6-K 1 675407_001.txt QUARTERLY SECURITIES REPORT FOR THE THIRD QUARTER ENDED DECEMBER 31, 2013 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 February 2014 Commission File Number 2 - 68279 RICOH COMPANY, LTD. ----------------------------------------------- (Translation of Registrant's name into English) 13-1, Ginza 8-Chome, Chuo-ku, Tokyo 104-8222, Japan --------------------------------------------------- (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-__ ) 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 Representative Director, President and Chief Executive Officer (principal executive officer) February 13, 2014 RICOH COMPANY, LTD. Consolidated Financial Statements For the Nine Months Ended December 31, 2013 This is an English translation of the Quarterly Securities Report (Shihanki Hokokusho) for the nine months ended December 31, 2013 pursuant to the Japanese Financial Instrument and Exchange Law. Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS March 31, 2013 and December 31, 2013

The accompanying notes are an integral part of consolidated financial statements. 2 Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS For the Nine Months Ended December 31, 2012 and 2013

The accompanying notes are an integral part of these consolidated financial statements. 3 For the Three Months Ended December 31, 2012 and 2013

The accompanying notes are an integral part of these consolidated financial statements. 4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Nine Months Ended December 31, 2012 and 2013

The accompanying notes are an integral part of these consolidated financial statements. For the Three Months Ended December 31, 2012 and 2013

The accompanying notes are an integral part of these consolidated financial statements. 5 Ricoh Company, Ltd. and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended December 31, 2012 and 2013

