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55
28. BUSINESS COMBINATIONS
The Company adopted ASC No.805 “Business Combinations” (formerly SFAS No.141R) (“ASC No.805”) effective April 1,
2009. ASC No.805 establishes principles and requirements for how an acquirer recognizes and measures in its financial state-
ments the identifiable assets acquired, the liabilities assumed, any noncontrolling interests in the acquiree and the goodwill
acquired in a business combination. ASC No.805 also requires to disclose to enable users of the financial statements to evalu-
ate the nature and financial effects of the business combination.
On May 7, 2009, the Company acquired 52% of the outstanding shares of Nuclear Fuel Industries, Ltd. (“NFI”), from
Furukawa Electric Co., Ltd. and Sumitomo Electric Industries, Ltd. with the intention of expanding the Company’s Nuclear
Power Systems business by establishing a market presence in Japan and building a fuel production platform in Asia.
The total purchase price for the acquisition was ¥11,526 million ($123,935 thousand) in cash. Of the total price, ¥13,680
million ($147,097 thousand) was allocated to property, plant and equipment, ¥10,070 million ($108,280 thousand) to noncon-
trolling interests, ¥8,054 million ($86,602 thousand) to amortizable intangible asset, ¥248 million ($2,667 thousand) to net lia-
bility assumed and ¥110 million ($1,183 thousand) to goodwill. The acquired intangible assets primarily consisted of contract-
ed customer relationships. The Company is amortizing the intangible assets over a weighted-average estimated life of 16.5
years.
The operating results of NFI are included in the Company’s consolidated financial statements from May 2009 onward.
On April 30, 2009, the Company and Fujitsu Limited (“Fujitsu”) concluded an agreement on the transfer of Fujitsu’s hard disk
drive (“HDD”) business to the Company for approximately ¥30.0 billion ($322,581 thousand) in total, which was subsequent-
ly adjusted to ¥25.4 billion ($273,118 thousand). To effect the transfer, Fujitsu spun off its HDD business into a newly incor-
porated entity called Toshiba Storage Device Corporation (“TSDC”) and on October 1, 2009, the Company acquired 80.1%
of the shares of TSDC. The Company will acquire the remaining 19.9% of shares of TSDC from Fujitsu by the end of
December 2010 and TSDC will become a wholly owned subsidiary of the Company. The Company expects to achieve great
synergies from this acquisition by: (i) expanding market share in the comprehensive area of data storage by leveraging its posi-
tion as a leading vendor of small form factor HDDs and integrating Fujitsu’s enterprise HDD business; and (ii) fulfilling a
wide range of storage device demand by adding solid state drive products to its product line, which will be newly developed by
integrating its flash memory technology with Fujitsu’s enterprise HDD technology.
Operating results of TSDC have been included in the Company’s consolidated statement of income since October 2009.
The Company is in the process of allocating the purchase price to the assets acquired and liabilities assumed in accordance
with ASC No.805, but the process has not finalized.
On December 15, 2009, the Company increased its ownership in its former affiliate Chevalier (HK) Limited and its sub-
sidiaries (“Chevalier (HK)”) by acquiring an additional 2% stake to 51% totaling approximately ¥8.0 billion ($86,022 thou-
sand) and consequently acquired a controlling financial interest of Chevalier (HK). The investment is intended to further
strengthen the Company’s presence in lifts and escalators industries of the global market, mainly in China and Southeast Asia.
The allocation of the fair value of the acquisition under ASC No.805 will be finalized when the valuation is completed.
29. SUBSEQUENT EVENT
Disposition of Other Capital Surplus
The Company resolved, at the board meeting held on May 7, 2010, the submission of the disposition of Toshiba
Corporation’s other capital surplus based on Article 452 of the Corporation Law of Japan.
Therefore, the additional paid-in capital will be reduced by ¥46,772 million ($502,925 thousand), and the retained earnings of
the consolidated balance sheet will be increased by the same amount.
Fujitsu Limited and Toshiba Corporation Sign MOU to Merge Mobile Phone Businesses
Fujitsu Limited (“Fujitsu”) and Toshiba Corporation signed a memorandum of understanding (“MOU”) to merge their
mobile phone business on June 17, 2010. According to the MOU, Toshiba Corporation will transfer its mobile phone busi-
ness to a new company to be established on October 1, 2010, and Fujitsu will acquire a majority of the shares in the company.
Fujitsu and Toshiba Corporation are in the process of examining the range and amount of assets and liabilities to be trans-
ferred to the company. Fujitsu and Toshiba Corporation plan to sign a final contract at the end of July 2010.