Consolidated Five-Year Summary
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31
Japanese yen(millions)

U.S. dollars(thousands)

2006

2007

2008

2009

2010

2010

Net sales ··························································· ¥ 153,059¥ 166,745¥ 187,303¥166,750¥ 152,671$1,640,918

9,354

10,497

11,658

5,441

5,524

59,372

Total assets ······················································· ¥ 133,440¥ 144,073¥ 158,147¥136,907¥ 153,426$1,649,033

For the year:

Net income·························································At year-end:

Current assets ···················································

66,43370,26582,00059,871

81,478875,731

Property, plant and equipment ··························

57,24065,011

68,22070,14064,986

698,474

Current liabilities ················································

30,66732,932

37,207

24,11532,911

353,729

Long-term debt ··················································

2,726

2,727

2,966

2,627

3,099

33,308

Net assets ·························································

90,25999,847110,033

103,249

109,096

1,172,571

Net assets / Total assets ···································
Retained earnings ·············································

67.6%
69,05064.3%
75,049

64.6%

70.9%

84,93487,58867.0%
92,140Japanese yen

Per share data:

67.0%
990,327
U.S. dollars¥ 215.09¥ 239.95¥ 112.00¥ 113.72$1.22

Net income – diluted · ········································

—

—

—

—

—

—

Net assets ·························································

1,714.93

1,907.92

2,102.64

1,999.38

2,115.38

22.74

Net income ························································ ¥ 186.02

Notes: 1. Dollar figures are translated, for convenience only, at the rate of ¥93.04 to U.S. $1.00.		
2. From fiscal year 2007, net assets were stated under “Accounting standard for presentation of net assets in the balance sheet (Accounting Standards Boardof Japan Statement No.5 issued on December 9, 2005)” and “Implementation guidance for Accounting standard for presentation of net assets in the balance
sheet (Accounting Standards of Japan Guidance No.8 issued on December 9, 2005). This standard applied retroactively to the net assets for fiscal year 2006.

Financial Section
Consolidated Five-Year Summary ······································ 6Consolidated Balance Sheets ············································· 7
Consolidated Statements of Income ··································· 9Consolidated Statements of Changes in Net Assets · ······· 10
Consolidated Statements of Cash Flows ···························11
Notes to Consolidated Financial Statements ···················· 12
Independent Auditors' Report · ·········································· 25
Corporate Data ·································································· 26

Annual Report 2010 6

Consolidated Balance Sheets
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIESAs of March 31, 2009 and 2010

Japanese yen(millions)

U.S. dollars(thousands)

2009

2010

Cash and cash equivalents [Notes 1(q) and 10] ····················¥ 16,335¥ 25,597$ 275,118

Time deposits ·········································································

68

645

6,933

			 Trade ··············································································

23,36933,394358,921

			 Non-consolidated subsidiaries and affiliates · ·················

463

13

140

ASSETS2010

Current Assets:

Notes and accounts receivable (Notes 4 and 10) –			 Allowance for doubtful accounts ·····································

(104)

(87)

(935)

Inventories (Note 2) ································································

13,665

16,455

176,859

Deferred tax assets (Note 14) ················································

2,017

2,417

25,978

Short-term loans ·····································································

644

638

6,857

Other current assets ·······························································

3,414

2,406

25,860			 Total current assets ························································

59,871

81,478875,731

Property, Plant and Equipment (Note 3):
Land ·······················································································

8,009

8,275

88,940

Buildings and structures ·························································

39,33841,732448,538

Machinery and vehicles ··························································

99,220106,877

1,148,721

Tools and furniture ·································································

33,96037,263

400,505

Construction in progress ························································

8,956

2,052

22,056

					

189,483

196,199

2,108,760

Less–accumulated depreciation ·············································(119,343)(131,213)(1,410,286)

			 Total property, plant and equipment ·······························

70,14064,986

698,474

804

1,137

12,221

Investments and Other Assets:
Investments in securities (Notes 10 and 11) ··························

Investments in and loans to 						 non-consolidated subsidiaries and affiliates ·······················

688

639

6,868

Long-term loans ·····································································

140

124

1,333

Deferred tax assets (Note 14) ················································

2,744

2,793

30,019Other assets ···········································································

2,520

2,269

24,387

			 Total investments and other assets ································

6,896

6,962

74,828

Total Assets ................................................................................

¥136,907¥153,426$1,649,033

The accompanying notes to the consolidated financial statements are an integral part of these statements.

7 Annual Report 2010

Japanese yen(millions)
LIABILITIES AND NET ASSETS

2009

U.S. dollars(thousands)

2010

Current Liabilities:
Short-term borrowings including 						 current portion of long-term debt (Notes 3, 10 and 19) · ···········¥ 4,483¥ 4,722
Notes and accounts payable (Note 10) – 							 Trade ····················································································
11,28916,496
			 Construction · ········································································
2,214
724
			 Non-consolidated subsidiaries and affiliates · ·······················
25
25
Accrued expenses (Note 10) ························································
5,166
6,098
Accrued income taxes ··································································
464
3,902
Other current liabilities · ································································
474
944
			 Total current liabilities ···························································
24,11532,911								Long-term Liabilities:
Long-term debt (Notes 3, 10 and 19) ···········································
2,627
3,099
Deferred tax liabilities (Note 14) ···················································
561
1,069
Employees’ severance and retirement benefits (Note 13) ···········
5,561
6,106
Retirement benefits for directors and corporate auditors ·············
549
156
Other long-term liabilities · ····························································
245
989
			 Total long-term liabilities ·······················································
9,543
11,419						
Contingent Liabilities (Note 4)
Net Assets
Shareholders’ Equity (Note 15):
Common stock						 Authorized–168,000 thousand shares in 2009 and 2010						 Issued–48,594 thousand shares in 2009 and 2010 ··················
8,284
8,284
Capital surplus · ············································································
7,541
7,541
Retained earnings ········································································
87,58892,140Treasury stock 				
(38)
(39)
		 12 thousand shares in 2009 and 12 thousand shares in 2010······
			 Total shareholders’ equity · ···················································
103,375
107,926
Valuation and Translation Adjustments:
Net unrealized holding gains on other securities · ························
127
319
Foreign currency translation adjustments [Note 1(c)] · ·················(6,368)(5,477)
			 Total valuation and translation adjustments ·························(6,241)(5,158)2010$

50,752
177,300
7,782
269
65,542
41,93910,146
353,730

33,308
11,49065,628
1,677
10,629122,732

89,037
81,051
990,327(419)
1,159,996
3,428(58,867)(55,439)

Minority Interests ·············································································

6,115

6,328

68,014

			 Total net assets······································································

103,249

109,096

1,172,571

Total Liabilities and Net Assets . .....................................................

¥136,907¥153,426$1,649,033

Annual Report 2010 8

Consolidated Statements of Income
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2009 and 2010

Japanese yen(millions)2009

U.S. dollars(thousands)

2010

2010

Net Sales ···························································································¥166,750¥152,671
					
Cost of Sales · ···················································································
134,732
122,375
Gross profit ···················································································
32,01830,296					
Selling, General and Administrative Expenses (Note 5) ···············
21,801
19,445
Operating income ·········································································
10,217
10,851					
Other Income (Expenses): 				Interest and dividend income ·······················································
200
77
Interest expense ···········································································
(295)
(334)
Losses on sale or disposal of property, 						 plant and equipment ·································································
(700)
(612)
Equity in gains (losses) of non-consolidated subsidiaries
		 and affiliates · ············································································(1)20
Foreign exchange gains (losses), net ··········································
(973)
101
Gains on reversal of allowance for doubtful accounts ··················—
28
Gains on reversal of reserve for warranty ····································—
106
Losses on devaluation of investment securities ···························(174)—
Impairment losses on property, plant and equipment (Note 6) ······
(137)
(571)
Other, net ·····················································································
357
510
					
(1,723)(675)$1,640,918

Income before income taxes and minority interests ·····················
8,494
10,176
					
Income Taxes (Note 14)				
Current ·························································································
2,445
4,498
Deferred ·······················································································
37
(35)
					
Minority Interests in Net Income of Consolidated Subsidiaries · ·········
571
189
					
Net Income ························································································¥ 5,441¥ 5,524
					Japanese yen
Per Share Data (Note 18):
Net income ···················································································¥ 112.00¥ 113.72
Net income–diluted · ·····································································——Cash dividends ·············································································
35.00
35.00

109,372

The accompanying notes to the consolidated financial statements are an integral part of these statements.