The accompanying notes are an integral part of these consolidated financial statements. 6 Ricoh Company, Ltd. and Consolidated Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES According to the article 95 of the "Regulations Regarding Terms, Forms and Preparation of Interim Consolidated Financial Statements" (Cabinet office Ordinance No.64, 2007), 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 nine months ended December 31, 2013 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 ("U.S. GAAP"). (A) PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. The accounts of variable interest entity are included in the consolidated financial statements, if applicable. Investments in entities in which Ricoh has the ability to exercise significant influence over the entities' operating and financial policies (generally 20% to 50% ownership) are accounted for on an equity basis. All significant inter-company balances and transactions have been eliminated in consolidation. (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 are 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 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. 7 Ricoh enters into arrangements with multiple elements, which may include any combination of products, equipment, installation and maintenance. Consideration in a multiple-element arrangement is allocated at the inception of the arrangement to all deliverables on the basis of the relative selling price if both of the following criteria are met: the delivered item(s) has value to the customer on a stand-alone basis; and the delivery of the undelivered item must be probable and controlled by Ricoh if the arrangement includes the right of return. If these criteria are not met, revenue is deferred until the undelivered elements are fulfilled and accounted for 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 fiscal year-end, and income and expenses are translated at the average rates of exchange prevailing during each fiscal year. The resulting translation adjustments are included as a part of accumulated other comprehensive income (loss) and noncontrolling interests in equity. All foreign currency transaction gains and losses are included in other income and expenses in the period incurred. (D) CASH EQUIVALENTS Cash and cash equivalents include highly liquid investments such as certificates of deposits (CD) and time deposits with maturities of three months or less. In addition, short term investments such as money management funds (MMF) and free financial funds (FFF) with maturities of three months or less are also classified into cash and cash equivalents, as they are readily convertible to cash and present insignificant risk of changes in value. (E) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES As discussed further in Note 8, 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. Ricoh recognizes 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 changes of a recognized asset or liability or an unrecognized firm commitment ("fair value hedge"), (2) a hedge of the variability of the 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 sheets or to specific firm commitments or forecasted transactions. 8 For derivative contracts that are designated and qualify as fair value hedges including foreign currency fair value hedges, the derivative instrument is marked-to-market with gains and losses recognized in current period earnings to offset the respective losses and gains recognized on the change in fair value of the hedged item. 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 noncontrolling interests in equity, 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 for 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's investments in debt and marketable equity securities are classified as available-for-sale securities. Available-for-sale securities are reported at fair value with unrealized gains and losses, net of related taxes, reported in accumulated other comprehensive income (loss) and noncontrolling interests in equity. 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: financial condition and near term prospects of issuer and intent and ability of Ricoh 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. Investments in affiliated companies over which Ricoh has the ability to exercise significant influence, but does not hold a controlling financial interest, are accounted for by the equity method. Non-marketable equity securities owned by Ricoh primarily relate to less than 20% owned companies and funds are stated at cost unless indication of impairment exist, which require the investment to be written down to its estimated fair value. (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. 9 (I) PROPERTY, PLANT AND EQUIPMENT The depreciation of property, plant and equipment is computed principally by using the straight-line method over the estimated useful lives. The depreciation period generally ranges from 5 years to 50 years for buildings and 2 years to 12 years for machinery and equipment. 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 Ricoh capitalizes certain internal and external costs incurred to acquire or create internal use software during the application development stage as well as upgrades and enhancements that result in additional functionality. The capitalized software is amortized on a straight line basis generally from 3 years to 5 years. (K) GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill is not amortized and is required to be tested at least annually for impairment. Acquired intangible assets with a definite useful life are amortized over their respective estimated useful lives and reviewed for impairment when an indication of impairment is identified. Other intangible assets with definite useful lives, consisting primarily of software, customer relationships and trademarks are amortized on a straight line basis over 1 year to 20 years. Any acquired intangible assets determined to have an indefinite useful life are not amortized, but instead are tested annually for impairment based on its fair value until its life would be determined to no longer be indefinite. In performing the goodwill impairment test, Ricoh utilizes the two-step approach prescribed. The first step requires a comparison of the carrying amount of the reporting units to the fair value of these units. If the carrying amount of a reporting unit exceeds its fair value, Ricoh will perform the second step of the goodwill impairment test to measure the amount of impairment loss, if any. (L) PENSION AND RETIREMENT ALLOWANCES PLANS Ricoh recognizes the overfunded or underfunded status of the defined benefit plans as an asset or liability in the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive income (loss) and noncontrolling interests, net of tax. 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 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. Ricoh recognizes interest and penalties related to unrecognized tax benefits in provision for income taxes in the consolidated statements of operations. 10 (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 operations. (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 asset group may not be recoverable. Recoverability of assets to be held and used is assessed by comparing the carrying amount of an asset or asset group to the expected future undiscounted net cash flows of the asset or asset group. If an asset or asset group 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 asset group 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) NET INCOME ATTRIBUTABLE TO RICOH COMPANY, LTD. PER SHARE Basic net income attributable to Ricoh Company, Ltd. per share of common stock is calculated by dividing net income attributable to Ricoh Company, Ltd. by the weighted-average number of shares of common stock outstanding during the period. The calculation of diluted net income attributable to Ricoh Company, Ltd. per share of common stock is similar to the calculation of basic net income attributable to Ricoh Company, Ltd. per share, except that the weighted-average number of shares outstanding includes the additional dilution from potential common stock equivalents such as convertible bonds. (R) USE OF ESTIMATES Management of Ricoh has made a number of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of fair value of financial instruments and contingent assets and liabilities, to prepare these financial statements in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates. Ricoh has identified seven 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 of securities, impairment of long-lived assets including goodwill, uncertain tax positions, realizability of deferred tax assets, the valuation of assets and liabilities in business combinations and pension accounting. (S) RECENTLY ADOPTED NEW ACCOUNTING STANDARDS Ricoh adopted retroactively Accounting Standards Update (ASU) 2011-11 and ASU 2013-01 from April 1 2013. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements. ASU 2013-01 replaced ASU 2011-11. The updates create new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of assets and liabilities or subject to an enforceable master netting arrangement or similar agreement. These ASU's impact disclosures only and will have no impact on Ricoh's consolidated financial position. 11 Ricoh adopted ASU 2013-02 from April 1 2013. This ASU requires an entity to report the effect of reclassifications out of accumulated other comprehensive income. This ASU will only impact disclosures and will have no impact on Ricoh's consolidated financial position. (T) RECLASSIFICATION Certain reclassifications have been made to the prior year's financial statements to conform to the current year's presentation. 12 2. SECURITIES Investment securities as of March 31, 2013 and December 31, 2013 consist of the following: Millions of Yen ---------------------------------- March 31, 2013 December 31, 2013 -------------------------------------------------------------------------------- Investment securities: Available-for-sale securities 52,319 59,331 Non-marketable equity securities 1,783 2,051 -------------------------------------------------------------------------------- 54,102 61,382 ================================================================================ The 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 March 31, 2013 and December 31, 2013 are as follows:

