Square Enix 2010 Annual Report Download - page 61

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Business combinations
■ Year ended March 31, 2009
Common control transactions
1. Outline of the business combination
(1) Name of the company acquired and business operations subject
to the business combination
The Games (Offline), Games (Online), Mobile Phone Content,
Publication and Other businesses operated by SQUARE ENIX
HOLDINGS CO., LTD. (formerly SQUARE ENIX CO., LTD.)
(2) Legal form of the business combination
An incorporation-type company split that the Company was a
split company and a newly established wholly owned subsidiary
assumed Company’s Games (Offline) business operation, etc.
(3) Name of the post-combination company
Newly established company through an incorporation-type com-
pany split: SQUARE ENIX CO., LTD.
(4) Outline of the transaction including purpose of the transaction
The Company believes that it is crucial to maintain profitability
and achieve medium- and long-term growth through the provi-
sion of high-quality, sophisticated contents and services.
However, in recent years, as information technology (IT) and
telecommunications technology and infrastructure have rapidly
developed and seen widespread adoption, customer preferences
have become greatly diversified and the speed of technical
innovation has accelerated. In such a business environment, the
Company decided to shift to a pure holding-company structure.
As well as aiming to clarify the profitability of each business
and the accountability structure, this shift was determined to be
essential for facilitating Group management that can flexibly
engage in strategic business alliances, including capital alli-
ances with other companies.
2. Outline of the accounting treatment
The transaction was treated as a common control transaction
pursuant to “Accounting Standard for Business Combinations”
(Business Accounting Council, issued on October 31, 2003) and
“Implementation Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business
Divestitures” (Accounting Standards Board of Japan Guidance
No. 10, revised on November 15, 2007).
■ Year ended March 31, 2010
Application of the purchase method
1. Name of the company acquired and business operations subject
to the business combination, main purpose of the business
combination, date of business combination, legal form of busi-
ness combination, and name of the company and percentage of
voting rights held subsequent to business combination
(1) Name of the company acquired and its principal business
operations
Name of company: Eidos plc
(hereinafter “Eidos”)
Type of business: Games (interactive entertainment products)
(2) Purpose of the business combination
This acquisition was carried out based on the judgment that, by
combining the hit products of Eidos with the products of
SQUARE ENIX Group, it would further strengthen the position of
the SQUARE ENIX Group as one of the global leaders in the
interactive entertainment industry.
(3) Date of business combination
April 22, 2009
(4) Legal form of the business combination and name of the post-
combination company
Legal form of the business combination: Share acquisition
Post-combination name of the acquired company: Eidos Ltd.
(5) Percentage of voting rights acquired: 100%
2. Period for which the acquired company’s operating results have
been included in the Company’s consolidated financial
statements
April 22, 2009 to March 31, 2010
3. Acquisition cost of the company subject to business combination
and breakdown thereof
Acquisition price Eidos shares GBP84,418,536.85 (¥12,217 million)
Acquisition cost GBP84,418,536.85 (¥12,217 million)
The yen amount shown above was calculated using the
exchange rate prevailing on April 22, 2009.
4. Amount of goodwill recognized, reasons for recognition, and
method and period of amortization
(1) Amount of goodwill recognized: GBP45,205,785.17
(¥6,542 million)
The yen amount shown above was calculated using the
exchange rate prevailing on April 22, 2009.
(2) Reasons for recognition of goodwill
Principally, in the regions where Eidos conducts its games busi-
ness, a portion of the excess earnings power its major game
titles are expected to generate could not be identified with spe-
cific assets, and this amount was recognized as goodwill.
(3) Method and period of amortization of goodwill
Amortized by the straight-line method over 10 years
59