Annual Report

2017
Year ended December 31, 2017

Motor forpower window lifters
GD-558RK

Motor forpower window lifters
GD-558RJ

Enhanced Lineup
Shifting Growth into
OverdriveSmall  Direct-Current
Electric Motors——— Accelerate for further GrowthEver since its founding, Mabuchi Motor Co., Ltd. has been a specialist manufacturer of small motors that consistently
deliver high quality and efficiency at low prices in line with our basic policy of “Bringing better and more reasonably
priced goods to the market.” Our small motors find diverse applications in automotive products and consumer andindustrial products, including home appliances, power tools, precision and office equipment, audio and visualequipment, and toys. In this way, we contribute to convenient, comfortable living for people the world over.

“The Mabuchi Group is the world’s leading producer of small motors. Our annual production volume of

approximately 1,560 million units (2017 results) is testimony to the excellent reputation and trust we have built with ourcustomers and a source of great pride for us.

In the coming years, we will continue to aspire to create new value through product development adaptable tomarket needs and through a flexible supply system.”

Extending Our Contribution through
New BusinessWe hope to challenge ourselves in new spheres of businessby creatively combining the technology that we havecultivated over the years into new forms that are applicableto tomorrow’s needs. By investigating resources outside ourwalls and by measuring our in-house capabilities, we strive
to develop new technological platforms. By refining our
product and business skills, we in turn strengthen our own
internal structure. Attentive to current technological trends,
we invest our energy in business fields where we believe
Mabuchi Motors can excel. Our constant hope is to provide
highly advanced technology, products, and services with a
special touch of “Mabuchi-ness.”

Profile1

MABUCHI MOTOR CO., LTD.

Expanding Our Contribution to
Existing Businesses
By improving the products and processes of our existing
stratum of businesses and by retaining the unique hightechnology of crucial components within our enterprise, we
are able to accomplish the following endeavors that buttressour continued effort to raise consumer satisfaction.

Exerting Continued Strength
To build realistic and effective organizational power, it isimperative for all employees to have a sense of autonomy andresponsibility when tackling a challenging, worthwhile project.
With his or her own strength, every employee must exert asense of leadership, and by sharing a common direction as ateam, aim toward success. By maximizing the capacities ofeach individual and by concentrating these unique forces into
one, we are able to realize the “Mabuchi Strength.”Annual Report 2017

Mabuchi’s Management Vision“Contributing to International Society andContinuously Increasing Our Contribution.”Management Guidelines
The “Management Guidelines” offer a direction for how
to perceive and realize the “contribution” expressed in
the “Management Principle.” This guideline also states
the services our business activities should aspire to
perform. We aim to become a corporation that cancontinue to aggrandize this “contribution” and proceed
in strength and perseverance.

Management Policies
When a new “value” created through our businessactivities is recognized and received by society, is when
the fruit of our contribution “profit,” can be achieved.
The management policies of Mabuchi Motor act as astarting point for our philanthropic activities as well as
the healthy growth of our business.

Management Scheme
Our Management Vision
Forward-looking Statements
Statements concerning the business forecast are based on information available at thetime of preparation. Actual results may differ from the forecast due to various factors.
Factors that may affect the operating results include, but are not limited to:• Fluctuations in exchange rates• Changes in economic conditions, demand trends, and other factors surrounding
Mabuchi’s businesses• Rapid technical innovations such as new technologies and new products• Fluctuations in the market prices of copper, steel, rare earth metals, and othermaterials

For the future of the Mabuchi Motor, while sustaining a
distinct “Mabuchi-ness,” we propose to proceed bycondensing our organizational strength throughselection and concentration.
We believe that the diversification of our businessactivities is not possible without a contribution tosociety. The heart of our work does not reside solely inthe realm of expanding sales. When our products are
truly welcomed in the marketplace, the product of ourcontribution takes the shape of profit. We truly believe
this view of management, and shall continue to support
future endeavors based on this belief.

Table of Contents
1 Profile
2 Mabuchi’s Management Vision
3 To Our Shareholders
8 Five-year Summary
9	Segment Information by Motor Application
11 Research and Development Activities
12 Corporate Governance13 Corporate Social Responsibility
15 Management’s Discussion and Analysis
17 Financial Data
39	Board of Directors, Audit & Supervisory
Board Members, and Executive Officers
40 Corporate Data
41 Investor Information
2

To Our
Shareholders
Standing united, the Mabuchi Groupwill implement priority activities in its
quest to achieve renewed growth.