Gross unrealized holding losses and the fair value of available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2013 and December 31, 2013 are as follows:

13 Gross unrealized holding losses of available-for-sale securities as of March 31, 2013 and December 31, 2013 consist of 13 and 9 kinds of securities. Ricoh concluded that the decline in fair value of investment securities at period end to be temporary, with considering such factors as financial and operating conditions of issuer, the industry in which the issuer operates and other relevant factors. Ricoh judged the degree of decline in fair value of investment securities against the fair value to be immaterial. The contractual maturities of debt securities classified as available-for-sale as of December 31, 2013 are as follows: Millions of Yen --------------------- Cost Fair value ------------------------------------------------------------------------------ Due after one year through five years 773 764 Over five years 1,143 1,173 ------------------------------------------------------------------------------ 1,916 1,937 ============================================================================== There were no significant proceeds from the sales of available-for-sale securities for the nine months ended December 31, 2012. The proceeds from the sales of available-for-sale securities for the nine months ended December 31, 2013 was Yen 7,153 million. There were no significant realized gains or losses on sales of available-for-sale securities for the nine months ended December 31, 2012. The realized gains on sales of available-for-sale securities for the nine months ended December 31, 2013 was Yen 2,349 million. There were no significant realized losses on sales of available-for-sale securities for the nine months ended December 31, 2013. There were no significant realized gains or losses on valuation of available-for-sale securities for the nine months ended December 31, 2012 and 2013. 3. PENSION AND RETIREMENT ALLOWANCE PLANS From October 1, 2013, some of domestic subsidiaries have modified a portion of the existing defined benefit pension plans into defined contribution plan. As a result of this modification, Ricoh recognized curtailment gain in net periodic pension cost for the three months and the six months ended September 30, 2013. The net periodic pension costs of the pension plans consist of the following components: Millions of Yen --------------------------------------- Nine months ended Nine months ended December 31, 2012 December 31, 2013 -------------------------------------------------------------------------------- Service cost 9,370 9,020 Interest cost 9,804 10,469 Expected return on plan assets (7,942) (10,702) Net amortization 2,768 2,317 Curtailment gain -- (5,951) -------------------------------------------------------------------------------- Total net periodic pension cost 14,000 5,153 ================================================================================ 14 Millions of Yen ---------------------------------------- Three months ended Three months ended December 31, 2012 December 31, 2013 -------------------------------------------------------------------------------- Service cost 3,148 2,836 Interest cost 3,327 3,496 Expected return on plan assets (2,687) (3,556) Net amortization 929 708 Curtailment gain -- (901) -------------------------------------------------------------------------------- Total net periodic pension cost 4,717 2,583 ================================================================================ 4. EQUITY The change in Ricoh shareholders' equity, noncontrolling interests and total equity for the nine months ended December 31, 2012 and 2013 are as follows:

5. OTHER COMPREHENSIVE INCOME (LOSS) Changes in accumulated other comprehensive income (loss) during the nine months ended December 31, 2013 is as follows:

15 Tax effects allocated to other comprehensive income before reclassifications resulting from unrealized gains (losses) on securities, pension liability adjustments, unrealized gains (losses) on derivatives and foreign currency translation adjustments are Yen (4,767) million, Yen (3,088) million, Yen (495) million and Yen (226) million, respectively. Changes in accumulated other comprehensive income (loss) during the three months ended December 31, 2013 is as follows:

Tax effects allocated to other comprehensive income before reclassifications resulting from unrealized gains (losses) on securities, pension liability adjustments, unrealized gains (losses) on derivatives and foreign currency translation adjustments are Yen (2,477) million, Yen (213) million, Yen (215) million and Yen (85) million, respectively. Reclassifications out of accumulated other comprehensive income (loss) during the nine months ended December 31, 2013 is as follows:

(a) Amounts in parentheses indicate losses in consolidated statements of operations. (b) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost. (See Note 3 for the information.) Reclassifications out of accumulated other comprehensive income (loss) during the three months ended December 31, 2013 is as follows:

(a) Amounts in parentheses indicate losses in consolidated statements of operations. (b) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost. (See Note 3 for the information.) 17 6. DIVIDENDS Cash dividends paid during the nine months ended December 31, 2012 is as follows: Resolved at the General meetings of Shareholders on June 26, 2012 ----------------------------------------------------------------------------- Total amount of dividends (million of yen) 6,163 Dividend per share of common stock (yen) 8.50 Record date March 31, 2012 Effective date June 27, 2012 Resource for dividend Retained earnings ============================================================================= Resolved at the Board meeting on October 30, 2012 ----------------------------------------------------------------------------- Total amount of dividends (millions of yen) 9,063 Dividend per share of common stock (yen) 12.50 Record date September 30, 2012 Effective date December 3, 2012 Resource for dividend Retained earnings ============================================================================= Cash dividends paid during the nine months ended December 31, 2013 is as follows: Resolved at the General meetings of Shareholders on June 21, 2013 ----------------------------------------------------------------------------- Total amount of dividends (million of yen) 11,963 Dividend per share of common stock (yen) 16.50 Record date March 31, 2013 Effective date June 24, 2012 Resource for dividend Retained earnings ============================================================================= Resolved at the Board meeting on October 31, 2013 ----------------------------------------------------------------------------- Total amount of dividends (millions of yen) 11,962 Dividend per share of common stock (yen) 16.50 Record date September 30, 2013 Effective date December 2, 2013 Resource for dividend Retained earnings ============================================================================= 7. PER SHARE DATA Ricoh shareholders' equity per share was Yen 1,238.55 and Yen 1,384.23 as of March 31, 2013 and December 31, 2013, respectively. Dividends per share shown in the consolidated statement of operations are computed based on dividends paid for the third quarter ended December 31, 2012 and 2013. A reconciliation of the numerator and the denominators of the basic and diluted per share computations for net income attributable to Ricoh Company, Ltd. are as follows:

Diluted net income per share attributable to Ricoh Company, Ltd. for the nine months and three months ended December 31, 2012 and 2013 is omitted because the Company did not have potentially dilutive common shares that were outstanding for the period. 8. 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. 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. 19 Interest Rate Risk Management Ricoh enters into interest rate swap agreements (including interest rate and currency 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 operations. The critical terms of the hedged debt obligations and the interest rate swaps are identical and there is no hedging ineffectiveness nor are net gains or losses excluded from the assessment of hedge effectiveness for the nine months ended December 31, 2013. 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) and noncontrolling interests on the consolidated balance sheets. These amounts are reclassified into earnings as interest on the hedged loans is paid. The critical terms of the hedged debt obligations and the interest rate swaps are identical and there is no hedging ineffectiveness nor are net gains or losses excluded from the assessment of hedge effectiveness for the nine months ended December 31, 2013. Ricoh expects that it will reclassify into earnings through other expenses during the next 12 months approximately Yen 129 million of the balance of accumulated other comprehensive income as of December 31, 2013. Undesignated Derivative Instruments Derivative instruments not designated as hedging instruments are held mainly 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 operations. Contract amounts of derivative instruments at March 31, 2013 and December 31, 2013 are shown in the following tables: Millions of Yen ------------------------------------- March 31, 2013 December 31, 2013 --------------------------------------------------------------------------- Interest rate swap agreements 311,883 339,308 Foreign currency contracts 214,512 227,073 Foreign currency options 8,451 14,135 =========================================================================== The location and fair value amounts of derivatives in consolidated balance sheet are shown in the following tables: 20 Derivatives designated as hedging instruments

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