Business News

Epson: Announcement of Revised Financial Results Outlook, Reduced Dividend and Extraordinary Loss

Wednesday 11. March 2009 - In light of recent events, Seiko Epson Corporation ("Epson", TSE: 6724) today announced it was revising its full-year consolidated financial results outlook issued on February 25, 2009, and would also reduce its forecast year-end dividend.

Epson also announced it expected to book an extraordinary loss for the fiscal year ending March 2009.
1. Consolidated financial results outlook for the fiscal year ending March 2009 (April 1, 2008, to March 31, 2009)

(Unit: billion yen, except where stated otherwise)
Net sales Operating income Ordinary income Net income Net earnings per share (yen)
Previous outlook (A) 1,138.0 6.0 13.0 -4.0 -20.37
Revised outlook (B) 1,138.0 6.0 13.0 -100.0 -509.26
Difference (B-A) – – – -96.0 –
Change (%) – – – – –
Reference:
Previous year (ending March 2008) 1,347.841 57.577 63.263 19.093 97.24
Reasons for revision

Epson is reiterating its February 25 forecasts for net sales, operating income, and ordinary income as there have been no significant changes to the assumptions made when compiling these forecasts.
The Company, however, is revising its net income forecast as losses are expected to grow compared to the previous outlook. Epson plans to book additional charges totaling 66.2 billion yen as an extraordinary loss on restructuring charges and impairment losses in its electronic device businesses, and increased corporate tax charges of 27 billion yen due to a write-down of deferred income tax assets resulting from the downturn in business results.
For the full year, Epson is assuming exchange rates of 100 yen to the US dollar and 142 yen to the euro.
2. Revision of forecast year-end dividend

Dividend per share
End of first half End of fiscal year Full-year total
Previous forecast – ¥19 ¥38
Revised forecast – ¥7 ¥26
Actual payment (current fiscal year) ¥19 – –
Reference
Actual payment (previous fiscal year (ending March 2008)) ¥16 ¥16 ¥32
Reasons for revision

Epson’s basic policy has been to ensure stable dividend payments, with a medium- to long-term target of an ongoing dividend payout ratio of 30%. Under this policy, Epson fulfilled its original forecast with an interim payment of 19 yen per share.
However, Epson has decided to reduce its year-end dividend from 19 yen to 7 yen per share due to the abovementioned likelihood of a significant net loss this fiscal year, and because of the prospect of a continuing severe business environment in the next fiscal year and beyond.
Epson’s management team acknowledges its responsibility for the downward revision of the financial results outlook and the reduction of the dividend. To demonstrate its determination to regain the trust of its shareholders, the Company has decided to reduce the compensation of its directors and executive officers by up to 30%, depending on position.
3. Extraordinary loss

As stated above, Epson plans to book additional charges of 66.2 billion yen as an extraordinary loss on restructuring charges and impairment losses in its electronic device businesses. The Company plans to book an extraordinary loss of 90 billion yen in its consolidated financial results for the fiscal year ending March 2009.
Epson also forecasts the write-down of 36.5 billion yen in deferred income tax assets as a result of the downturn in business results. The Company also expects to write-down 17.5 billion yen in deferred income tax liabilities, and accordingly plans to book corporate tax charges of 24 billion yen in its consolidated results for the fiscal year ending March 2009.
In its non-consolidated results for the fiscal year ending March 2009, Epson plans to book an extraordinary loss of 88.9 billion yen. This is partly due to additional charges of 74.7 billion yen on restructuring charges and impairment losses. The Company also plans to book corporate tax charges of 17.5 billion yen resulting from the write-down of 18.4 billion yen in deferred income tax assets.
Cautionary statement

This report includes forward-looking statements that are based on management’s view from the information available at the time of the announcement. These statements involve risks and uncertainties. Actual results may be materially different from those discussed in the forward-looking statements. The factors that may affect Epson include, but are not limited to, general economic conditions, the ability of Epson to continue to introduce new products and services to markets in a timely fashion, consumption trends, competition, technology trends and exchange rate fluctuations.