Hiroo Okoshi
Representative Director and President,
President & CEO

Business Results for Fiscal 2017

Please see the table below for the year-on-year changes.

We will report on the consolidated performance for the
fiscal year ended December 31, 2017 (January 1 to December 31, 2017).

During fiscal 2017, the world economy in general showed
underlying strength. The economic environments of the
major countries and regions were as follows:

For the fiscal year ended December 31, 2017 (fiscal 2017),
consolidated net sales were 146,925 million yen, operating
income was 24,066 million yen, and income before income
taxes was 27,485 million yen.

Financial Highlights
Thousands of
U.S. dollars

Rate ofchange

2017

2017

YoY

¥146,925$1,300,223+4.4%

Millions of yen

2016
Net sales ¥140,699

3Operatingincome24,22524,066

212,974-0.7%

Profit attributableto owners of parent

20,59820,303

179,672

-1.4%

Total
assets258,387

269,318

2,383,349+4.2%

Net assets

232,917242,179

2,143,182+4.0%

MABUCHI MOTOR CO., LTD.

Economic Environments of Major Countries and Regions
In the U.S. economy: Sustained growth continued,
supported by strong consumer spending spurred by
improvement in the employment environment.
In the European economy: The economy was strong
against a backdrop of capital investment expansion.
In the Japanese economy: Moderate growthcontinued, as a result of expansion of consumer spending
accompanying improvement in the employment
environment.
In emerging market economies: A gradual adjustment
phase continued in the Chinese economy, and overall
growth remained low.

IssueAnnual Report 2017

Acceleration of Growth in the Power Window
Lifter Motor Business1

Result Winning of orders from new customers by means of

next-generation motors for power window lifters

Issue

Expansion of Small and Medium-sized
Automotive Motor Sales and New Applications

2

Result Expansion of orders for small and medium-sizedautomotive motors for various applications by means ofapplication-specific standard products, and developmentof new applications

The Group’s applications by market were as follows:

Applications by Market

Issue

Development of New Applications in
the Consumer and Industrial Products Sector

3

Result Sales expansion through enhancement of the lineup of

motors for high-end home appliances

In the Automotive Products Market: Healthy demand
continued overall.
In the Consumer and Industrial Products Market:
Although demand remained stable, markets for some
applications continued to contract.

Issue

Implementation of Laborsaving Measures andEstablishment of Next-Generation Manufacturing

4

Result Acceleration of labor-saving in production processes

through inspection automation using image processing
technology

Main Initiatives for Fiscal 2017
The main initiatives and results of fiscal 2017 are as follows.
Issue

Acceleration of Growth in the Power Window
Lifter Motor Business1

Result Winning of orders from new customers by means of

next-generation motors for power window lifters

Issue

Expansion of Small and Medium-sized
Automotive Motor Sales and New Applications

2

Issue

5

Implementation of Global Base Strategy

Result Construction of a plant building at the new production

base in Poland

We actively introduced and implemented measures toachieve further progress with sales and market share expansion, the development of new markets, and the realization of higher quality and higher efficiency, and achieved
results that contributed to business growth in fiscal 2017
and that will lead to future business growth.

Result Expansion of orders for small and medium-sizedautomotive motors for various applications by means ofapplication-specific standard products, and developmentof new applications

Issue

Development of New Applications in
the Consumer and Industrial Products Sector

3

Result Sales expansion through enhancement of the lineup of

motors for high-end home appliances

Issue

Implementation of Laborsaving Measures andEstablishment of Next-Generation Manufacturing

4

Net
Sales/Gross
Ratio in production processes
ResultAccelerationProfit
of labor-saving
through inspection automation using image processing(Millions of yen)technology 29.1

Issue

5

24.8

32.8

30.4
143,143

32.2

Operating Income(Millions of yen)

16.0
13.8

140,699

146,925

122,544
Implementationof Global Base Strategy

22,961

17.2

16.4

24,22524,066

2016

2017

8.6
16,875

108,401

Result Construction of a plant building at the new production
9,335

base in Poland

2013
Gross profit ratio (%)

2014

2015

2016

2017

2013

2014

2015

Operating income ratio (%)

4Outlook for Fiscal 2018
The economic environments of the major countries andregions are forecasted as follows for fiscal 2018.

