets consist primarily of cash and cash equivalents and marketable
securities maintained for general corporate purposes.
20
(B) GEOGRAPHIC INFORMATION
Sales which are attributed to countries based on location of customers and
long-lived assets for the half years ended September 30, 2005, 2006 and for the
year ended March 31, 2006 are as follows:
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
------------------------------------------------------------------------------------
Sales-
Japan 477,766 492,491 966,224
The Americas 183,915 203,584 387,412
Europe 201,399 226,504 434,800
Other 56,789 64,343 120,802
------------------------------------------------------------------------------------
Consolidated 919,869 986,922 1,909,238
====================================================================================
Property, Plant and Equipment -
Japan 203,053 212,031 210,973
The Americas 17,838 17,640 18,111
Europe 25,247 26,749 26,783
Other 10,719 13,835 12,376
------------------------------------------------------------------------------------
Consolidated 256,857 270,255 268,243
====================================================================================
(C) ADDITIONAL INFORMATION
The following information shows net sales and operating income recognized by
geographic origin for the half years ended September 30, 2005, 2006 and for the
year ended March 31, 2006. In addition to the disclosure requirements under
SFAS No.131, "Disclosure about Segments of an Enterprise and Related
Information," Ricoh discloses this information as supplemental information in
light of the disclosure requirements of the Japanese Securities and Exchange
Law, which a Japanese public company is subject to.
21
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
--------------------------------------------------------------------------------------------------------------------
Sales-
Japan
External customers 492,467 504,429 992,945
Intersegment 204,313 246,032 413,087
--------------------------------------------------------------------------------------------------------------------
Total 696,780 750,461 1,406,032
--------------------------------------------------------------------------------------------------------------------
The Americas
External customers 182,319 203,560 385,746
Intersegment 1,753 1,731 7,630
--------------------------------------------------------------------------------------------------------------------
Total 184,072 205,291 393,376
--------------------------------------------------------------------------------------------------------------------
Europe
External customers 199,569 226,823 434,304
Intersegment 2,446 1,740 4,449
--------------------------------------------------------------------------------------------------------------------
Total 202,015 228,563 438,753
--------------------------------------------------------------------------------------------------------------------
Other
External customers 45,514 52,110 96,243
Intersegment 48,019 72,402 104,045
--------------------------------------------------------------------------------------------------------------------
Total 93,533 124,512 200,288
--------------------------------------------------------------------------------------------------------------------
Elimination of intersegment sales (256,531) (321,905) (529,211)
--------------------------------------------------------------------------------------------------------------------
Consolidated 919,869 986,922 1,909,238
====================================================================================================================
Operating Expenses-
Japan 651,425 698,853 1,310,233
The Americas 177,607 196,341 378,108
Europe 192,048 218,977 417,341
Other 86,934 115,687 185,283
--------------------------------------------------------------------------------------------------------------------
Elimination of intersegment sales (253,157) (316,099) (530,311)
--------------------------------------------------------------------------------------------------------------------
Consolidated 854,857 913,759 1,760,654
====================================================================================================================
Operating Income-
Japan 45,355 51,608 95,799
The Americas 6,465 8,950 15,268
Europe 9,967 9,586 21,412
Other 6,599 8,825 15,005
--------------------------------------------------------------------------------------------------------------------
Elimination of intersegment profit (3,374) (5,806) 1,100
--------------------------------------------------------------------------------------------------------------------
Consolidated 65,012 73,163 148,584
====================================================================================================================
Other, net 2,497 1,105 4,182
====================================================================================================================
Income from Continuing Operations before Income Taxes, Minority
Interests and Equity in Earnings of Affiliates 67,509 74,268 152,766
====================================================================================================================
Total Assets-
Japan 1,186,255 1,257,839 1,220,780
The Americas 235,714 249,432 240,726
Europe 226,006 262,571 235,897
Other 73,123 93,698 79,102
Elimination (145,994) (179,148) (152,438)
Corporate assets 373,483 413,371 417,116
--------------------------------------------------------------------------------------------------------------------
Consolidated 1,948,587 2,097,763 2,041,183
====================================================================================================================
22
Intersegment sales between geographic areas are made at cost plus profit.
Operating income by geographic area is sales less expense related to the area's
operating revenue.
No single customer accounted for 10% or more of the total revenues for the half
years ended September 30, 2005, 2006 and for the year ended March 31, 2006.
10. SUPPLEMENTARY INFORMATION TO THE STATEMENT OF INCOME
The following amounts were charged to selling, general and administrative
expenses for the half years ended September 30, 2005, 2006 and for the year
ended March 31, 2006:
Millions of Yen
----------------------------------------------------
Half year ended Half year ended Year ended
September 30, 2005 September 30, 2006 March 31, 2006
-----------------------------------------------------------------------------------
Research and development costs 54,962 56,529 110,385
Advertising costs 7,802 8,240 15,732
Shipping and handling costs 7,354 9,088 16,058
-----------------------------------------------------------------------------------
11. SUBSEQUENT EVENT
Based on a resolution approved at the Board of Directors held on November 21,
2006, the Company issued the "Euro Yen Zero Coupon Convertible Bonds due 2011"
on December 7, 2006.
Total principal amount of issue: Yen 55,000 million
Issue price: 100.5%
Date of issue: December 7, 2006
Date of maturity: December 7, 2011
Coupon: Zero
Use of proceeds: (1) Repayment of a portion of the Company's outstanding corporate bonds
(2) Capital investments
23