Olympus 2015 Annual Report Download - page 52

20. Loss on Liquidation of Business
1) March 31, 2014
Loss on liquidation of business of ¥11,591 million recorded in the consolidated statement of operations for the year ended March 31, 2014
stems mainly from the liquidation of the consolidated subsidiaries which conducted the biologics business.
2) March 31, 2015
Loss on liquidation of business of ¥1,820 million ($15,167 thousand) recorded in the consolidated statement of operations for the year
ended March 31, 2015 stems mainly from losses incurred due to the withdrawal from the business concerning E-Globaledge Corporation,
which is a consolidated subsidiary.
21. Loss Related to Securities Litigation
The Company has received claims for compensation for damages from several individual and institutional investors for losses sustained as a
result of the Company’s false statements for the purpose of postponing recognition of losses in the Annual Securities Reports, Semi-Annual
Securities Reports and Quarterly Securities Reports for the period from the year ended March 31, 2001 through the first quarter of the year
ended March 31, 2012. “Loss related to securities litigation” represents losses relating to these claims for compensation for damages.
A breakdown of the losses is as follows:
Millions of yen
Thousands of
U.S. dollars
2014 2015 2015
Settlement charge ................................................................................................................................. ¥ 6,256 ¥6,760 $56,333
Compensation for damage .................................................................................................................... — 56 467
Provision for loss on litigation ................................................................................................................. 11,000 — —
Total ...................................................................................................................................................... ¥17,256 ¥6,816 $56,800
Settlement charge and Compensation for damage included the amount of settlements paid for some of the claims for damages and
damages and interest on delayed payment based on a court judgment.
Provision for loss on litigation is a rational estimate of the amount considered likely to be required to prepare for losses related to litiga-
tion, etc., in light of the status of litigation proceedings.
22. Penalty Charges
In a case that was pending in the Tokyo District Court where the Company was accused of being in violation of the Securities and Exchange
Act and the Financial Instruments and Exchange Act, the Company was fined ¥700 million which was presented as “Penalty charges” in the
consolidated statement of operations for the year ended March 31, 2014. The judgment for the case was settled after the lapse of the
period allowed for appeal.
23. Loss Related to the Investigation under U.S. Anti-Kickback Act and the Related Act
The Company’s U.S. subsidiary, Olympus Corporation of the Americas, has been the subject of an investigation by the U.S. Department
ofJustice relating to potential issues concerning its medical business under the Anti-kickback Act and the False Claims Act in the United
States. The Company recorded ¥53,866 million ($448,883 thousand) as “Loss related to the investigation under U.S. Anti-kickback Act and
the related Act” for the estimated loss based on the current statues of the investigation.
18. Selling, General and Administrative Expenses
The following table summarizes the major components of selling, general and administrative expenses for the years ended March 31, 2014
and 2015:
Millions of yen
Thousands of
U.S. dollars
2014 2015 2015
Advertising and promotion expenses ..................................................................................................... ¥ 41,885 ¥ 42,906 $ 357,550
Salaries and allowance .......................................................................................................................... 113,761 124,863 1,040,525
Bonuses ................................................................................................................................................ 26,085 28,073 233,942
Retirement benefit expenses .................................................................................................................. 8,650 4,659 38,825
Amortization of goodwill ......................................................................................................................... 9,457 9,421 78,508
Research and development expenses ................................................................................................... 29,174 35,697 297,475
Depreciation and amortization ............................................................................................................... 26,002 29,794 248,283
The total of research and development expenses included in “selling, general and administrative expenses” and “Cost of sales” for the
years ended March 31, 2014 and 2015 amounted to ¥66,796 million and ¥74,101 million ($617,508 thousand), respectively.
19. Impairment Loss on Fixed Assets
The losses on impairment of fixed assets that the Company and its consolidated subsidiaries recorded for the years ended March 31, 2014
and 2015 were as follows:
For the year ended March 31, 2014
Use Type of assets Location Millions of yen
Assets used for Imaging Business Buildings and structures Tokyo,
Massachusetts
in America and
others
¥2,394
Tools, furniture and fixtures 137
Machinery and equipment 906
Construction in process 340
Goodwill 174
Long-term prepaid expenses 400
Idle properties Buildings and structures Fukushima 488
Assets scheduled for disposal Software Singapore 32
Total ¥4,871
For the year ended March 31, 2015
Use Type of assets Location Millions of yen
Thousands of
U.S. dollars
Idle properties Buildings and structures Aomori ¥119 $992
Total ¥119 $992
The Company and its consolidated subsidiaries mainly classify their assets for business use into groups based on business segment.
However, assets to be disposed of and idle assets are classified as respective independent groups of assets.
Some assets for business use were not expected to make a profit constantly because of the deterioration in the business environment.
As a result, carrying amounts for assets for business use were written down to their recoverable amounts. The recoverable amount is mea-
sured according to the value in use or net selling price based on real estate appraisal. When the value in use based on future cash flows is
estimated to be negative, the assets are assumed to have no recoverable value.
With regard to assets scheduled for disposal, a decision has been made to dispose of an in-house system for supporting operational
efficiency improvement. As a result, the book value of these assets is considered to be zero.
Carrying amounts of idle properties were written down to their recoverable amounts, owing to substantial decline in the fair market
values. The recoverable amounts were estimated by net realizable values of fixed assets which were calculated based on net selling price.
Notes to the Consolidated Financial Statements
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OLYMPUS Annual Report 2015
100 OLYMPUS Annual Report 2015