Economic Environments of Major Countries and Regions
In the U.S. economy: Expected to remain strong.
In the European economy: Expected to maintaingrowth as a whole, despite a sense of uncertainty about
the outlook for the U.K. economy.
In the Japanese economy: Modest growth is expected
to continue.
In emerging market economies: China, India andBrazil are showing a recovery trend, and gradual growthin emerging countries overall is expected to continue.
The Group’s applications by market are forecast as follows:

Applications by Market
In the Automotive Products Market: Gradual growthis expected to continue.
In the Consumer and Industrial Products Market:
While demand for motors for power tools and officeequipment in the business-use market is expected to
be flat, contraction of demand for motors for officeequipment in the personal-use products market isforecast.

Priority Activities for Fiscal 2018
(Issues to Be Addressed)(1) Strengthening‌of Competitiveness through M&As
(mergers and acquisitions)
The Company reached an agreement with HANWA Co., Ltd.
(HANWA) to transfer HANWA’s Chinese subsidiary, HANWASTEEL SERVICE (JIANGXI) CO., LTD. (HSSJ), to the Company’s
subsidiary Mabuchi Industry Co., Ltd. (Hong Kong Mabuchi),and a transfer of equity agreement was executed between
Hong Kong Mabuchi and HANWA on January 15, 2018.
Through Hong Kong Mabuchi, the Company will acquire
100% equity in HSSJ and make it an affiliated company.

5

MABUCHI MOTOR CO., LTD.

HSSJ is a processing company that supplies steel sheet coilmaterial, a key material for motors, to Jiangxi Mabuchi, aproduction base of the Company, thus contributing tostable procurement of key components, quality improvement, and strengthening of cost competitiveness. We will
work to create early-stage synergies that will lead to afurther increase in the competitiveness of internally manufactured components.

(2) ‌Acceleration of Growth in the Power Window
Lifter Motor BusinessMedium-sized automotive motor for power window lifter
For Japanese automakers•	In fiscal 2017, we secured orders for next-generation
motors that will realize further size and weight reduction,
and we plan to start mass production in the third quarterof fiscal 2018.
•	We will develop a structure to ensure smooth supply anduse this increased adoption of such motors as a springboard for activities to expand sales to other automakers
and increase the number of equipped models.
For European, North American and Chinese automakers•	Against a backdrop of robust demand in the European,North American, and Chinese markets, we continue tosecure new business for standard products, for which weare actively engaging in sales expansion activities, andmaking steady progress with trade inquiries that will leadto future business.
•	We will continue to step up sales expansion activities tosolidify our market position.

Power Window Lifter Motor Sales Results and Forecast(Billion yen)

35

(%)

Sales amount
Sales quantity (2014=100%)

200

30
150

25
20

100

15
10

50

5
0

2014

2015

2016

2017

2018
Forecast0Annual Report 2017(3) ‌Expansion of Small and Medium-sized Automotive
Motor Sales and New Applications(4) ‌Development of New Applications in the Consumer
and Industrial Products Sector

Medium-sized automotive motors for power seats, electric
parking brakes, and new door area applications
Below is a summary of our activities related to electric
parking brakes, power seats, and new door area applications, which are some of the main applications for mediumsized automotive motors.
For electric parking brakes•	We will aim for further sales growth from electric parking
brake motors by increasing the number of models
equipped with such brakes and raising the installation
rates of products for major Japanese and European automakers.
For power seats and new door area applications•	We will move ahead with proposals and development of
new products to win orders for power seat and door area
applications.

In addition to business activities centered on existing small
brush motors, we are reinforcing initiatives to develop andincrease sales of brushless motors in order to focus on new
applications and create new demand. Our main activities inthis area are described below.
For light electric vehicles•	We will work to win new orders for brushless motors forlight electric vehicles by deploying application-specificstandard products for automated guided vehicles (AGVs),
medical stretchers, and other applications.
For high-end home appliances•	Upgrading of products such as cordless vacuum cleanersand hair dryers is progressing. We will develop new
high-performance motors by leveraging the advanced
technological capabilities of a specialized manufacturer tomeet customer needs.
For residential electronic locks•	We will deploy small-diameter standard motors andfurther strengthen sales expansion activities.

