Settlement of Subsidiary Company Lawsuit, Announcement of Extraordinary Loss and Revision of Financial Results Outlook

 

- TOKYO, Japan, July 31, 2012 -

Seiko Epson Corporation ("Epson," TSE: 6724) has announced that its subsidiary Epson Imaging Devices Corporation ("Epson Imaging") has agreed to settle for US$150 million civil litigation in the United States brought by Motorola Mobility LLC on behalf of the former Motorola, Inc. and a number of its affiliates. The litigation against Epson Imaging and another Epson affiliate sought damages stemming from the purchase and sale of liquid crystal displays ("LCDs").

As a result, Epson will record an extraordinary loss for the first quarter of the current fiscal year. In light of this and recent business trends, the company will also revise its first half and full year outlooks.

1. Settlement of lawsuit

(1) Timeline

In October 2009, Motorola, Inc. filed a lawsuit in the United States on behalf of itself and a number of its affiliates against Epson Imaging and another Epson affiliate alleging violations of antitrust and competition laws. In 2011, Motorola Mobility LLC was substituted as the plaintiff in the action.

Epson Imaging has vigorously defended the lawsuit. After careful consideration of the expense of continuing litigation and other factors, however, Epson Imaging has determined that settlement of the litigation is in its best interests.

(2) Details of settlement

Epson Imaging will pay Motorola Mobility LLC the sum of US$150 million in full settlement of all antitrust and competition law claims in the litigation, including all claims of the former Motorola Inc., and Motorola Mobility LLC will dismiss its claims against the Epson defendants in the litigation with prejudice.

2. Announcement of extraordinary loss

(1) Loss on litigation

As a result of the abovementioned settlement and settlements of other lawsuits, Epson will record an extraordinary loss of 13,320 million yen in the first quarter of the current fiscal year.

(2) Provision of allowance for doubtful accounts and provision for loss on guarantees (nonconsolidated)

In consideration of the financial situation of an affiliated company, Epson will in the first quarter record as an extraordinary loss a provision of allowance for doubtful accounts and a provision for loss on guarantees totaling 13,311 million yen.

These extraordinary losses mainly result from the payment of the abovementioned settlement fees and have already been included in the income statements of the consolidated affiliated company. They have therefore not been included as extraordinary losses in the consolidated accounts.

3. Revision of financial results outlook

Epson has downwardly revised its outlook for net sales and consequently its operating income outlook. The continued weakness of the global economy, the slower than expected recovery of Epson's markets, especially in Europe and the United States, and declining growth rates in emerging economies have affected in particular the company's information-related equipment business.

After consideration of these factors and the extraordinary loss mentioned in 2. (1) above, Epson will revise as follows its first-half and full-year financial results outlook announced on April 27, 2012.

(1) Revised first half outlook (fiscal year ending March 31, 2013)
(April 1, 2012, to September 30, 2012)

(Unit: billion yen, except where stated otherwise)

  Net sales Operating
income
Ordinary
income
Net income Net earnings
per share (yen)
Previous
outlook (A)
(April 27, 2012)
410.0 4.0 3.0 -6.0 -33.54
Revised outlook (B) 400.0 -14.0 -14.0 -34.0 -190.06
Difference (B-A) -10.0 -18.0 -17.0 -28.0 -
Change (%) -2.4% - - - -
Reference:
Previous year
(ended March 2012)
425.518 6.774 6.146 -4.370 -21.89

(2) Revised full-year outlook (fiscal year ending March 31, 2013)
(April 1, 2012, to March 31, 2013)

(Unit: billion yen, except where stated otherwise)

  Net sales Operating
income
Ordinary
income
Net income Net earnings
per share (yen)
Previous
outlook (A)
(April 27, 2012)
890.0 35.0 33.0 14.0 78.26
Revised outlook (B) 870.0 28.0 28.0 5.0 27.95
Difference (B-A) -20.0 -7.0 -5.0 -9.0 -
Change (%) -2.2% -20.0% -15.2% -64.3% -
Reference:
Previous year
(ended March 2012)
877.997 24.626 27.022 5.032 26.22

About Epson
Epson is a global imaging and innovation leader whose product lineup ranges from inkjet printers and 3LCD projectors to sensors and other microdevices. Dedicated to exceeding the vision of its customers worldwide, Epson delivers customer value based on compact, energy-saving, and high-precision technologies in markets spanning enterprise and the home to commerce and industry.
Led by the Japan-based Seiko Epson Corporation, the Epson Group comprises more than 75,000 employees in 97 companies around the world, and is proud of its ongoing contributions to the global environment and the communities in which it operates.
http://global.epson.com/