9 Annual Report 2010

1,315,295
325,623
208,996
116,627828(3,590)(6,578)
215
1,086
301
1,139
—
(6,137)
5,481(7,255)48,345
(376)
2,031
$

59,372

U.S. dollars
$

1.22
—
0.38

Consolidated Statements of Changes in Net Assets
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2009 and 2010

Japanese yen(millions)
Valuation and translation
adjustments

Shareholders' equity

Balance as of March 31, 2008 · ······························

Commonstock

CapitalsurplusRetainedearnings¥8,284¥7,541¥84,934

Net
ForeignTotal
unrealized
Treasurycurrency
shareholders’ holding gains
stocktranslation
equityon otheradjustments
securities¥(36)¥100,723

436

¥

995

Minority
interests

Total
net assets¥7,879¥110,033

Increase for unification of accounting policies		applied to foreign subsidiaries ····················

—

—

31

—

31

—

—

—

31

Net income · ·····················································

—

—

5,441

—

5,441

—

—

—

5,441

Purchase of treasury stock ······························

—

—

—

(2)

(2)

—

—

—

(2)

Cash dividends paid ········································——(2,818)—(2,818)———(2,818)Other, net··························································

—

—

—

—

—

(309)

(7,363)(1,764)(9,436)

Balance as of March 31, 2009 · ······························¥8,284¥7,541¥87,588¥(38)¥103,375¥127¥(6,368)¥6,115¥103,249
5,524

Net income · ·····················································

—

—

5,524

—

5,524

—

—

—

Purchase of treasury stock ······························

—

—

—

(1)

(1)

—

—

—

(1)

Cash dividends paid ········································

—

—

(972)

—

(972)

—

—

—

(972)

Other, net..........................................................

—

—

—

—

—

192

891

213

1,296

Balance as of March 31, 2010 . ..............................

¥8,284¥7,541¥92,140¥(39)¥107,926¥319¥(5,477)¥6,328¥109,096

Valuation and translation
adjustments
Net
ForeignTotal
unrealized
Treasurycurrency
shareholders’ holding gains
stocktranslation
equityon otheradjustments
securities

Minority
interests

Total
net assets

		

U.S. dollars(thousands)
Shareholders' equity								Commonstock

CapitalsurplusRetainedearnings

Balance as of March 31, 2009 . ..............................

$89,037$81,051$941,402$1,365$(68,444)

Net income . .....................................................

——

59,372—59,372———

Purchase of treasury stock ..............................

—

—

—

(10)

(10)

—

—

—

(10)

Cash dividends paid ........................................

——(10,447)—(10,447)———(10,447)

—

—

2,063

9,577

2,289

13,929$(419) $1,159,996$3,428$(58,867)

Other, net..........................................................

—

—

—

Balance as of March 31, 2010 . ..............................

$89,037$81,051$990,327$(409) $1,111,081$65,725 $1,109,727
59,372$68,014 $1,172,571

The accompanying notes to the consolidated financial statements are an integral part of these statements.

Annual Report 2010 10

Consolidated Statements of Cash Flows
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2009 and 2010
Japanese yen(millions)2009

U.S. dollars(thousands)

2010

Cash Flows from Operating Activities: 				Income before income taxes and minority interests ··········································¥ 8,494¥10,176
Adjustments for:				
Depreciation and amortization ··········································································
12,312
11,994Losses on sale or disposal of property, plant and equipment ···························
680
604
Impairment losses on property, plant and equipment ·······································
137
571
Decrease in allowance for doubtful accounts · ··················································
(79)
(16)
Increase (decrease) in employees' severance and retirement benefits ············
(157)
545
Interest and dividend income ············································································
(200)
(77)
Interest expense · ······························································································
295
334
Decrease (increase) in notes and accounts receivables · ·································
11,491(8,588)
Increase in inventories ······················································································(246)(1,716)
Increase (decrease) in notes and accounts payables ·······································(3,696)
3,145
Other, net ··········································································································(1,685)2,190
		 Subtotal · ·······································································································
27,346
19,162
Interest and dividend income received · ····························································
246
128
Interest paid ······································································································
(310)
(323)
Income taxes paid ·····························································································(7,212)547
		 Net cash provided by operating activities ·····················································
20,07019,514				Cash Flows from Investing Activities:
Increase in time deposits ··················································································
(48)
(290)
Decrease in time deposits ·················································································
700
16
Payments for purchases of property, plant and equipment · ·····························(21,418)(7,565)
Proceeds from sale of property, plant and equipment ······································
241
52
Payments for acquisitions of intangible assets ·················································
(519)
(262)
Payments for purchases of investment in securities ·········································
(12)
(10)
Payments for additional portions of consolidated subsidiaries · ························—(42)
Payments for acquisitions of consolidated subsidiaries (Note 8) ······················—(448)
Additions to loans receivable ············································································
(45)
(28)
Collection of loans receivable ···········································································
53
65
Other, net ··········································································································
(21)
(82)
		 Net cash used in investing activities ·····························································(21,069)(8,594)			Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net ···········································
(888)
(403)
Proceeds from long-term loans payable ···························································
1,926
913
Repayments of long-term loans payable · ·························································(1,045)(955)
Payments for acquisitions of treasury stock ······················································(2)(1)
Cash dividends paid ··························································································(2,817)(972)
Cash dividends paid to minority shareholders ··················································
(485)
(434)
Other, net ··········································································································
12(11)
		 Net cash used in financing activities ·····························································(3,299)(1,863)
Effect of Exchange Rate Changes on Cash and Cash Equivalents ··················Net Increase in Cash and Cash Equivalents · ······················································Cash and Cash Equivalents at Beginning of Year ··············································Cash and Cash Equivalents at End of Year ·························································(1,789)(6,087)22,422¥16,335

The accompanying notes to the consolidated financial statements are an integral part of these statements.

11 Annual Report 2010

205
9,262
16,335¥25,5972010$109,372
128,912
6,492
6,137
(172)
5,858
(828)
3,590
(92,304)(18,444)
33,80323,538205,954
1,376(3,471)
5,879
209,738(3,117)
172(81,309)559(2,816)(107)(451)(4,815)
(301)
699
(883)
(92,369)(4,331)
9,813(10,264)(10)(10,447)(4,665)(120)(20,024)
2,203
99,548
175,570$275,118

Notes to Consolidated Financial Statements
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES

1. Summary of Significant Accounting and Reporting Policies(a) Basis of presenting the consolidated financial statements
The accompanying consolidated financial statements of Exedy
Corporation (“the Company”) and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in the
Financial Instruments and Exchange Law in Japan and its related
accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirementsfrom International Financial Reporting Standards.
The accounts of the Company’s overseas subsidiaries are preparedin accordance with either International Financial ReportingStandards or U.S. generally accepted accounting principles,with consolidation adjustments for the specified six items, which
are described in “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated Financial
Statements (“PITF No.18”)”, as applicable. The accompanying
consolidated financial statements have been restructured andtranslated into English from the consolidated financial statementsof the Company prepared in accordance with Japanese GAAP and
filed with the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Financial Instruments and Exchange
Law in Japan. Certain supplementary information included in thestatutory Japanese language consolidated financial statements,
but not required for fair presentation, is not presented in theaccompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at March 31, 2010, whichwas ¥93.04 to U.S. $1.00. The convenience translation should not
be construed as representation that the Japanese yen amounts
have been, could have been, or could in the future be, converted
into U.S. dollars at this or any other rate of exchange.
(b) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which theCompany has power of control through majority voting rights or the
existence of certain conditions evidencing control by the Company.
The consolidated financial statements include the accounts of theCompany and its 28 significant majority owned subsidiaries.
Investments in non-consolidated subsidiaries and affiliates overwhich the Company has the ability to exercise significant influence
over operating and financial policies of the investees, are accounted
for using the equity method. Investments in 4 non-consolidated
subsidiaries and 1 affiliate are accounted for using the equity
method.
In the elimination of investments in consolidated subsidiaries,
the assets and liabilities of the subsidiaries, including the portion
attributable to minority shareholders, are valued using the fairvalue at the time the Company acquired control of the respective
subsidiary. Material intercompany balances, transactions and profits
have been eliminated in consolidation. All the overseas subsidiaries
except for 1 consolidated subsidiary, are consolidated using a fiscal
period ending December 31. Significant transactions occurring fromJanuary 1 to December 31, the Company’s fiscal year-end, areadjusted for in the consolidated financial statements.
(c) Translation of foreign currencies
Monetary assets and liabilities denominated in foreign currency aretranslated into Japanese yen at current rates at each balance sheet

date and the resulting translation gains or losses are charged toincome for the current period.
The balance sheets of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rates except forshareholders’ equity accounts, which are translated at historicalrates. Income statements of consolidated overseas subsidiaries
are translated at the average rates during the year. Translation
adjustments resulting from translating financial statements whose
accounts are denominated in foreign currencies are not includedin the determination of net income but are reported as “Foreign
currency translation adjustments” in a component of net assets andminority interests.
(d) Securities
Securities consist principally of marketable and nonmarketable
equity securities.
Other securities with available fair market value are stated at fairmarket value. Net unrealized holding gains and losses on thesesecurities are reported, net of applicable income taxes, as aseparate component of net assets.
Realized gains and losses on the sale of such securities arecomputed using the moving average cost method.
Other securities with no available fair market value are stated atmoving average cost, net of the amount considered uncollectible.
If the fair market value of other securities declines significantly, suchsecurities are stated at fair market value and the difference between
the fair market value and the carrying amount is recognized as aloss in the period of decline. If the net asset value of other securities
with no available fair market value declines significantly, suchsecurities should be written down to the net asset value by charging
to income.
(e) Derivatives
All derivatives are stated at fair value.
(f) Inventories
Inventories possessed for selling except for supplies are mainly
stated at the lower of cost (first-in, first-out) or net realizable value atMarch 31, 2010. Supplies are mainly stated at cost determined by
the last purchase cost method.
(g) Property, plant and equipment
The Company and its domestic consolidated subsidiaries computethe depreciation of property, plant and equipment by using thedeclining-balance method and its overseas consolidated subsidiaries
mainly by using the straight-line method. The depreciation ofbuildings acquired by the Company and its domestic consolidated
subsidiaries on and after April 1, 1998 is computed by using thestraight-line method.
Estimated useful lives of property, plant and equipment are as
follows:
Buildings and structures ··········································· 3–50 years
Machinery and vehicles ············································ 2–15 years
Tools and furniture ··················································· 2–20 years
Maintenance and repairs including minor renewals and betterments
are charged to income as incurred.