Small automotive motors
Below is a summary of our activities related to grille shutter
actuators and shift-by-wire systems, which are applications
for small automotive motors.
For grille shutter actuators and shift-by-wire systems•	In addition to stepping up sales expansion activities, wewill focus on development of new brush motors andbrushless motors capable of contributing to functional
enhancement of customers’ products.

Small Automotive Motor Sales Results and Forecast(Billion yen)

60

(%)

Sales amount
Sales quantity (2014=100%)

150

50
40

100

30
20

50

10
0

2014

2015

2016

2017

2018
Forecast

0(5) ‌Implementation of Laborsaving Measures andEstablishment of Next-generation Manufacturing
Our production technology strategy calls for a shift from“humans” to “equipment.” To maximize the effectivenessof this strategy, we are engaged in the following activities.
Phase 1 and 2 Laborsaving Plans (2011–2016)•	We achieved labor-saving in excess of 30% during bothPhase 1 (2011–2013) and Phase 2 (2014–2016) Laborsaving Plans.
Phase 3 Laborsaving Plan (2017–2019)•	In fiscal 2017, the first year of the three-year plan, we
achieved year-on-year labor-saving in excess of 10% asplanned.
•	We will horizontally deploy the automatic inspection
equipment utilizing image processing technology that has
already been introduced at some production bases.
Promotion of the international specialization system inmanufacturing technology innovation•	We will organize a global start-up team of specialists fromwithin the Group and work to realize the rapid start-up of
new production bases and production lines.
•	We will strengthen activities to horizontally deploy bestpractices from each production base across all production
bases.

6

(6) Implementation of Global Base Strategy
To further solidify our global production and supply system,
we are engaged in the following activities.
Poland Mabuchi•	The start-up of this production base is progressing
smoothly. Plant building construction began during thethird quarter of fiscal 2017, and we are working toward
completion of construction during 2018 as planned.
Europe Mabuchi•	To realize a rapid response to technical issues in Europe, inthe third quarter of fiscal 2017, we established within
Europe Mabuchi in Germany an organization with designand development functions, in addition to the previous
technical services function, and began design and development activities.
•	The sales, technology and production functions will be
integrated, and we will work to improve customer satisfaction and increase sales by promptly responding locallyto the needs of European customers.
Thailand Mabuchi•	To strengthen the sales structure in the ASEAN region,
where automotive electrical equipment companies havebeen concentrating operations in recent years, in January
2018, we established Thailand Mabuchi as a sales base.
Vietnam Mabuchi Branch Plant•	We will construct a branch plant near Vietnam Mabuchi
to mainly handle development and manufacturing of
motor production facilities.
•	Construction of a plant building is planned to start in fall2018 to accelerate labor-saving throughout the Group by
expanding the capacity to construct production facilities.

Basic Policy on Profit Sharing, andDividend Payments for the Current
and Next Periods
Mabuchi maintains a basic policy of actively returning profits
to shareholders in accordance with its business results. We
do this while also providing funds from internal reserves forcapital expenditures, research and development which arenecessary for the growth and development of the Company, and while maintaining our financial soundness.
Under this policy, apart from when business results are
remarkably sluggish due to a sudden deterioration in thebusiness environment, we consistently distribute an annual
ordinary dividend of 30 yen per share as payment of along-term stable dividend, plus an additional special dividend equal to 30% of the consolidated net income divided
by the number of outstanding shares, depending on theperformance of the Company.
We paid an interim dividend of 54 yen (an ordinary
dividend of 15 yen and a special dividend of 39 yen) per
share and a year-end dividend of 66 yen (an ordinary dividend of 15 yen and a special dividend of 51 yen) per share.
Thus, the annual dividend for fiscal 2017 was 120 yen per
share in total. We plan to pay an annual dividend of 109 yen
per share (an ordinary dividend of 30 yen and a special
dividend of 79 yen) for fiscal 2018.
We will continue to consider repurchasing more treasury
stock as necessary, as a way of flexibly responding to changes in the share price and the business environment, and as ameans of fulfilling our capital policy and returning profits toshareholders.
It is our policy to appropriate internal reserves to further
strengthen and deepen our existing businesses and to invest
in areas of growth, with a view to increasing corporate value.

Mabuchi’s Global Network
ASEAN

Planned Site of Poland Mabuchi
Thailand

VietnamDanang Mabuchi

Thailand Mabuchi
Singapore Mabuchi

Vietnam Mabuchi

PolandBerlinGermany

Planned site ofPoland Mabuchi

Directly connected to the German border by land route (approx. 450 km)

7MABUCHI MOTOR CO., LTD.

