Notice of Revised Business Forecast for Fiscal Year Ended March 31, 2008, as a Result of Acquisition of MGI PHARMA, INC.

• For Print
• April 21, 2008

1. Revised business forecast for the fiscal year ended March 31, 2008,(April 1, 2007 to March 31, 2008)

2. Reasons for revision

• Intangible assets: $1,378 million [estimated fair values of marketed products and core-technology]
• Deferred tax liabilities related to identified intangible assets: ($551 million)
• In-process Research & Development (IP R&D)*: $840 million [estimated fair value of compounds under development]
• Other assets acquired and liabilities assumed: $533 million
• Goodwill: $1,744 million

• *
  IPR&D: The amounts assigned to product candidate compounds under development that have no alternative future use shall be charged to R&D expense at the acquisition date.

• Main items that impact on the results of operation for the business combination described above are as follows:

  • In-process R&D expenses: ¥87.4 billion [as a component of R&D expenses]
  • Amortization of intangible assets: ¥3.1 billion [as a component of cost of goods sold and R&D expenses]
  • Increase of inventories: ¥2.5 billion [as a component of cost of goods sold]
  • Income taxes and other: (¥4.5 billion) [as a component of Income taxes-deferred and other]

• Goodwill related to the acquisition of MGI PHARMA, INC. does not have any impact on the profit and loss for the fiscal year ended March 31, 2008. However, in Japan, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statement”, a new accounting standard, will be effective for the fiscal year beginning on or after April 1, 2008 under which goodwill amortization will be incurred affecting on the results of operation. The goodwill will be amortized over 20 years.

• R&D expense is expected to increase due to R&D activities expanding on a global basis. On the other hand, as a result of conversion to yen in operation results of the U.S. subsidiaries, sales and SG&A expense are expected to fall due to the decline in the value of the dollar in the fourth-quarter.

• Business performance of MGI PHARMA, INC. on a stand-alone basis for the two months following the acquisition is favorably reflected.

• Operating income and net income are expected to increase by 5% and 1%, respectively, from the previous year, when the impact of the application of business combination accounting of the acquisition of MGI PHARMA, INC. is set aside.

• R&D expense is expected to increase due to R&D activities expanding on a global basis.

• Loss on devaluation of investment securities will occur due to a weak stock market, in addition to loss from foreign exchange due to the decline in the value of the dollar in the fourth-quarter

3. Year-end Dividend Forecast

• Although business combination accounting applied to the acquisition of MGI PHARMA, INC. results in some impact on reported profit and loss of the company, cash-flow from operating activities is not affected. Therefore, the dividend policy will not be changed.

• Year-end dividend will be ¥65 per share, and remains the same as the previous forecast. As a result, annual dividend is expected to be ¥130 per share, an increase of ¥10 from the previous year.

4. Business forecast for the fiscal year ending March 31, 2009, (April 1, 2008 to March 31, 2009)

• Note:
  Year on Year is a ratio over the revised business forecast for the fiscal year ended March 31, 2008.

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