Annual Report 2010 12

(h) Software
Software is amortized using the straight-line method over the usefullife (3–5 years) of the software.
(i) Leases
Finance leases, except for certain immaterial leases, are capitalized
and depreciated over lease terms, as applicable. However, as
permitted, the Company and consolidated domestic subsidiaries
account for finance leases commencing prior to April 1, 2008 which
do not transfer ownership of the leased property to the lessee
as operating lease with disclosure of certain “as if capitalized”
information in Note 9.
(j) Income taxes
The Company and its consolidated subsidiaries recognize the tax
effects of temporary differences between the carrying amounts ofassets and liabilities for tax and financial reporting purposes.
The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used forincome tax purposes.
(k) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historicalbad debt ratio during a certain reference period plus the estimateduncollectible amount based on the analysis of individual accounts.
(l) Employees’ severance and retirement benefits
The Company and its consolidated subsidiaries provide for
employees’ severance and retirement benefits at the end of the
fiscal year based on the estimated amounts of projected benefit
obligation and the fair value of the plan assets at that date.
Actuarial differences are fully amortized in the year following theyear in which the actuarial differences are recognized. Prior service
costs are recognized in expenses in the year in which they are
incurred.
(Changes in accounting policies)
Effective from the fiscal year ended March 31, 2010, the Company
and consolidated domestic subsidiaries adopted the “Partial
Amendments to Accounting Standard for Retirement Benefits (Part3)” (ASBJ Statement No.19 issued on July 31, 2008). The new
accounting standard requires domestic companies to use the rate of
return on long-term government or gilt-edged bonds as of the endof the fiscal year for calculating the projected benefit obligation of adefined-benefit plan. Previously, domestic companies were allowed
to use a discount rate determined by taking into consideration
fluctuations in the yield of long-term government or gilt-edged bonds
over a certain period. This change had no material impact on the
consolidated financial statements for the year ended March 31,
2010.

13 Annual Report 2010(m) Retirement benefits for directors and corporate auditors
Domestic consolidated subsidiaries have unfunded retirement
allowance plans for directors and corporate auditors. The amounts
required under the plans have been fully accrued.
(Additional information)
The Company abolished the practice of providing for retirement
benefits for directors and corporate auditors based on the resolution
for the abolishment of the institution for retirement benefits for
directors and corporate auditors at the ordinary general meeting of
the shareholders on June 24, 2009. As a result of this resolution,
the estimated future payment of ¥401 million ($4,313 thousand)was transferred from retirement benefits for directors and corporate
auditors to other long-term liabilities.
(n) Accounting for consumption taxes
Consumption taxes withheld upon sale and consumption taxes paidby the Companies on their purchases of goods and services are notincluded in the amounts of respective revenue or cost or expense
items in the accompanying consolidated statements of income.
(o) Per share data
The computation of net income per share is based on the weighted
average number of shares outstanding during each year, excluding
the Company’s treasury stock, and based on net income attributed
to ordinary shareholders, excluding bonuses to directors andcorporate auditors, etc. The computation of net income–diluted pershare assumes the full exercise of outstanding warrants and fullconversion of convertible bonds at the beginning of the year (or at
the time of issuance if this is after the beginning of the year) with
an applicable adjustment for related net-of-tax interest expense.
The computation of net assets per share is based on the number ofshares of common stock outstanding at the year-end, excluding theCompany’s treasury stock, and based on net assets attributed toordinary shareholders, excluding minority interests.
Cash dividends per share shown in the statements of income are
the amounts applicable to the respective years.
(p) Goodwill
Goodwill, except for minor goodwill, is amortized by the straight-line
method over five years. Minor goodwill is expensed as incurred.
(q) Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits
and short-term investments which have maturities of three months
or less when purchased, are easily convertible into cash and have
few risks of fluctuation in value.
(r) Reclassification
Certain comparative figures have been reclassified to conform to thecurrent year’s presentation.

2. Inventories
Inventories as of March 31, 2009 and 2010 were as follows:
Japanese yen(millions)Finished goods ············································································································
Work-in process ··········································································································
Raw materials · ············································································································
Supplies · ·····················································································································
				

U.S. dollars(thousands)

2009

2010

2010

¥ 5,687
2,666
4,287
1,025
¥13,665¥ 7,312
3,458
4,605
1,080
¥16,455$ 78,590
37,16649,495
11,608$176,859

The ending inventory balance represents after write-down of book value when their carrying amounts become unrecoverable, and thewrite-down recognized at cost of sales were ¥569 million and ¥203 million ($2,182 thousand) as of March 31, 2009 and March 31, 2010,
respectively.

3. Assets Pledged as Collateral
The following assets were pledged as collateral for ¥129 million and ¥107 million ($1,150 thousand) of secured long-term loans fromgovernment-sponsored agencies as of March 31, 2009 and March 31, 2010, respectively:
Japanese yen(millions)

2010

2009
Land ································································································································
Buildings and structures, net ···························································································
			

U.S. dollars(thousands)

2010
¥62
35
¥97

¥62
37
¥99

$ 666
376
$1,042

As is customary in Japan, short-term and long-term bank loans are made under general agreements which provide that additional security
and guarantees for present and future indebtedness will be given at the request of the bank under certain circumstances, and that any
collateral so furnished will be applicable to all indebtedness to that bank. To date, the Company and its consolidated subsidiaries have notreceived any such requests from their banks.

4. Contingent Liabilities
Contingent liabilities as of March 31, 2009 and 2010 were as follows:
Japanese yen(millions)

2010

2009
Trade notes receivable discounted ·················································································

U.S. dollars(thousands)

2010
¥64

¥6

$688

5. Research and Development Expenses
Research and development expenses are charged to income as incurred. Research and development expenses charged to income for theyears ended March 31, 2009 and 2010 were as follows:
Japanese yen(millions)2009
Research and development expenses ············································································¥4,947

U.S. dollars(thousands)

2010¥4,3702010$46,969

Annual Report 201014

6. Impairment of Fixed Assets
The Company and its consolidated subsidiaries evaluated the profitability in each business category, which is Manual automotive drivetrain
operations, Automatic automotive drivetrain operations, Industrial drivetrain operations and Other (Plants and other facilities). Accounting for
impairment of fixed assets shall be applied only when the investment may not be recoverable in the business.
In the year ended March 31, 2009, the result indicates each business can recover the investment through the future. However, the Company
and its consolidated subsidiaries has some assets which belong to Automatic automotive drivetrain category and there is no prospect foruse. Therefore, the Company and its consolidated subsidiaries recognized impairment losses on those assets where the recoverable value
was less than the net book value. The recoverable value of assets was based on net selling price. Impairment losses were recognized for theexcess of the net book value over the recoverable value.
Impairment losses on fixed assets for the year ended March 31, 2009 were as follows:
March 31, 2009
Asset Group

Asset Type

Usage

AT
AT

Machinery
Tools and furniture

Idle
Idle

Japanese yen(millions)··················································································

¥114
23

						

¥137

In the year ended March 31, 2010, the result indicates impairment in industrial machine drivetrain business due to deterioration of businessenvironment and can not recover the investment through the future. Therefore the Company and its consolidated subsidiaries recognizedimpairment losses on those assets where the recoverable value was less than the net book value. The recoverable value of assets was
based on value in use. Impairment losses were recognized for the excess of the net book value over the recoverable value. Moreover, theCompany and its consolidated subsidiaries has some assets which belong to Manual automotive drivetrain category and there is no prospect
for use. Therefore the Company and its consolidated subsidiaries recognized impairment losses on those assets where the recoverable
value was less than the net book value. The recoverable value of assets was based on net selling price. Impairment losses were recognized
for the excess of the net book value over the recoverable value.
Impairment losses on fixed assets for the year ended March 31, 2010 were as follows:
March 31, 2010
Asset Group

Asset TypeJapanese yen(millions)

Usage

		
Buildings and structures· ···································
		
Machinery and vehicles· ···································
Industrial machine drivetrain
Tools and furniture
Production · ···································
		Construction in progress		
· ···································
		
Intangible assets		· ···································
MT
Machinery and vehicles
Idle. ...................................
						