Annual Report 2017

Five-year Summary
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries(Years Ended December 31)

Millions of yen

Thousands of
U.S. dollars

2013

2014

2015

2016

2017

2017

¥ 108,401¥ 122,544¥ 143,143¥ 140,699¥ 146,925$1,300,223

Cost of sales

81,54686,92999,673

94,51099,619881,587

Selling, general and administrative expenses

17,51918,73920,50821,96323,239205,661

9,335

16,87522,961

24,22524,066

212,974

15,01523,595

26,593

26,53927,485

243,235

10,51918,09018,546

20,59820,303

179,672

Capital expenditures

5,755

9,597

16,187

11,236

12,844113.664

Depreciation and amortization

4,301

4,771

6,386

6,016

7,143

63,212R&D expenses

3,763

4,503

5,164

5,024

5,233

46,310Exchange gain, net

5,624

5,124

2,329

493

280

2,479

Net cash provided by operating activities

11,75018,118

20,11527,95822,585

199,873

Net cash provided by (used in) investing
activities

4,264(11,977)(1,178)(3,440)(14,027)(124,132)

Net cash used in financing activities(3,031)(6,014)(13,312)(11,860)(13,844)(122,521)

Total assets

227,253

256,368

256,196258,387

269,318

2,383,349

Net assets

208,791

233,312233,245

232,917242,179

2,143,182

For the year:
Net sales

Operating income
Income before income taxes
Profit attributable to owners of parent

Cash flows:At year-end:

Per share data:

Yen

U.S. dollars

150.10258.02266.98300.70299.742.65

2,978.02

3,325.99

3,363.01

3,405.14

3,579.98

31.68

70.00

107.00110.00120.00120.001.06

Operating income ratio (%)

8.6

13.8

16.0

17.2

16.4

–

ROE (%)

5.4

8.2

8.0

8.8

8.6

–

ROA (%)

7.9

9.9

10.6

10.2

9.8

–

Shareholders’ equity ratio (%)

91.9

91.0

91.0

90.1

89.9

–

Number of shares outstanding(Thousands of shares)

35,14535,144

69,46868,587

67,792–

Number of employees (Persons)

28,18825,354

24,41923,76823,936–

Profit attributable to owners of parent
Net assets
Dividends applicable to current year
earnings
Other data:

Notes:
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥113=U.S.$1.
2. ROE is calculated by dividing net income by the average of total shareholders’ equity plus the revaluation/translation adjustment during the period.
3. The shareholders’ equity ratio is calculated by dividing the sum of total shareholders’ equity and the revaluation/translation adjustment as of the end of theperiod by total assets as of the end of the period.
4. Per share data: The Company conducted a stock split on January 1, 2015, in which each share of the Company’s common stock was split into two shares. Per
share data has been calculated based on the number of shares issued after the stock split (excluding treasury stock). The results for fiscal years 2013 and 2014
have been adjusted and restated, and reflect the amounts after the stock split to facilitate year-on-year comparison of results.

8Segment Information
by Motor Application
Below is a description of the market conditions formotors, the Mabuchi Group’s main
business, and a report on the Group’s
sales situation.
In fiscal 2017, consolidated net sales
amounted to 146,915 million yen, up 4.4%
from the previous fiscal year.

Automotive
Products

Automotive Products Market

72.0%

Net sales in this market rose to 105,793 million yen(a 5.7% increase on a year-on-year basis).

Medium-sized Motors•	Decrease in sales of power window lifter motors due to the impactof an inventory adjustment in China, despite higher sales of new
high-torque standard products to major automakers in North
America•	Increase in sales of electric parking brake motors due to full-scalemass production and shipment to major Japanese customers and anincrease in the number of equipped models and higher installation
rates at European and American customers•	In others, increases in sales of seat belt pretensioner and door closer

Net Sales by Principal Item
(Billion yen)

(Year-on-year change)

60.0
50.0
40.0

5.6

7.3

6.0

7.2

10.5

10.8

30.9

29.8

2016

2017

30.0
20.0
10.0
0

Others128.9%
Electric Parking Brake
119.9%
Power Seat
102.5%
Power Window Lifter
96.4%

Small Motors•	Increase in sales of motors for door lock and mirror due to a stable
increase in demand for automobiles, higher installation rates, andother factors•	Maintenance of high market share of motors for air conditioning
damper•	Increase in sales of motors for head light (level adjuster) due toincreases in the number of equipped models and market share

Net Sales by Principal Item
(Billion yen)

50.0
40.0
30.0
20.0
10.0
0

9

MABUCHI MOTOR CO., LTD.

