Epson 2008 Annual Report Download - page 33

60 Seiko Epson Corporation
61Annual Report 2008
6. Notes receivable and notes payable maturing at fiscal year-end
Notes receivable and notes payable are settled on the date of
clearance. As March 31, 2007 was a bank holiday, notes receivable
and notes payable maturing on that date could not be settled and
were included in the ending balance of notes and accounts receivable,
trade account and notes and accounts payable, trade account as
follows:
Millions of yen
Notes receivable ¥272
Notes payable 463
8. Investments in debt and equity securities
Epson classifies all investments in debt and equity securities in either
held-to-maturity debt securities or other securities.
The aggregate cost and market value (carrying value) of other
securities with market values, which were included in investment
securities account at March 31, 2007 and 2008, were as follows:
Millions of yen
March 31, 2007
Gross unrealized
Cost Gains Losses
Market value
(carrying value)
Equity securities ¥11,214 ¥15,437 ¥(121) ¥26,530
Debt securities 1 — (—) 1
Other 279 — (—) 279
Total ¥11,494 ¥15,437 ¥(121) ¥26,810
Millions of yen
March 31, 2008
Gross unrealized
Cost Gains Losses
Market value
(carrying value)
Equity securities ¥10,778 ¥6,290 ¥(847) ¥16,221
Debt securities 0 — (—) 0
Other 308 — (—) 308
Total ¥11,087 ¥6,290 ¥(847) ¥16,531
Thousands of U.S. dollars
March 31, 2008
Gross unrealized
Cost Gains Losses
Market value
(carrying value)
Equity securities $107,577 $62,789 $(8,459) $161,907
Debt securities 8 — (—) 8
Other 3,081 — (—) 3,081
Total $110,667 $62,789 $(8,459) $164,997
The carrying amount of other securities, which was carried at cost
and included in short-term investments account and investment
securities account at March 31, 2007 and 2008, comprised the
following:
Millions of yen
Thousands of
U.S. dollars
March 31 March 31,
Other securities 2007 2008 2008
Certificate of deposit ¥ — ¥127,072 $1,268,312
Unlisted equity securities 18,866 1,073 10,710
Corporate bonds — 300 2,994
Other 63 27 278
Total ¥18,929 ¥128,473 $1,282,295
The carrying amount of held-to-maturity debt securities, which
was carried at amortized cost and included in short-term investments
account and investment securities account at March 31, 2007 and
2008, comprised the following:
Millions of yen
Thousands of
U.S. dollars
March 31 March 31,
Held-to-maturity debt securities 2007 2008 2008
Commercial paper ¥30,983 ¥ 9,992 $ 99,737
National/Local bonds and other —159 1,589
Total ¥30,983 ¥10,152 $101,327
The amount of investments in unconsolidated subsidiaries and
affiliates, which was included in investment securities account at March
31, 2008, was ¥2,342 million ($23,380 thousand).
7. Inventories
Losses recognized and charged to cost of sales as a result of valuation
at the lower of cost or market value at March 31, 2007 and 2008 were
¥13,960 million and ¥11,258 million ($112,370 thousand),
respectively.
5. Acquisitions
(1) Business combination with Toyo Communication
Equipment Co., Ltd.
On October 1, 2005, the Company and Toyo Communication
Equipment Co., Ltd. (“Toyo”) combined their respective quartz device
businesses and commenced operations as the succeeding company,
Epson Toyocom Corporation (“Epson Toyocom”). Under the business
merger agreement and corporate split agreement, the Company split-
off its quartz device business (excluding optical devices) and transferred
it to Epson Toyocom.
The Company acquired 99,000,000 shares of common stock and
20,000,000 shares of subordinate common stock with voting rights
issued by Toyo as a result of the business split and business merger
transactions. As a result, Epson Toyocom was owned 67.9% by the
Company (without considering dilutive shares), after the transactions.
Epson Toyocom has been a consolidated subsidiary of the Company.
The composition of the assets acquired and liabilities assumed
from the Toyo Group in the year ended March 31, 2006 was as
follows:
Millions of yen
Year ended
March 31,
2006
Current assets ¥ 32,128
Fixed assets 31,224
Short-term borrowings (100)
Current portion of long-term debt (7,144)
Current liabilities (8,773)
Long-term debt (5,673)
Long-term liabilities (8,402)
Consolidation adjustment (6,840)
Minority interests in subsidiaries (13,996)
Change in interest due to business combination (12,424)
Cash and cash equivalents held by the Toyo Group 12,204
Proceeds from business combination, net of payment ¥ 12,204
(2) Acquisition of Yasu Semiconductor Corporation
The Company held 50% of the total outstanding shares of Yasu
Semiconductor Corporation (“YSC”), a 50:50 joint venture established
with International Business Machines Corporation and its affiliates
(collectively, “IBM”), with the aim of, among other things, operating a
facility that produces semiconductors.
IBM had an option to sell its 50% of YSC shares to the Company
for ¥9,450 million effective from the end of June 2006, while the
Company had an option to buy those shares for the same amount
effective from the same date. Their respective options were exercised
on July 1, 2006. As a result, YSC became a wholly owned subsidiary
of the Company.
The goodwill arising from the acquisition of the shares totaled
¥1,937 million. Due to the dissolution of YSC, the goodwill was
impaired in full and recognized as part of reorganization costs for the
year ended March 31, 2007.
The consolidated financial statements include YSC’s financial
results from July 1, 2006 to March 31, 2007.
The assets acquired and liabilities assumed on the date of the
business combination in accordance with purchase method were
¥10,075 million and ¥3,324 million, respectively.
Upon acquisition, net cash payments of ¥3,306 million represented
cash and cash equivalents of ¥6,144 million held by YSC at the date of
the acquisition, which were offset by the cash consideration of ¥9,450
million for the acquisition. It was disclosed as “Payments for acquisition
of additional stock of an affiliate” in the consolidated statements of
cash flows for the year ended March 31, 2007.
The composition of the assets acquired and liabilities assumed by
the acquisition of YSC in the year ended March 31, 2007 was as
follows:
Millions of yen
Year ended
March 31,
2007
Current assets ¥8,554
Fixed assets 1,521
Current liabilities (1,401)
Long-term liabilities (1,161)
Goodwill 1,937
Consideration for acquisition ¥9,450
The business combination is not expected to have a material
effect on the consolidated statements of operations for the year ended
March 31, 2007, assuming the combination is completed on the first
day of the year, and the effect is not audited.