Pentax 2008 Annual Report Download - page 76

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Stock price to volatility (Note 1)
Estimated time to exercise (Note 2)
Estimated dividends (Note 3)
Risk free rate (Note 4)
29.37%
5.38 years
¥65
1.07%
29.54%
5.88 years
¥65
1.11%
31.35%
6.38 years
¥65
1.15%
32.36%
6.88
¥65
1.20%
(a) (b) (c) (d)
Notes: 1. It is based on historical volatility of stock price for the period, corresponding to the estimated time to exercise, prior to the grant date.
2. It is assumed to be exercised in the middle of the exercise period due to the lack of enough data for other reasonable estimation.
3. It is based on the actual dividends for the year ended March 31, 2007.
4. It is based on interest rates on national government bonds with maturity corresponding to the estimated time to exercise.
2. Valuation Method for Fair Value of Stock Options
The 7th stock subscription rights granted for the year ended March 31, 2008 are valued as follows:
Fair value of stock subscription rights is valued for each of the following exercise periods.
(a) From October 1, 2008 to September 30, 2009
(b) From October 1, 2008 to September 30, 2010
(c) From October 1, 2008 to September 30, 2011
(d) From October 1, 2008 to September 30, 2017
a. Option-pricing model used: Black-Scholes model
b. Major assumptions used:
3. Estimation Methods for Number of Vested Stock Options
Only the actual number of stock options is reflected due to difficulty in estimating the number of stock options to be forfeited in the future.
4. Stock-based compensation expense is recorded on the consolidated statement of income for the year ended March 31, 2008 as follows:
Cost of sales ¥ 105 million
Selling, general and administrative expenses ¥ 311 million
No. 18 BUSINESS COMBINATIONS AND BUSINESS DIVESTITURES
Business combination — the purchase method
1. Name of the acquired company, description of its businesses,
major reasons for business combination, business combination
date, legal form for business combination, name of the concerned
company after business combination and ratio of acquired voting
rights
(1) Name of the acquired company and description of its businesses
Acquired company: Pentax Corporation
Business description: Manufacture, sale, etc. of life care products,
imaging systems and optical components
(2) Reasons for business combination
The Company and Pentax Corporation aim to establish strong
operating foundations by using management resources they
respectively own in a manner supplementary to each other. The
two companies also seek to create corporate value by developing
attractive products with optical and precision processing
technologies at which they excel and offering the products to a
broader range of customers.
Following the management integration, the Company and
Pentax Corporation are working to optimize their business
portfolios, and aim at further bolstering their competitiveness.
(3) Business combination date
August 14, 2007
(4) Legal form for business combination
Share acquisition
(5) Name of the concerned company after business combination
Pentax Corporation
(6) Ratio of acquired voting rights
90.58% (Note: The Company and Pentax Corporation merged in
March 2008. Details of their merger are stated in “business
combination—under common control.”)
2. Period of the acquired company’s results included in consolidated
financial statements for the consolidated fiscal year under review
The acquired company’s results during the period from October 1,
2007 to March 31, 2008 are consolidated.
3. Cost of acquiring the company and its breakdown
Share acquisition expenses ¥ 94,482 million
Direct expenditure on share acquisition 296 million
Acquisition cost ¥ 94,778 million
Notes to Consolidated Financial Statements
Hoya Corporation and Subsidiaries
74