(Year-on-year change)

3.2
2.6
6.3

3.8
3.2
6.3

16.0

18.0

18.4

19.1

2016

2017

Others117.3%
Head Light (Level Adjuster)
119.4%Air Conditioning Damper
100.4%
Door Mirror (including folding)112.1%
Door Lock103.4%

Annual Report 2017

Consumer and Industrial Products Market
Net sales in this market rose to 41,222 million yen (a 1.4% increase on a year-on-year basis).
•	Increase in sales of motors for beauty-related equipment thanks to strong demand from themidrange and high-end toothbrush segments•	Decrease in sales of
Net Sales by Principal Item
motors for inkjet printer(Billion yen)
(Year-on-year change)
due to a policy of
Othersemphasizing profitability
50.0
112.0%and market contraction
Multifunction Printer (MFP)
40.0
and Laser Printer (LP)•	Strong sales of motors for107.2%
12.7
11.3
Car CD Player
power tool to the North
30.0
2.3
85.3%
2.5
American market
4.6
4.0
Power Tool
20.0
104.5%
5.0
5.2•	In others, increases in sales
Inkjet Printer
7.8
9.0
of motors for light electric
86.4%
10.0
Beauty-related Equipment
vehicle and housing
8.7
8.0
109.2%
0equipment
2016
2017

Consumer andIndustrial Products

28.0%

Sales Forecast by Market

Automotive Products Market

mirror, and air conditioning damper•	Increase in sales of motors for headlight level adjusters due
to higher installation rates•	In others, increases in sales of motors for steering lock, grilleshutter actuator, and shift-by-wireMedium-sized Motors: 61.8 billion yen(a 12.0% increase on a year-on-year basis)•	Increase in sales of power window lifter motors to theEuropean, North American, and Chinese markets due to anincrease in adoption of high-torque standard products•	Decrease in sales of power seat motors due to the impactof a change in the product mix and model changes ofequipped models•	Increase in sales of electric parking brake motors due toan increase in the number of equipped models and higher
installation rates•	In others, increases in sales of motors for engine peripheral
equipment, seat belt pretensioner, and door closer
Small Motors: 54.3 billion yen(a 7.5% increase on a year-on-year basis)•	Maintenance of a high market share of motors for door lock,

Consumer and Industrial Products Market
37.7 billion yen (an 8.1% decrease on a year-on-year basis)•	Increase in sales of motors for beauty-related equipment
due to continued strong demand from the midrange andhigh-end toothbrush segments•	Decrease in sales of motors for inkjet printer due to a policyof emphasizing profitability and market contraction•	A decrease in sales of others overall due to a policy of
maximizing profitability, despite increases in sales of motors
for medical equipment, light electric vehicle, and housing
equipment(Millions of yen)

Net Sales by Application
Thousands of
U.S. dollars

Millions of yen

2013
Automotive
Products
Consumer andIndustrial Products
Total Sales

2014

2015

2016

2017

¥ 66,220 ¥ 78,748 ¥ 96,369 ¥100,132 ¥105,793
42,11943,753

46,76440,541

2017

46,76440,541

41,12243,753
42,119Consumer andIndustrial Products$  936,221

41,122363,911¥108,340 ¥122,502 ¥143,134 ¥140,674 ¥146,915$1,300,132

Automotive Products

66,22096,369100,132

2015

2016

35,55734,396

105,793

78,748$1=¥1132013

Net Sales by Region
Thousands of
U.S. dollars

Millions of yen

2013
Japan

2014

2015

2016

2017

¥ 10,109 ¥ 11,307 ¥ 11,615 ¥ 12,010 ¥ 12,533

2017

2017

(Millions of yen)$  110,911

32,492

29,940

North & Latin
America

11,475

12,85017,204

17,36018,376

162,619

Europe19,71323,62429,262

30,11734,766

307,663

China & HongKong

41,52844,77949,493

46,79048,748431,398

Asia Pacific

25,51329,94035,55734,39632,492

287,539¥108,340 ¥122,502 ¥143,134 ¥140,674 ¥146,915$1,300,132

11,475
10,109$1=¥1132013

Total Sales

2014

Asia Pacific

25,51349,493
41,52819,713

46,79048,748

North & Latin
America
29,262

30,11734,766

12,85017,204

17,36018,376

11,307

11,61512,01012,533

2014

2015

2016

2017

23,624China & Hong Kong
Europe44,779Japan

10

Research and Development Activitiesof power window lifter motors, a development model aimed at large
North American automakers, and we are currently working tofurther expand sales and provide technical support. We also received
orders from Japanese automakers for our next-generation
development model featuring further advances in compactness andweight reduction.