¥ 89
357
70
44
2
9
¥571

U.S. dollars(thousands)
$ 957
3,837
752
473
21
97
$6,137

7. Changes in Net Assets(a) Shares issued / Treasury stock

March 31, 2009
Shares issued:
Common stock (thousands) ······················································
			
Treasury stock:
Common stock (thousands)·······················································
			

Number of shares
as of March 31,
2008

Increase

Decrease

Number of shares
as of March 31,
2009

48,594
48,594————

48,594
48,594

10
10

2
2

—
—

12
12

(Note) The increase of treasury stock — common stock 2 thousand is due to purchase of the stocks less than standard unit 2 thousand.

15 Annual Report 2010

Number of shares
as of March 31,
2009

March 31, 2010
Shares issued:
Common stock (thousands) ······················································
			
Treasury stock:
Common stock (thousands)·······················································
			

Increase

Decrease

Number of shares
as of March 31,
2010

48,594
48,594————

48,594
48,594

12
12

0
0

—
—

12
12

(Note) The increase of treasury stock — common stock 0 thousand is due to purchase of the stocks less than standard unit 8 hundred.

(b) Dividends(1) Dividends
March 31, 2009
Resolution

Type of shares

Cash dividends paid
Japanese yen (millions)

Dividends per share(Japanese yen)

Cut-off date

Effective dateOrdinary general meeting of the		Common stock
shareholders on June 26, 2008

¥ 1,603¥33.0

March 31, 2008

June 27, 2008

Board of Directors’ meeting on
October 30, 2008

¥ 1,215¥25.0

September 30, 2008

November 28, 2008

Common stock

March 31, 2010
Resolution

Type of shares

Cash dividends paid
Japanese yen (millions)
U.S. dollars (thousands)

Dividends per share(Japanese yen)
(U.S. dollars)

Cut-off date

Effective dateOrdinary general meeting of the		Common stock
shareholders on June 24, 2009			¥ 486$ 5,224

¥10.0
$0.11

March 31, 2009

June 25, 2009

Board of Directors’ meeting on
Common stock
October 29, 2009			¥ 486$ 5,224

¥10.0
$0.11

September 30, 2009

November 27, 2009

(2) Dividends, of which cut-off date was in the year ended March 31, 2010, and effective date of which will be in the year ending March 31, 2011
Resolution

Type of shares

Ordinary general meeting of theCommon stock
shareholders on June 24, 2010			Cash dividends paid
Japanese yen (millions)
U.S. dollars (thousands)¥ 1,215$13,059

Sourceofdividends

Retainedearnings

Dividends per share
Cut-off date
(Japanese yen)
(U.S. dollars)

¥25.0
$0.27

March 31, 2010

Effective dateJune 25, 2010

8. Cash Flows
Acquisition of newly consolidated subsidiaries
In the year ended March 31, 2010, the Company acquired a part of shares of Ceekay Daikin Limited. The assets and liabilities of Ceekay
Daikin Limited. acquired by the Company and the reconciliation between the acquisition cost and net cash used for the acquisition were as
follows:

Current assets ······························································································
Non-current assets ·······················································································
Goodwill · ······································································································
Current liabilities····························································································
Non-current liabilities ····················································································
Foreign currency translation adjustments ····················································
Minority interests ·························································································
Transferred from investment in securities ····················································
Acquisition cost ····························································································Cash and cash equivalents of newly consolidated subsidiary · ····················Net acquisition cost ······················································································

Japanese yen(millions)

U.S. dollars(thousands)¥2,0001,187
404(1,838)
(886)
207
(231)
(201)
642
(194)
¥ 448

$21,496
12,758
4,342(19,755)(9,523)2,225(2,483)(2,160)6,900(2,085)$ 4,815

Annual Report 201016

9. Leases(a) Finance leases
As discussed in Note 1 (i), finance leases commenced prior to April 1, 2008 which do not transfer ownership of leased assets to lessees areaccounted for as operating leases.
Information relating to finance leases, except those leases for which the ownership of the leased assets is considered to be transferred to
the lessee, is described below.
Pro forma information regarding leased property such as acquisition cost, accumulated depreciation, accumulated losses on impairment andfuture minimum lease payments under finance leases that do not transfer the ownership of the leased property to the lessee for the years
ended March 31, 2009 and 2010 was as follows:
Japanese yen (millions)
March 31, 2009
Machinery and vehicles ·················
Tools and furniture ························
			Acquisition
cost

Accumulated
depreciation

¥266
142
¥408

¥197
56
¥253

Accumulated
losses on
impairment
¥
¥

—
—
—

Balance
¥ 69
86
¥155

Japanese yen (millions)
March 31, 2010
Machinery and vehicles ·················
Tools and furniture ························
			Acquisition
cost

Accumulated
depreciation

¥141
115
¥256

¥ 96
50
¥146

Accumulated
losses on
impairment
¥
¥

—
—
—

U.S. dollars (thousands)
BalanceAcquisition
cost

Accumulated
depreciation

¥ 45
65
¥110

$1,515
1,236$2,751$1,032537$1,569

Accumulated
losses on
impairment
$
$

—
—
—

Balance$ 483
699$1,182The scheduled maturities of future lease payments, on such lease contracts for the years ended March 31, 2009 and 2010 were as follows:
Japanese yen(millions)2009

U.S. dollars(thousands)

2010

2010

Due within one year · ·········································································································
Due over one year ·············································································································
			

¥ 46
109
¥155

¥ 38
72
¥110

$ 408
774
$1,182

Lease payments for the year ·····························································································

¥ 62

¥ 50

$ 537

The amounts of acquisition costs and future minimum lease payments under finance leases included the interest expense portions.
Depreciation expenses, which are not reflected in the accompanying consolidated statements of income, calculated by the straight-line
method, would have been ¥62 million and ¥50 million ($ 537thousand) for the years ended March 31, 2009 and 2010, respectively.
The Company had no leased assets on which impairment should have been recognized for the years ended March 31, 2009 and 2010.

(b) Operating leases
The scheduled maturities of future lease payments under non-cancelable operating leases as of March 31, 2009 and 2010, were as follows:
Japanese yen(millions)2009
Due within one year · ·········································································································
Due over one year ·············································································································
			

17 Annual Report 2010

¥ 3
7
¥10

U.S. dollars(thousands)

2010
¥ 6
16
¥22

2010
$ 64
172
$236

10. Financial Instruments
Effective from the year ended March 31, 2010, the Company and its consolidated subsidiaries adopted “Accounting Standard for Financial
Instruments” (Accounting Standards Board of Japan Statement No.10 issued on March 10, 2008) and “Guidance on Disclosing Fair Value of
Financial Instruments” (Accounting Standards Board of Japan Guidance No.19 issued on March 10, 2008).
The Company and its consolidated subsidiaries manage funds only in short-term deposits, raise funds by bonds or loans and engage inderivative transactions for the purpose of avoiding the risk of foreign exchange rate fluctuation and ensuring steady cash flow, not for tradingor speculative purposes. Hedging accounting through derivative transactions was not applied as the necessary conditions were not met.
Notes and accounts receivable have exposure to the credit risk of customers. The Company and its consolidated subsidiaries are managing
such a risk by controlling the due date and balance of receivables from customers and watching their credit risk conditions in accordancewith the Group credit regulations. Furthermore, to avoid the risk and ensure steady cash flow of accounts receivable in foreign currency,
the Company and its consolidated subsidiaries engage in derivative transactions (forward currency exchange contracts). Certain securities
include exposure to market risk. The Company and its consolidated subsidiaries have such securities for the purpose of maintaining
relationships with customers or suppliers, not for trading purposes. The fair values of the securities are periodically reported to the Board of
Directors at the board meeting of the Company. Due dates of notes and accounts payable are mainly within one year. Short-term borrowings
are mainly for the purpose of working capital and long-term debt is mainly for the purpose of payment for investment in equipment. Derivativetransactions are entered and controlled by the financial department with approval of the financial manager under the rules of each company,
which provide the details such as the department in charge and the maximum transaction amount. To reduce credit risk, transaction
counterparties are limited to major financial institutions. Notes and accounts payable and borrowings have exposure to liquidity risk. The
Company and its consolidated subsidiaries are controlling such risk by planning monthly budgets of payment.
The book values of the financial instruments included in the consolidated balance sheet and their fair values at March 31, 2010 were as
follows.
Japanese yen (millions)
March 31, 2010

U.S. dollars (thousands)

Book value

Fair value

DifferenceBook value

Fair value

Difference¥26,242
33,405¥26,242
33,405¥——$282,051
359,039$282,051
359,039——

1,069(14,634)(3,371)(5,186)(4,450)(27)

1,069(14,634)(3,371)(5,186)(4,462)
(27)

—
—
—
—
(12)
—

11,490(157,287)(36,232)(55,739)(47,829)(290)

11,490(157,287)(36,232)(55,739)(47,958)
(290)

—
—
—
—
(129)
—

Cash and time deposit . ............................................
Notes and accounts receivable ................................
Investments in securities
Other securities......................................................
Notes and accounts payable ....................................
Short-term borrowings ..............................................
Accrued expenses ....................................................
Long-term debt .........................................................
Derivative transactions .............................................

