News Release

Sale of Idle Asset and Notice of Revised Full-Year Financial Results Outlook

- TOKYO, Japan, October 29, 2015 -

Seiko Epson Corporation (TSE: 6724, "Epson") today announced that its board of directors had approved the sale of an idle asset. As a consequence of the impact of this sale on results and recent business conditions, Epson has also revised its full-year outlook for the year ending March 2016 issued on July 30, 2015. Details are as follows:

1. Sale of idle asset

(1) Reason for sale

Epson has continued to reorganize its business structure with the purpose of building the foundations for ongoing growth based on its Updated SE15 Second-Half Mid-Range Business Plan. Accompanying this reorganization, Epson has decided to sell an idle asset with the aim of improving the efficiency of management resources and strengthening its financial structure.

(2) Asset to be sold

  • a. Asset: Land (98,310.93 m²)
  • b. Address: 2-1-1 Koyato, Koza-gun, Samukawa-machi, Kanagawa, Japan
  • c. Current status: Idle asset

Due to the terms of the contract we are unable to disclose the carrying amount or the sale price of the asset.

(3) Details of purchaser

We are unable to disclose details of the purchaser, which is a Japanese corporation, for contractual reasons. The purchaser has no capital, human resources or business relationship with Epson and it is not a related party of Epson.

(4) Schedule for sale

  • Resolution by Epson board of directors: October 29, 2015
  • Conclusion of contract: October 30, 2015 (planned)
  • Sale of the asset: End of December 2015 (planned)

(5) Impact on financial results

Epson expects to recognize gain on sale of the asset of ¥11.6 billion as extraordinary income for the year ending March 2016 in the stand-alone financial results in accordance with J-GAAP. Epson also expects to recognize gain on sale of the asset of ¥7.7 billion as other operating income in the consolidated statement of comprehensive income for the three months ending December 2015 in accordance with IFRS.

Epson recognized a reversal of impairment loss of ¥3.8 billion as other operating income in the consolidated statement of comprehensive income for the three months ended September 30, 2015 in accordance with IFRS, which requires reversal of impairment loss. As a result, there is a difference between the stand-alone financial results and the consolidated financial results in gain on sale of the asset.

The impact on the consolidated financial results is as described in 2. Revised full-year outlook (year ending March 2016) below.

2. Revised full-year outlook (year ending March 2016) (IFRS)
(April 1, 2015, to March 31, 2016)

(Unit: billion yen, except where stated otherwise)

  Revenue Business profit Profit from operating activities Profit before taxes Profit for the period Profit for the period attributable to owners of the parent company Basic earnings (loss) per share for the period (yen)
Previous outlook (A) 1,130 102 100 100 70 70 195.65
Revised outlook (B) 1,100 82 91 88 60 60 167.70
Difference
(B-A)
-30 -20 -9 -12 -10 -10 -
Difference (%) -2.7 -19.6 -9.0 -12.0 -14.3 -14.3 -
Reference:
Previous year
(ended March 2015)
1,086.341 101.275 131.380 132.536 112.785 112.560 314.61

Notes

1. Business profit is calculated by deducting the cost of sales and SGA expenses from revenue. This indicator is not defined in the consolidated statement of comprehensive income, but it is essentially the same as operating income under J-GAAP. Epson discloses business profit because we believe users of our consolidated financial statements will find it useful in evaluating Epson's financial performance.
2. Epson declared a two-for-one stock split of the Company's common shares, effective April 1st, 2015. Basic earnings per share were calculated on the assumption that the stock split took place at the start of the previous consolidated financial year.

Reasons for revision

Boosted by the effects of foreign exchange, first half revenue exceeded the previous outlook. In inkjet printers, we benefitted from ongoing steady sales of high-capacity ink tank models aimed at emerging economies, of higher priced business inkjets and of ink. On the other hand, business profit was below plan. This was due to a delay in some production adjustments for ink cartridge models until the third quarter, an increase in dollar-based manufacturing costs, and, amid lower year-on-year growth in sales of 3LCD projectors, a decline in sales of projectors for education in the European, North American and other markets.

In the second half, we forecast continuing steady sales of high-capacity ink tank models, of higher priced business inkjets and of ink. This is against ongoing uncertainty in emerging market economies, including the deceleration of the Chinese economy and continuing currency deterioration in Latin America. We also expect a fall in demand for large-format inkjet printers for commerce and industry in North America and Asia, a worsening model mix for 3LCD projectors due to a decline in sales of high-value-added models for education, and lower prices for inkjet printers in North America and other regions. After careful consideration of the above factors we have decided to lower our second-half outlooks for both revenue and business profit.

We will therefore reduce our full-year outlooks for both revenue and business profit as expressed in 2. above. We are also revising our outlooks for profit from operating activities and subsequent profit categories due to these factors and profit from the sale of asset expressed in 1. above.

About Epson
Epson is a global technology leader dedicated to driving innovations and exceeding customer expectations in printing, visual communications, quality of life and manufacturing. Epson's lineup ranges from inkjet printers, printing systems and 3LCD projectors to industrial robots, smart glasses and sensing systems and is based on original compact, energy-saving, and high-precision technologies.
Led by the Japan-based Seiko Epson Corporation, the Epson Group comprises nearly 72,000 employees in 93 companies around the world, and is proud of its contributions to the communities in which it operates and its ongoing efforts to reduce environmental burdens.
http://global.epson.com/


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