The Mabuchi Motor Group’s R&D activities are spearheaded by
Mabuchi Motor Co., Ltd. (the parent company) and MABUCHIMOTOR (DONGGUAN) CO., LTD. (in the Asia segment). In thissection, we provide an overview of the Group’s R&D activities.
The R&D organization consists of the Product Development
Headquarters, Manufacturing Headquarters, Engineering
Management Dept., and Technical Research Institute. The ProductDevelopment Headquarters consists of Product Development Dept.
1, Product Development Dept. 2 and Product Development Dept. 3.
In fiscal 2017, our R&D organization assumed a matrix structure
subordinated to the Company’s business division system, whichcenters on applications.
The Manufacturing Headquarters consists of the Production
Engineering Dept. and the Operations Control Dept. The Production
Engineering Dept. conducts research into construction methods andproduction technologies. The newly established Technical ResearchInstitute engages mainly in high-value-added work, including thedevelopment of elemental technologies based on the Group’s
technology roadmap, as well as new product development centeredon strategically important applications.
From its inception, the Research and Development Center of
MABUCHI MOTOR (DONGGUAN) CO., LTD. (the “R&D Center”) has
mainly engaged in design improvement work. The R&D Center also
handles new product development aimed at rapidly launchingproducts in the Chinese local market, as well as new productdevelopment tasks entrusted by the Company.
To materialize on a timely basis new product development andnew product introductions, Mabuchi prepared a technology
roadmap based on information obtained from market research andbenchmarking-based technical investigation, and is steadily
developing elemental technologies in accordance with the roadmap.
Our Technical Research Group, established in 2015, is implementing
measures specific to this roadmap, including development of new
product-out-type offerings.
Mabuchi is focusing on the strategies described below for
examination and implementation of urgent measures, with the aimsof strengthening its responsiveness to new motor-related fields andapplications and realizing manufacturing capabilities that can win
anywhere in the world based on the philosophy of local production,
local consumption.

Motors for power seats
Mabuchi’s introduction of distinctive, small, high-torque motors for
power seats has led to increased adoption by large customers andsharp growth in sales and market share. Seeking to further increase
market share, we are reinforcing our products and conducting sales
expansion activities. We also started developing a derivative modelfor our lumbar support motor and a new type of geared motor forrecliners.

Engine peripheral equipment
Our engine peripheral equipment offerings have high future potential
because they contribute to energy savings through precise engine
control, and are also suited to engines subject to high temperaturesand vibration. In mid-November 2017, we started mass production of
the RS-4G5WA, a high-torque model in the same series as the
RS-4F5WA, a high-durability model that went into mass production
in fiscal 2014, and continued our sales promotion activities.

Power lift gates (PLGs)
Power lift gates (PLGs) are increasingly being fitted to SUVs, where
demand is growing. In the PLG market, we have started developing
a new model compatible with compact unit designs.

Motors for light electric vehicles
In this market, we have continued working to increase sales ofmotors for electrically assisted bicycles and commuter vehicles. We
are receiving various inquiries about these motors, which are finding
widespread applications in electric carriages, electric lawn mowers,
and the like.
In regard to existing models for other markets, Mabuchi willcontinue harnessing its know-how to improve its product features
while remodeling to enhance added value. At the same time, we will
deploy the aforementioned R&D Center to build a structure forpromptly meeting market and customer needs.
In fiscal 2017, R&D expenses amounted to 5,233 million yen. At
fiscal year-end, the total number of industrial properties held by theCompany stood at 783 (168 in Japan and 615 overseas), and thetotal number of new industrial property applications domesticallyand overseas was 80.