(Notes) 1. The methods used to determine the fair value of financial instruments and derivative transactions are as follows:		 Cash and time deposit, notes and accounts receivable, notes and accounts payable, short-term borrowings and accrued expenses are settled in the
short term and the fair values are considered to be equal to book values. Therefore, fair values are stated at book values. Investments in securities(Other securities) are stated at fair market value. Information regarding investments in securities classified by the purposes for which they are held isnoted in the relevant section of this report.
		 Long-term debt is stated at fair value based on the method in which total amount of principal and interest is discounted at the interest rate that would
be applied if each company borrowed the same, but new, principal amount.
		 Derivative information is noted in the relevant section of this report.
2. Financial instruments for which the fair value is considered difficult to determine
		 Non-listed equity securities and investments in nonconsolidated subsidiaries and affiliates (book value ¥707 million ($7,599 thousand)) have nomarket price available and are considered to be financial instruments for which the fair market value is difficult to determine. Therefore, these
instruments are not included in “Investment in securities (Other securities)” in the table above.
3. Refund schedule for current credit after consolidated dateJapanese yen (millions)
2011

Cash and time deposit ............................ ¥26,242
Notes and accounts receivable . .............
33,405
				
59,6472012 to
2015
¥
¥

—
—
—

2016 to
2020
¥ —
—
¥ —

U.S. dollars (thousands)
2021 and
thereafter
¥
¥

—
—
—

2011

$282,051
359,039$641,090

2012 to2015

2016 to
2020

$

$

$

—
—
—

$

—
—
—

2021 and
thereafter
$
$

—
—
—

4. Payment schedule for long-term debt after consolidated dateJapanese yen (millions)Long-term debt . ......................................

20112012 to2015

2016 to2020¥ 1,351¥2,630¥469

U.S. dollars (thousands)
2021 and
thereafter
¥

—

2011

2012 to2015

2016 to2020$14,521$28,267$5,0412021 and
thereafter$—

Annual Report 2010 18

11. Securities
Other securities with book values (fair values) exceeding acquisition costs as of March 31, 2009 and 2010 were as follows:
Japanese yen (millions)
Acquisition
cost

March 31, 2009

		 Equity securities ··············································································································
		 Interest-bearing securities ·······························································································
		 Others ·····························································································································
				

Book
value

¥249
—
—
¥249

¥542
—
—
¥542

Japanese yen (millions)
March 31, 2010

		 Equity securities ··············································
		 Interest-bearing securities ·······························
		 Others ·····························································
					Difference
¥293
—
—
¥293

U.S. dollars (thousands)

Acquisition
cost

Book
value

Difference

Acquisition
cost

¥334
—
—
¥334

¥910
—
—
¥910

¥576
—
—
¥576

$3,590——$3,590Book
value

Difference$9,781——$9,781$6,191——$6,191Other securities with book values (fair values) not exceeding acquisition costs as of March 31, 2009 and 2010 were as follows:
Japanese yen (millions)
Acquisition
cost

March 31, 2009

		 Equity securities ··············································································································
		 Interest-bearing securities ·······························································································
		 Others ·····························································································································
				

Book
value

¥271
—
—
¥271

¥195
—
—
¥195

Japanese yen (millions)
March 31, 2010

		 Equity securities ··············································
		 Interest-bearing securities ·······························
		 Others ·····························································
					Difference
¥(76)
—
—
¥(76)

U.S. dollars (thousands)

Acquisition
cost

Book
value

Difference

Acquisition
cost

¥197
—
—
¥197

¥159
—
—
¥159

¥(38)
—
—
¥(38)

$2,117——$2,117Book
value$1,709——$1,709Difference$(408)——$(408)The book value of securities with no available fair values as of March 31, 2009 and 2010 were as follows:
Japanese yen(millions)

2009
Other securities with no fair value
Non-listed equity securities ·································································································

19 Annual Report 2010

¥67

U.S. dollars(thousands)

2010

2010
¥68

$731

12. Derivatives
The following table provides information on derivative instruments as of March 31, 2009 and 2010.
Japanese yen (millions)Contract amount

Fair value

Gain (loss)

Forward exchange contracts:
To sell U.S. dollars ···············································To sell Euro ··························································To sell Japanese Yen ··········································
To buy Japanese Yen ··········································
To buy U.S. dollars ··············································

¥824
9
100
120
1

¥848
10
125
117
1

¥(24)
(1)
(25)
3
0

Currency swaps:
Payment Rupiah
Receipt U.S. dollars ·············································
					

21
¥ —

3
¥ —

3
¥(44)

March 31, 2009

Japanese yen (millions)
March 31, 2010

Forward exchange contracts:
To sell U.S. dollars ···············································To sell Euro ··························································To sell Japanese Yen ··········································
To buy U.S. dollars ··············································
To buy Thai bahts ················································
To buy Japanese Yen ··········································
					

U.S. dollars (thousands)

Contract amount

Fair value

Gain (loss)

Contract amount

Fair value

Gain (loss)¥1,070
24
90
91
55
13
¥1,343

¥(22)
(1)
0
(2)
(2)
(0)
¥(27)

¥(22)
(1)
0
(2)
(2)
(0)
¥(27)

$11,501
258
967
978
591
140
$14,435$(237)
(11)
0
(21)
(21)
(0)
$(290)$(237)
(11)
0
(21)
(21)
(0)
$(290)

13. Employees’ Severance and Retirement Benefits
The Company and its domestic consolidated subsidiaries have adopted defined benefit retirement plans: cash balance plans and lump-sum
payment plans, as well as defined contribution pension plans.
The liability for employees’ severance and retirement benefits included in the liabilities section of the consolidated balance sheets as ofMarch 31, 2009 and 2010 consisted of the following:					Japanese yen(millions)

U.S. dollars(thousands)

2009

2010

2010

Projected benefit obligation ·······························································································
Fair value of plan assets ··································································································
			¥(11,781)
5,080(6,701)¥(11,601)
5,968(5,633)$(124,688)
64,144(60,544)

Unrecognized actuarial differences ···················································································
Liability for employees’ severance and retirement benefits ·······································

1,140¥ (5,561)(473)¥ (6,106)(5,084)$ (65,628)

Included in the consolidated statements of income for the years ended March 31, 2009 and 2010 were employees’ severance and retirement
benefit expenses comprised of the following:
Japanese yen(millions)2009
Service costs ·····················································································································
Interest costs ·····················································································································
Expected return on plan assets ·························································································
Amortization of actuarial differences ·················································································
Employees’ severance and retirement benefit expenses ··········································
Others · ······························································································································
			

¥ 496
234
(110)
527
1,147
183
¥1,330U.S. dollars(thousands)

2010
¥ 527
235
(101)
1,134
1,795
192
¥1,9872010$ 5,664
2,527(1,086)
12,18819,293
2,064$21,357(Note) “Others” represents the payments to defined contribution pension plans.

