Seiko Epson Corp : Notification of Corporate Split Concerning Epson and Wholly-Owned Subsidiary Company

Notification of Corporate Split Concerning Epson and Wholly-Owned Subsidiary Company

- TOKYO, Japan, January 31, 2012 -

At a meeting of its board of directors, Seiko Epson Corporation ("Epson," TSE: 6724) decided that as of April 1, 2012 (planned effective date) it would acquire in an absorption-type split the sales function, real estate and subsidiary companies of wholly-owned subsidiary company Epson Toyocom Corporation ("Epson Toyocom"). Details are as follows.
Note that because this is an absorption-type split with a wholly-owned subsidiary, certain details have been omitted from this disclosure.

1. Purpose of split

In October 2010, Epson established its Microdevices Operations Division, and in July 2011 acquired in an absorption-type split the quartz device business of Epson Toyocom and related departments. By creating and managing a flexible and efficient operation, Epson's goal is to strengthen its microdevices business.
Against this background, Epson aims to lay business foundations that will enable it to generate true value for its customers. By absorbing the sales function of Epson Toyocom, Epson hopes to create a powerful sales function that combines both semiconductors and quartz, allows Epson Toyocom to concentrate on the manufacturing plant in the Miyazaki region of Japan, and therefore strengthens the structure of its microdevices business.

2. Outline of split

(1) Split timetable

Approval by board of directors meeting of contract concerning absorption-type split:
January 31, 2012

Conclusion of absorption-type split contract:
January 31, 2012

Planned split date (date effective):
April 1, 2012

Epson is carrying out this split based on article 796 clause 3 of the Japanese Companies Act, and Epson Toyocom based on article 784 clause 1 of the Companies Act. As a result, approval has been granted without reference to each company's shareholders' meeting

(2) Split method

This is an absorption-type split in which Epson Toyocom is the splitting company, and Epson is the absorbing company.

(3) Allocation of shares relating to split

Because Epson holds all the issued shares of Epson Toyocom, there will be no compensation paid to the latter as a result of this split

(4) Handling of share options and bonds with share options

This item is not applicable.

(5) Increase or decrease in capital relating to split

There will be no increase or decrease in capital as a result of this split.

(6) Rights and obligations assumed by acquiring company

Epson will acquire by absorption-type split the sales function, real estate and subsidiary companies of wholly-owned subsidiary company Epson Toyocom (excluding the crystal device manufacturing operations at the Miyazaki Plant).

(7) Value of assets and liabilities (provisional)

Assets: 18.6 billion yen, liabilities: 3.2 billion yen

(8) Outlook for performance of obligations

Epson has determined that it expects to be able to fulfill its necessary liabilities after the split comes into effect.

3. Outline of companies involved in split

(as of March 31, 2011)

(1) Company name	Seiko Epson Corporation (acquiring company)	Epson Toyocom Corporation (splitting company)
(2) Main office	4-1 Nishishinjuku 2-chome, Shinjuku-ku, Tokyo	421-8 Hino, Hino-shi, Tokyo
(3) Representative	Minoru Usui, president	Torao Yajima, president
(4) Business lines	Development, manufacturing, sales and service of information-related equipment, electronic devices, precision products and others	Manufacturing and sales of crystal devices (development transferred to Epson according to the July 2011 corporate split)
(5) Paid-in capital	¥53,204 million	¥12,266 million
(6) Founded	May 18, 1942	November 12, 1949
(7) No. of issued shares	199,817,389	187,569,355
(8) End of fiscal year	March 31	March 31
(9) No. of employees	74,551 (consolidated)	1,577 (non-consolidated)
(10) Principal shareholders and % ownership (as of September 30, 2011)	Aoyama Kigyo Kabushiki Kaisha:10.36% Sanko Kigyo Kabushiki Kaisha: 7.15% The Master Trust Bank of Japan, Ltd. (Trust Account): 5.23%	Seiko Epson Corporation: 100%
(11) Financial situation and business results in preceding fiscal year	Fiscal year ended March 31, 2011 (consolidated)	Fiscal year ended March 31, 2011 (non-consolidated)
Total net assets	¥270,808 million	¥22,697 million
Total assets	¥798,229 million	¥47,748 million
Total net assets per share	¥1,347.71	¥121.01
Net sales	¥973,663 million	¥83,285 million
Operating income	¥32,709 million	-¥6,067 million
Ordinary income	¥31,174 million	-¥6,616 million
Net income	¥10,239 million	-¥9,826 million
Earnings per share	¥51.25	-¥52.39
Dividend per share	¥20.0	-

Note: On November 17, 2011, Aoyama Kigyo Kabushiki Kaisha, listed above in (10) Principal shareholders and % ownership (as of September 30, 2011), submitted documents to the Head of the Kanto Finance Office outlining a change to its shareholdings. According to these documents, its shareholding percentage as of that day amounted to 0.86%.

4. Epson's situation after the split

There will be no change to Epson's trading names, business lines, main office, representative, paid-in capital or end of fiscal year as a result of this split.

5. Outlook

Epson does not plan to revise its consolidated results outlook as a result of this split. Please refer to the FY2011 third quarter (fiscal year ending March 2012) Consolidated results and supplementary information, issued today, for details of Epson's latest outlook.