Epson 2009 Annual Report Download - page 79

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78
23. Special purpose entity
Epson Toyocom, a consolidated subsidiary of the Company, approved a resolution at a meeting of its board of
directors held on February 23, 2007, for the cancellation of the securitization of certain real estate (the “Real
Estate”), which it owned in Kawasaki, Kanagawa Prefecture, Japan. The securitization was implemented on
March 27, 2002 before the merger with the quartz device business of the Company.
Epson Toyocom used one special purpose entity (the “SPE”), which is a special limited company under Japanese
law, for the securitization. Epson Toyocom procured funds by transferring the trust beneficiary rights of the Real
Estate to the SPE, and, in addition to fully funding the anonymous association business established by the SPE
concerning the Real Estate, Epson Toyocom leased the Real Estate through a fixed-term building leaseback
contract. On July 3, 2007, the SPE sold the trust beneficiary rights to certain third parties and the leaseback
contract was canceled on the same day. Furthermore, the anonymous association contract was canceled on
February 29, 2008, and Epson Toyocom received a return on its investment in the
anonymous association. As of March 31, 2008, Epson Toyocom determined that there was no likelihood of its
incurring a related loss subsequent to March 31, 2008. Epson Toyocom had no voting interests in the SPE, nor
had it seconded any directors or employees to the SPE as of March 31, 2008.
Transactions with the SPE for the year ended March 31, 2008, were primarily as follows:
Millions of yen
Transactions:
Investment in anonymous association -
Dividend income ¥3,557
Leaseback transaction -
Lease expenses 64
The leaseback transaction in the table above concerns the Real Estate up to the cancellation date of the related
contract. The transaction was recorded as an operating lease.
There were no related balances to the SPE as of March 31, 2008 and 2009.
24. Subsequent events
The Company and its consolidated subsidiary Epson Toyocom Corporation (“Epson Toyocom”) resolved at
meetings of their respective boards of directors, held on April 30, 2009, to carry out a share exchange through
which Epson Toyocom was to become the wholly-owned subsidiary of Seiko Epson (the “share exchange”), and
they entered into the agreement for the share exchange (the “share exchange agreement”).
The shares of Epson Toyocom were delisted before the effective date of the share exchange agreement (June 1,
2009; final date for trading was May 25, 2009).
(1) Purpose of share exchange
The share exchange will improve Epson’s management speed and, through further streamlining, will enhance
Epson’s overall strength, its management foundations, and corporate value.
(2) Share exchange method
(a) Share exchange method
Based on the April 30, 2009 share exchange agreement, the Company will allocate its shares to Epson
Toyocom’s shareholders in exchange for Epson Toyocom’s shares.