Assumptions used in the calculation of the above information were as follows:

Method of attributing the projected benefits to periods of service ·····································
Discount rate ·····················································································································
Expected rate of return on plan assets · ············································································
Amortization of prior service costs ····················································································
Amortization of actuarial differences ·················································································

2009

2010

Straight-line basis
2.0%
2.0%
1 year
1 yearStraight-line basis
2.0%
2.0%
1 year
1 yearAnnual Report 2010 20

14. Income Taxes
Significant components of the Company and consolidated subsidiaries' deferred tax assets and liabilities as of March 31, 2009 and 2010 were as follows:
Japanese yen(millions)2009
Deferred tax assets:
Employees’ severance and retirement benefits · ······················································Net operating losses carried forward ·········································································
Accrued bonuses to employees · ···············································································
Impairment losses on property, plant and equipment · ··············································
Losses on devaluation of inventories · ·······································································
Unrealized gains (inventories) ···················································································
Accrued warranty costs ·····························································································
Accrued enterprise tax · ·····························································································
Unrealized gains (fixed assets) · ················································································
Retirement benefits for directors and corporate auditors · ········································
Accounts payable·······································································································
Depreciation · ·············································································································
Losses on disposal of machinery · ·············································································
Other · ························································································································
Total deferred tax assets ································································································
Valuation allowance · ·································································································

U.S. dollars(thousands)

2010

2010

¥2,245
1,723
726
488
441
374
240
—
225
222
—
112
93
839
7,728
(1,622)¥2,466
1,797
892
703
424
379
343
262
220
—
162
122
—
971
8,741
(2,014)$26,505
19,314
9,587
7,556
4,557
4,074
3,687
2,816
2,365
—
1,741
1,311
—
10,436
93,949(21,647)

6,106

6,727

72,302

(833)
(469)
(330)
(92)
(182)
(1,906)—(1,144)
(795)
(326)
(220)
(101)
(2,586)—(12,296)(8,545)(3,504)(2,365)(1,085)(27,795)—

Deferred tax liabilities ·····································································································(1,906)						Net deferred tax assets ···································································································¥4,200(2,586)(27,795)¥4,141$44,507

Deferred tax assets ·········································································································
		
Deferred tax liabilities:
Property, plant and equipment····················································································
Retained earnings of overseas subsidiaries ······························································
Reserve for advanced depreciation ···········································································Net unrealized holding gains on other securities ······················································
Other · ························································································································
Total deferred tax liabilities ····························································································
Valuation allowance · ·································································································The Company and its consolidated subsidiaries are subject to a number of taxes based on income, which, in the aggregate, indicate astatutory tax rate in Japan of approximately 40.4% for the years ended March 31, 2009 and 2010.
The following table summarizes the significant differences between the statutory tax rate and the Company’s effective tax rate for financial
statement purposes for the years ended March 31, 2009 and 2010:

2009
Statutory tax rate ·············································································································
Adjustments for:Non-deductible expenses ··························································································Per capita inhabitants tax ··························································································Tax credit for research and development expenses · ················································
Different tax rates applied to overseas subsidiaries ··················································
Increase(decrease) of retained earnings of overseas subsidiaries ···························
Dividend · ···················································································································
Increase in valuation allowance · ···············································································
Other ·························································································································
Effective tax rate · ············································································································

2010

40.4%

40.4%

1.0
0.3
(3.0)
(6.6)
(12.3)
4.4
6.3
(1.3)
29.2%

0.6
0.2
(2.7)
(3.8)
3.2
1.3
3.9
0.7
43.8%

15. Shareholders’ Equity
Net assets section comprises three subsections, which are shareholders’ equity, valuation and translation adjustments and minority interests.
Under the Japanese Corporate Law (“the Law”), the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the newshares as additional paid-in capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or theexcess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional
paid-in capital or legal earnings reserve. Additional paid-in capital is included in capital surplus and legal earnings reserve is included inretained earnings in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit and could be capitalized
by a resolution of the shareholders’ meeting.
Under the Law, additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, by a resolution of theshareholders’ meeting, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained
earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of theCompany in accordance with Japanese laws and regulations.

21 Annual Report 2010

16. Segment Information
The Company and its consolidated subsidiaries operate in three business segments, Manual automotive drivetrain operations, Automatic
automotive drivetrain operations and Other. The Manual automotive drivetrain segment manufactures and sells clutch discs, clutch covers,
flywheels and other manual transmissions. The Automatic automotive drivetrain segment is engaged in the manufacture and sale of torqueconverters and wet friction clutch plates. The Other segment consists of industrial machine drivetrain operations, that is, the manufacture andsale of powershift transmissions, and other operations including the sale and manufacture of clutches for motorcycle, plants and other facilities.
Business segment information for the years ended 31, 2009 and 2010 was as follows:
Japanese yen(millions)

U.S. dollars(thousands)

2009

2010

2010

Sales:
Manual automotive drivetrain operations ·····································
		
Automatic automotive drivetrain operations · ·······························
		
Other operations ··········································································
		
Eliminations (inter-segment net sales) · ·······································
				¥ 54,632
93,67825,730(7,290)¥ 166,750¥ 45,733
95,651
17,883(6,596)¥152,671$ 491,541
1,028,063
192,208(70,894)$1,640,918

Operating Costs and Expenses: Manual automotive drivetrain operations ·····································
		
Automatic automotive drivetrain operations · ·······························
		
Other operations ··········································································
		
Non-allocated operating expenses and eliminations ···················
				¥ 47,370
90,50425,041(6,382)¥156,533¥ 39,837
90,434
17,579(6,030)¥141,820$ 428,171
971,991
188,940(64,811)$1,524,291

Operating Income:Manual automotive drivetrain operations ·····································
		
Automatic automotive drivetrain operations · ·······························
		
Other operations ··········································································
		
Non-allocated operating expenses and eliminations ···················
				

¥

7,262
3,173
690
(908)
¥ 10,217

¥

5,896
5,217
304
(566)
¥ 10,851$

Assets:Manual automotive drivetrain operations ·····································
		
Automatic automotive drivetrain operations · ·······························
		
Other operations ··········································································
		
Corporate and eliminations ··························································
				¥ 37,585
71,076
16,355
11,891¥136,907¥ 41,524
73,995
17,396
20,511¥153,426$ 446,303
795,303
186,973
220,454$1,649,033

Depreciation and Amortization: Manual automotive drivetrain operations ·····································
		
Automatic automotive drivetrain operations · ·······························
		
Other operations ··········································································
		
Corporate and eliminations ··························································
				

¥

2,964
8,191
1,275
(118)
¥ 12,312

¥

3,032
7,937
1,142
(117)
¥ 11,994$

Capital Expenditures:
Manual automotive drivetrain operations ·····································
		
Automatic automotive drivetrain operations · ·······························
		
Other operations ··········································································
		
Corporate and eliminations ··························································
				

¥

¥

$

5,700
13,531
3,276(83)¥ 22,424

¥

1,527
3,270
1,597
(103)
6,291

63,37056,072
3,268(6,083)$ 116,627

32,58885,307
12,275(1,258)$ 128,912$

16,41235,146
17,165(1,107)
67,616(Note) Effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries changed estimated useful lives on depreciation ofmachinery based on an amendment in the Corporation Tax Law. As compared with the previous method, operating costs and expenses increased by ¥79
million in the Manual automotive drivetrain operations, ¥308 million in the Automatic automotive drivetrain operations and 29 million in the Other operations, andoperating income for each segment decreased by the same amount.

Geographic area segment information for the years ended March 31, 2009 and 2010 was as follows:
Japanese yen(millions)

U.S. dollars(thousands)

2009

2010

2010

Sales:
Japan ···························································································
		
America · ······················································································
		
Asia-Oceania ···············································································
		
Other ····························································································
		
Eliminations (inter-segment net sales) · ·······································
				¥121,492
31,07133,897
2,659(22,369)¥166,750¥117,348
23,222
29,337
2,079(19,315)¥152,671$1,261,264
249,592
315,316
22,345(207,599)$1,640,918

Operating Costs and Expenses: Japan ···························································································
		
America · ······················································································
		
Asia-Oceania ···············································································
		
Other ····························································································
		
Non-allocated operating expenses and eliminations ···················
				¥116,895
30,36429,503
2,222(22,451)¥156,533¥110,282
22,791
26,293
1,916(19,462)¥141,820$1,185,318
244,959
282,599
20,594(209,179)$1,524,291

Operating Income:Japan ···························································································
		
America · ······················································································
		
Asia-Oceania ···············································································
		
Other ····························································································
		
Non-allocated operating expenses and eliminations ···················
				

¥

4,597
708
4,395
436
81
¥ 10,217

¥

7,066
431
3,044
163
147
¥ 10,851$

Assets:Japan ···························································································
		
America · ······················································································
		
Asia-Oceania ···············································································
		
Other ····························································································
		
Corporate and eliminations ··························································
				¥ 79,509
19,20730,7091,695
5,787¥136,907¥ 81,648
18,98336,106
1,859
14,830¥153,426$ 877,558
204,031
388,070
19,980159,394$1,649,033

75,946
4,633
32,7171,751
1,580$ 116,627(Notes) 1. The Company’s operations are classified into geographical areas as follows: Japan, America, Asia-Oceania (Thailand, Malaysia, China, Indonesia,
Vietnam, Australia, United Arab Emirates, New Zealand and India) and Other (Europe).
2. Effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries changed estimated useful lives on
depreciation of machinery based on an amendment in the Corporation Tax Law. As compared with the previous method, operating costs andexpenses increased by ¥416 million in Japan segment and operating income for each segment decreased by the same amount.

