Hitachi 2004 Annual Report Download - page 79

75Hitachi, Ltd. Annual Report 2005
On December 31, 2002, the Company purchased a majority ownership interest in a company to which the hard disk drive
operations and related intellectual property portfolio had been transferred from International Business Machines Corp.
(IBM) for a total cash purchase price (excluding acquisition costs) of ¥222,262 million, including certain purchase price
adjustments subsequent to the initial purchase date. The purchase price and the amount of goodwill recorded upon
acquisition may be reduced. The purchase price is payable in three installments, of which the first two installments were
paid in the years ended March 31, 2003 and 2004, with the remaining payment due in December 2005.
On January 1, 2003, this company began operating as Hitachi Global Storage Technologies Netherlands B.V. (HGST).
HGST offers a full array of hard disk drives and this acquisition will complement and expand the Company’s product
portfolio, production capacity, research and development and distribution channels globally.
Upon closing, the Company obtained full voting rights to HGST and, as a result, has consolidated all of its assets and
liabilities in the consolidated balance sheet, with the remaining installment payments recorded as liabilities.
The amounts assigned to each major asset and liability caption of HGST at the acquisition date are as follows:
Millions of yen
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 94,865
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,326
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,138
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35,948)
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,159)
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (226,222)
The purchase price upon closing is as follows:
Millions of yen
Cash paid to IBM in the years ended March 31, 2003 and 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥180,251
Cash to be paid to IBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,011
Direct acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,960
Total purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥226,222
In-process research and development assets amounting to ¥2,787 million have been acquired as part of the purchase
and have been written off at the date of acquisition as these assets are considered as not having alternative use. The
write-off has been recorded as selling, general and administrative expenses.
The results of operations of the acquired company beginning on December 31, 2002 are included in the accompanying
consolidated statements of operations. On a pro forma basis, revenue, net loss and the per share information of the
Company, with an assumed acquisition date of April 1, 2002 are as follows:
Unaudited
Millions of yen
2003
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥8,541,202
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (149,891)
Yen
2003
Basic net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥(44.72)
Diluted net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44.84)