Epson 2006 Annual Report Download - page 58

Seiko Epson Annual Report 2006
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With respect to the Company’s directors and statutory auditors, who are not covered by the benefit plans for
employees described previously, provision is made for retirement benefits based on internal rules regarding
directors’ and statutory auditors’ retirement benefits. In accordance with the Commercial Code of Japan, pay-
ments of retirement benefits for directors and statutory auditors are subject to approval by a resolution at the
Company’s shareholders’ meeting.
(14) Accrued recycle costs –
At the time of sale, accrued recycle costs are provided for estimated future returns of consumer personal computers.
(15) Revenue recognition –
Revenue from sale of goods is recognized at the time when goods are shipped. Revenue from services is recognized
when services are rendered and accepted by customers.
(16) Research and development costs –
Research and development costs are expensed as incurred.
(17) Leases –
Epson leases certain office space, machinery and equipment and computer equipment from third parties.
Under Japanese accounting standards, capital leases, other than those under which ownership of the assets will
be transferred to the lessee at the end of the lease term, are allowed to be accounted for as operating leases with
footnote disclosure of the estimated acquisition cost, estimated accumulated depreciation and future estimated
lease payments.
Epson has recorded substantially all leases as operating leases in the manner described in the preceding paragraph.
(18) Net income per share –
Net income per share is computed based on the weighted average number of common shares outstanding during
each fiscal period.
(19) Appropriations of retained earnings –
Appropriations of retained earnings reflected in the accompanying consolidated financial statements have been
recorded after approval by the shareholders as required under the Commercial Code of Japan. In addition to
year-end dividends, the board of directors may declare interim cash dividends by resolution to the shareholders
of record as of September 30 of each year.
(20) Reclassifications –
Certain prior year amounts have been reclassified to conform to the presentations for the year ended March 31, 2006.
3. U.S. dollar amounts:
U.S. dollar amounts presented in the accompanying consolidated financial statements and in these notes are
included solely for the convenience of readers and are not audited. These translations should not be construed as
representations that the yen amounts actually represent, or have been or could be converted into U.S. dollars at
that or any other rate. As the amounts shown in U.S. dollars are for convenience only, a rate of ¥117.47 = U.S.$1,
the rate of exchange prevailing at March 31, 2006, has been used.
4. Acquisitions:
(1) Business combination with SANYO Electric Co., Ltd. –
On October 1, 2004, the Company and SANYO Electric Co., Ltd. (“SANYO”), including its subsidiaries Tottori
SANYO Electric Co., Ltd. and SANYO LCD Engineering Co., Ltd. transferred their liquid crystal businesses to a joint
venture company called SANYO EPSON IMAGING DEVICES CORPORATION (“SANYO EPSON”). The paid-in
capital of SANYO EPSON was ¥15,000 million and it is owned 55% and 45% by the Company and by SANYO,
respectively. SANYO EPSON is a consolidated subsidiary of the Company.