Annual Report 2010 22

Net sales outside Japan for the years ended March 31, 2009 and 2010 were as follows:
Japanese yen(millions)		
America · ······················································································
		
Asia-Oceania ···············································································
		
Other ····························································································
				

U.S. dollars(thousands)

2009

2010

2010

¥31,165
33,247
7,308¥71,720¥23,492
35,7885,366¥64,646$252,494
384,652
57,673$694,819

17. Related Party Transactions
For the years ended March 31, 2009 and 2010, the Company and its consolidated subsidiaries had operational transactions with Aisin AW
Co., Ltd and Aisin Holdings of America, Inc., which are subsidiaries of Aisin Seiki Co., Ltd. which holds 33.4% of the Company's voting rights.
A summary of the significant transactions between the Company and its consolidated subsidiaries and such companies for the years ended
March 31, 2009 and 2010 were as follows:
March 31, 2009
Operation

Anjo City
Aichi Pref.

¥ 26,480

Manufacturing
automotive
parts

—

Aisin AW
Co., Ltd.

Anjo City
Aichi Pref.

¥ 26,480

Manufacturing
automotive
parts

—

Sale ofproducts

Sale ofproducts

Aisin
HoldingsofAmerica,Inc.

Indiana
U.S.A.

$282,290

Administrationof overall
North
Americanoperations

40%(directly
held)

Debt

Interest
expenseOperation

Categories

Name

AddressThe
Company

Other relatedcompany’s
subsidiary

Aisin AW
Co., Ltd.

Other related
Dynax
company’s
Corporation
subsidiary

Exedy
Other related
Americacompany’s
Corporation subsidiary

Votingrights(%)

Relationship

CapitalJapanese yen(millions)

Subjects

BusinessrelationshipSale ofproducts

Trade

AmountJapanese yen(millions)

Sale ofproducts
Concurrently
serving as
directors

Accounts

Balance
Japanese yen(millions)

Accounts
receivable¥

503

Advanced
received¥1¥ 2,374

Accounts
receivable

¥

216

¥

Long-term
debt¥ 1,529

Accounts

Balance
Japanese yen(millions)
U.S. dollars(thousands)

Accounts
receivable¥ 1,021$10,974

Advanced
received¥$¥ 3,973

86

March 31, 2010

Subjects

Categories

Name

Address

CapitalJapanese yen(millions)
U.S. dollars(thousands)

The
Company

Other relatedcompany’s
subsidiary

Aisin AW
Co., Ltd.

Anjo City
Aichi Pref.

¥ 26,480$284,609

Manufacturing
automotive
parts

—

Sale ofproducts

Other related
Dynax
company’s
Corporation
subsidiary

Aisin AW
Co., Ltd.

Anjo City
Aichi Pref.

¥ 26,480$284,609

Manufacturing
automotive
parts

—

Sale ofproducts

Sale ofproducts¥ 2,192$23,560

Accounts
receivable¥537$ 5,772

Exedy
Other related
Americacompany’s
Corporation subsidiary

Aisin
HoldingsofAmerica,Inc.

Indiana
U.S.A.

$282,290

Administrationof overall
North
Americanoperations

40%(directly
held)

Debt

Interest
expense¥$Long-term
debt¥ 1,547$16,627

Votingrights(%)

Relationship
Businessrelationship

Trade

AmountJapanese yen(millions)
U.S. dollars(thousands)

Sale ofproducts
Concurrently
serving as
directors¥ 4,059$43,62637
398(Transaction terms and policy determination thereof)
With regard to sale of products and debt, prices and other transaction terms are determined by negotiation in consideration of market situations.
(Note) Consumption taxes are included in the balance, but not in the trade amounts.

23 Annual Report 2010554

18. Per Share Data
Per share data for the years ended March 31, 2009 and 2010 were as follows:
Japanese yen

2010

2009
Net income ························································································································Net income – diluted · ·······································································································Net assets ·························································································································

U.S. dollars

2010¥ 113.72—
2,115.38¥ 112.00—
1,999.38$ 1.22—22.74

Diluted net income per share is not disclosed because potentially dilutive securities have not been issued.

The information on which per share data was calculated for the years ended March 31, 2009 and 2010 was as follows:
Japanese yen(millions)2009
Net income per share of common stock 			Net income · ···············································································································¥ 5,441
Amounts not attributed to ordinary shareholders · ·····················································—Net income attributed to ordinary shareholders · ·······················································¥ 5,441
The weighted average number of shares (thousands) ··············································

U.S. dollars(thousands)

2010

2010

¥ 5,524—¥ 5,524$59,372—$59,372

48,582

48,58319. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2009 and 2010 were as follows:
Japanese yen(millions)2009
Short-term borrowings ·········································
Current portion of long-term debt ························
Current portion of lease obligation ······················
Long-term debt ····················································
Lease obligations ················································
Other interest bearing debt · ································
					¥3,681
802
5
2,627
15
79
¥7,209U.S. dollars(thousands)
2010¥3,371
1,351
16
3,099
28
58
¥7,9232010

Weighted
averageinterest rates$36,232
14,520172
33,308301
623$85,156

3.7%
6.2
—
2.6
—
0.5

Year
due

2011–20192011–2015

Annual maturities of long-term debt and lease obligations as of March 31, 2010 were as follows:
Long-term debt
Years ending March 31
2012 ···································································································································································
2013 ···································································································································································
2014 ···································································································································································
2015 and thereafter ············································································································································
				

Lease obligation
Years ending March 31
2012 ···································································································································································
2013 ···································································································································································
2014 ···································································································································································
2015 and thereafter ············································································································································
				Japanese yen(millions)¥1,908636
86
469¥3,099Japanese yen(millions)
¥13
8
6
1
¥28

U.S. dollars(thousands)$20,507
6,836
924
5,041
$33,308

U.S. dollars(thousands)
$140
86
64
11
$301

Annual Report 2010 24

Independent Auditors’ Report
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIESTo the Shareholders and Board of Directors of
EXEDY Corporation:
We have audited the accompanying consolidated balance sheets of EXEDY Corporation andconsolidated subsidiaries as of March 31, 2010 and 2009 and the related consolidated statements ofincome, changes in net assets and cash flows for the year then ended, expressed in Japanese yen.
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to independently express an opinion on these consolidated financial statements basedon our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of EXEDY Corporation and its consolidated subsidiaries asof March 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for theyears then ended, in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2010 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.

Osaka, Japan
June 25, 201025 Annual Report 2010

Corporate Data
BOARD OF DIRECTORSAND CORPORATE
AUDITORS
As of June 30, 2010
President and Chief Executive Officer:
Haruo Shimizu
Director: Etsuji Terada
Hisayasu Masaoka
Masayuki Matsuda
Katsumi Shintou
Hidehito Hisakawa
Hideki Miura
Mikio Natsume
Auditors: Naoaki Sawada
Kanshirou Toyoda
Koji Okada
Takenori Yamasaki

DOMESTIC JAPANESE NETWORKEXECUTIVE OFFICERSOUTLINE OF COMPANY

As of June 30, 2010

As of March 31, 2010

Senior Executive Managing Officer:
Etsuji Terada
Hisayasu Masaoka
Masayuki Matsuda
Executive Managing Officer: Katsumi Shintou
Hidehito Hisakawa
Hideki Miura
Yoshitsugu Sakamoto
Shougo Okamura
Senior Executive Officer:
Koji Akita
Akira Hirai
Executive Officer:
Yoshio Katayama
Masahito Baba
Tadashi Nakahara
Mitsugu Yamaguchi
Tetsuya Yoshinaga
Makoto Ichikawa
Keizo Nishigaki
Hiroshi Toyohara
Kenji Matsuda

Name:
EXEDY Corporation
Established:
July 1, 1950
Paid-in Capital:¥8,284 million
Number of Employees:
2,388
Number of Authorized Shares:
168,000 thousand shares
Number of Issued Shares:
48,594 thousand shares
Number of Shareholders:
6,081
Average number of shares
held by one Shareholder:
7,991 shares
Listed on First Sections,Tokyo/Osaka Stock Exchange

Head Office:Chubu Sales Office:Tokyo Sales Office:Hiroshima Sales Office:1-1-1 Kidamotomiya, Neyagawa-shi, Osaka, 572-8570
Tel: 81-72-824-6933 Fax: 81-72-821-7913
DBS Tokyo, 2-17-2 Iwamoto-cho, Chiyoda-ku, Tokyo, 101-0032
Tel: 81-3-3862-2771 Fax: 81-3-3864-1547

Saitama Sales Office:Oomiyanakacho AK Bldg., 6th Floor, 1-104 Naka-cho,
Oomiya-ku, Saitama-shi, Saitama, 330-0845
Tel: 81-48-650-4441/4442 Fax: 81-48-650-4443

Shizuoka Sales Office:RICOH Solutions Higashi Shizuoka Bldg., 2nd Floor, 6-20
Aratajima-cho, Fuji-shi, Shizuoka, 417-0043
Tel: 81-545-54-0861 Fax: 81-545-54-0862

Hamamatsu Sales Office:CITY21Bldg., 6th Floor, 320-4 Sunayama-cho, Naka-ku,
Hamamatsu-shi, Shizuoka, 430-0926
Tel: 81-53-413-6011 Fax: 81-53-413-6012

