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61
Matsushita Electric Industrial Co., Ltd. 2006
2. Basis of Translating Financial Statements
The consolidated financial statements are expressed in
yen. However, solely for the convenience of the reader,
the consolidated financial statements as of and for the
year ended March 31, 2006 have been translated into
United States dollars at the rate of ¥117=U.S.$1, the
approximate exchange rate on the Tokyo Foreign
Exchange Market on March 31, 2006. This translation
should not be construed as a representation that all the
amounts shown could be converted into U.S. dollars.
3. Acquisition
On April 1, 2004, the Company acquired 19.2% of
the issued common shares of Matsushita Electric Works,
Ltd. (MEW) through a tender offer to obtain its con-
trolling interest. Until then, the Company had a 31.8%
equity ownership.
This acquisition also resulted in another acquisition
of a controlling interest of PanaHome Corporation
(PanaHome) because both the Company and MEW
had 27% equity ownerships, respectively.
The results of operations of MEW and PanaHome
are included in the consolidated financial statements
since that date. MEW is a manufacturer of household
electric equipment, building products and related
materials based in Osaka, Japan. As a result of the
acquisition, the Company is expected to provide a
comprehensive range of home electric and household
equipment and systems in Japan. It also expects to
reduce costs through economies of scale and sharing of
research and development resources and marketing
channels. The aggregate purchase cost of additional
MEW shares was ¥147,187 million and was paid in
cash. The carrying value of the Company’s common
shares of MEW immediately before the acquisition was
¥200,174 million. The carrying value of the Compa-
ny’s existing common shares of PanaHome at April 1,
2004 was ¥22,861 million.
The purchase price of additional MEW shares has
been allocated based upon the estimated fair value of
the identifiable assets acquired and liabilities assumed
at the date of acquisition. The excess of the purchase
price over fair value of net identifiable assets was
allocated to goodwill. The Company’s new basis of
investments in MEW and PanaHome upon the acquisi-
tion of additional shares of MEW was ¥343,844
million, which consisted of the purchase price
of acquired shares and the carrying value of the existing
shares, net of deferred tax liabilities of ¥26,378 million
on the outside basis of existing shares that had been
accounted for using the equity method. Such new basis
of investments in MEW and PanaHome was allocated
as follows:
Millions of yen
Cash and cash equivalents.................................................................................................... ¥ 226,911
Other current assets............................................................................................................. 431,633
Property, plant and equipment............................................................................................. 440,584
Goodwill ............................................................................................................................ 41,523
Intangible assets .................................................................................................................. 25,533
In-process research and development................................................................................... 311
Other assets......................................................................................................................... 220,631
Total assets acquired ........................................................................................................ 1,387,126
Current liabilities ................................................................................................................ 335,899
Noncurrent liabilities .......................................................................................................... 419,803
Total liabilities assumed ................................................................................................... 755,702
Minority interests................................................................................................................ 287,580
Net assets acquired ......................................................................................................... ¥ 343,844