Tosho Bldg., 2nd Floor, 1-16-5 Mikawaanjo-cho, Anjo-shi, Aichi, 446-0056
Tel: 81-566-71-2750 Fax: 81-566-72-7015
DBS Hiroshima, 6-6 Sakaemachi, Kaita-cho, Aki-gun,
Hiroshima, 736-0043
Tel: 81-82-821-0021 Fax: 81-82-823-6620

EXEDY Hiroshima Co., Ltd.:

6-11 Taguchi Kenkyu Danchi, Higashi Hiroshima-shi,
Hiroshima, 739-0038
Tel: 81-82-425-3434/5 Fax: 81-82-425-3436

EXEDY Kyoto Co., Ltd.:

15 Kizuogawa, Kizugawa-shi, Kyoto, 619-0214
Tel: 81-774-73-0631 Fax: 81-774-73-2147

Ueno Division:

EXEDY Logistics Co., Ltd.:

Kawagoe Plant:

EXEDY Precision Co., Ltd.:DYNAX Corporation:

EXEDY Trading Co., Ltd.:EXEDY Casting Co., Ltd.:EXEDY Electric Facilities Co., Ltd.:

2418 Ota-cho, Iga-shi, Mie, 518-0825
Tel: 81-595-23-8101 Fax: 81-595-24-5521
1-103-25 Yoshinodai, Kawagoe-shi, Saitama, 350-0833
Tel: 81-49-225-0601 Fax: 81-49-225-0600
1053-1 Kamiosatsu, Chitose-shi, Hokkaido, 066-8585
Tel: 81-123-24-3247 Fax: 81-123-49-2050
112 Haishi, Fukuchiyama-shi, Kyoto, 620-0955
Tel: 81-773-22-1156 Fax: 81-773-23-8477

1-1-33 Kidamotomiya, Neyagawa-shi, Osaka, 572-0822
Tel: 81-72-825-0473 Fax: 81-72-820-2521
104-1 Joden, Mimasaka-shi, Okayama, 701-2625
Tel: 81-868-74-3501 Fax: 81-868-74-3503
1-1-33 Kidamotomiya, Neyagawa-shi, Osaka, 572-0822
Tel: 81-72-824-7633 Fax: 81-72-822-1016
6-17 Kamikicho, Moriguchi-shi, Osaka, 570-0024
Tel: 81-6-6997-3131 Fax: 81-6-6997-3150

Nippon Retarder System Co., Ltd.:

1-1-33 Kidamotomiya, Neyagawa-shi, Osaka, 572-0822
Tel: 81-72-820-0911 Fax: 81-72-824-1035

OVERSEAS NETWORKDYNAX America Corporation (DXA)DYNAX Industry Shanghai Co., Ltd. (DXS)EXEDY Malaysia Sdn. Bhd. (EXM)

568 East Park Drive, Roanoke, VA 24019, U.S.A.
Tel: 1-540-966-6010 Fax: 1-540-966-6011

No.350 Rongxiang Road, Songjiang Export Processing
Zone, Shanghai 201613, CHINA
Tel: 86-21-57748388 Fax: 86-21-57748389

PT 16748, Jalan Permata 1/5, Arab-Malaysian Industrial
Park 71800 Nilai, Negeri Sembilan, MALAYSIA
Tel: 60-6-7992988 Fax: 60-6-7996388

EXEDY Chongqing Co., Ltd. (EXC)

EXEDY New Zealand Ltd. (ENZ)

D44, D45, D47, D49 North Economy & Technology
Development Park, Chong Qing, 401142, CHINA
Tel: 86-23-62924439 Fax: 86-23-62900348

151 Wairau Road Glenfield Auckland, NEW ZEALAND
Tel: 64-9-444-0901 Fax: 64-9-444-0903

EXEDY Guangzhou Co., Ltd. (EGC)

700/316 Moo 6, Bangna-Trad Road, Tumbon Don HuaRoh, Amphur Muang, Chonburi 20000, THAILAND
Tel: 66-38-214-423 Fax: 66-38-214-422

EXEDY America Corporation (EAC)
2121 Holston Bend Drive, Mascot, TN 37806, U.S.A.
Tel: 1-865-932-3700 Fax: 1-865-932-2230

EXEDY Globalparts Corporation (EGP)
8601, Haggerty Road South, Belleville, MI 48111, U.S.A.
Tel: 1-734-397-3333 Fax: 1-734-397-7300

EXEDY Holdings of America Corporation (EHA)
8601, Haggerty Road South, Belleville, MI 48111, U.S.A.
Tel: 1-734-397-3333 Fax: 1-734-397-9567

EXEDY-DYNAX America Corporation (EDA)

No.406, E-Aria, Longfu Car Accessories Centre, Hengfu
Road, Guangzhou, CHINA
Tel: 86-20-83489166 Fax: 86-20-83489370

EXEDY Shanghai Co., Ltd. (ESC)

8601, Haggerty Road South, Belleville, MI 48111, U.S.A.
Tel: 1-734-397-6556 Fax: 1-734-397-6566

1399 Chengqiao Road, Fengxian District, Shanghai
201400, CHINA
Tel: 86-21-67109075 Fax: 86-21-37565209

EXEDY Middle East FZCO (EME)

Shanghai DYNAX Co., Ltd. (DXC)

P.O.BOX 18199, Warehouse No. ZE5 & ZE6 Jebel Ali Free
Zone, Jebel Ali Dubai, U.A.E.
Tel: 971-4-883-2244 Fax: 971-4-883-2500<Amman Representative Office>Room No.103, 1st Floor, Al Housanie Bldg. #6 Salem
Moh'd Al-Ekdhah Street Sweifieh, Wadi Al-Saier, Amman,
JORDAN
Tel: 962-658-13215 Fax: 962-658-13015<Nairobi Representative Office>International House, 1st Floor, Room No.12, Mama Ngina
Street, P.O. Box 41931-00100, Nairobi, KENYA
Tel: 254-20-221-1214 Fax: 254-20-221-5700<Riyadh Branch Office>Room #1 Al Edressi Bldg, Prince Fahed Bin Ibrahim St.
In front of AL-Majal Centre, Riyadh, SAUDI ARABIA
Tel: 966-12148431 Fax: 966-12148728

EXEDY Australia Pty. Ltd. (EAP)
21 Fiveways Boulevard, Keysborough, Victoria 3173,
AUSTRALIA
Tel: 61-3-9701-5556 Fax: 61-3-9701-5684

No.2 plant 1399 Chengqiao Road, Fengxian District,
Shanghai 201400, CHINA
Tel: 86-21-57437465 Fax: 86-21-57437458

P.T. EXEDY Indonesia (EXI)
Jalan Pegangsaan Dua Km2 No.64, Kelapa Gading,
Jakarta, Utara 14250, INDONESIA
Tel: 62-21-4603353 Fax: 62-21-4603355

P.T. EXEDY Motorcycle Indonesia (EMI)JL. Pulobuaran Raya Kav. III FF 8-9, Jakarta, Timur 13920,
INDONESIA
Tel: 62-21-4602581 Fax: 62-21-4602580

Ceekay Daikin Ltd. (CDL)<Aurangabad Plant>
Plot No.L-4, M.I.D.C. Industrial Area, Chikalthana,
Aurangabad, 431 210, M.H. INDIA
Tel: 91-240-2484014 Fax: 91-240-2484403<Greater Noida Plant>
Plot No.9, Udyog Kendra Industrial Area, Greater Noida,
201 304, U.P. INDIA
Tel: 91-120-2350280~286 Fax: 91-120-2350237

EXEDY Corporation Asean Regional Office (EAR)

EXEDY Friction Material Co., Ltd. (EFM)
700/359 Moo 6, Bangna-Trad Road, Tumbon Don HuaRoh, Amphur Muang, Chonburi 20000, THAILAND
Tel: 66-38-743-923 Fax: 66-38-743-927

EXEDY Thailand Co., Ltd. (EXT)
700/316 Moo 6, Bangna-Trad Road, Tumbon Don HuaRoh, Amphur Muang, Chonburi 20000, THAILAND
Tel: 66-38-214-423 Fax: 66-38-214-422

EXEDY Vietnam Co., Ltd. (EXV)Khai Quang Industrial Zone, Vinh Yen City, Vinh Phuc
Province, Socialist Republic of VIETNAM
Tel: 84-211-3721252 Fax: 84-211-3721253

EXEDY Clutch Europe Ltd. (ECE)
Unit 2, Rokeby Court, Manor Park, Runcorn, Cheshire
WA7 1RW, U.K.
Tel: 44-1928-571850 Fax: 44-1928-571852

EXEDY DYNAX Europe Ltd. (EDE)
2800 Tatabanya, Szarkalab UT6, HUNGARY
Tel: 36-34-311-117 Fax: 36-34-311-122

Annual Report 2010 26