(1) Strengthen technologies of brushless motors and their drive circuits(2) Consider further laborsaving for production lines in addition toexisting laborsaving efforts(3) Shorten and eliminate development lead-times and processes

Below is a major new product launched in fiscal 2017:

In addition, while tailoring our responses to specific applications, ourtechnology and sales teams have joined forces under our businessdivision system to address applications in our core automotive motor
business and applications that we must concentrate on in businesses
earmarked to become operational pillars in the future.

RS-4G5WA for engine peripherals
In the existing RS-4F5WA series, we developed a high-torquemodel for applications requiring high durability, such as intake andexhaust valves, coolant valves, turbocharger actuators, and EGR
valves. This brush motor reflects our improved responsiveness tothe diversified needs of customers.

Motors for power window lifters
In fiscal 2017, we commenced mass production of the GD-558 series

R&D Expenses/R&D Expenses Ratio

R&D Personnel

Number of Intellectual Properties(Millions of yen)

(Employees)(Intellectual properties)
748

3.5

3.7

4,503

3.6
5,164

3.6

3.6

5,024

5,233

425

432

437

436

432

600
95

640
109

682
120

157

783
168

3,763
505

2013

2014

2015

2016

R&D expenses ratio (%)

11

MABUCHI MOTOR CO., LTD.

2017

2013

2014

2015

2016

2017

2013

531

562

591

615

2014

2015

2016

2017

Overseas

Domestic

Annual Report 2017

Corporate Governance
Basic Approach to Corporate Governance
The Management Principle of MABUCHI MOTOR CO., LTD.

•	To clearly separate management decision-making and(the “Company”) is “Contributing to International Society

efficient business execution, and to clarify the scope ofand Continuously Increasing Our Contribution” throughaccountability;

the Company’s small motors business. The Company•	To build and operate a sound internal control system;

understands that realizing this principle is its raison d’être.

•	To appoint a suitable number of independent officers

Corporate governance of the Company comprises thewhose interests do not conflict with those of shareholders,organizational structure and managerial systems that support

to ensure the objectivity and neutrality of management

the realization of its Management Principle and various

supervision functions;management measures that maintain these systems.

•	To foster a corporate culture in which all employees

Accordingly, the fundamental objective in establishing andrecognize and share the understanding that the practices of

implementing an appropriate corporate governancecorporate ethics and compliance support the organization’sframework is to further the interests of shareholders andsocial impartiality and are fundamental to living up to theother stakeholders on an ongoing basis through the creation

trust and expectations of all stakeholders; andof fair profits and the enhancement of corporate value.

•	To disclose corporate information to shareholders andConstructing and maintaining a corporate governance systemother stakeholders in an appropriate, fair, timely and clear

along the lines given below is indispensable for the Company

manner and to ensure accountability through the Board ofas a listed company:

Directors, the Audit & Supervisory Board and other bodies.

General Meeting of Shareholders
Appoint/Dismiss
Consult/
ReportIndependent
Auditors

ReportAudit & Supervisory Board(including three outside Audit& Supervisory Board Members/
independent outside officers)

Department for Audit &Supervisory Board Members

Nominating Committee

Board of Directors(including two outside directors/
independent outside officers)

AdviseAudit

Supervise

ReportCompensation Committee

ReportManagement Principle

DirectReportAccounting Audit

LiaiseConsult

Executive Committee(Executive Managing Officers)

AdviseInternal Reporting
SystemExecuteCompany Departments(Responsible for Compliance)

Subsidiaries(One Director in Charge ofCompliance)(Internal Audit Committee)

Internal Audit

WEB

Meeting of Head of Group Offices(Risk Management Committee)

Representative Directors

Internal Audit Department

Group Management
VisionBasic Policy on
Internal Control
Mabuchi Motor EthicalStandards
Other Supervisory
Frameworks• Environmental
Management Committee• Design Reviews• Division of
Duties/Company Rules
and Regulations• Ringi System and Other
Regulations• (Subsidiaries) Regulations
on Powers of Approval

https://www.mabuchi-motor.com/investor/management/governance.html 12

Corporate Social
Responsibility
Contributing to Society through Motors

Initiatives to Achieve Sustainable
Development Goals (SDGs)
In September 2015, the Sustainable Development Goals (SDGs)
were adopted by the consensus of 193 member countries at a
United Nations Summit held in New York, with 17 goals and 169
targets as the 2030 Agenda for Sustainable Development.
Paragraph 67 of the ofﬁcial agenda document calls on “allbusinesses to apply their creativity and innovation,” statingclearly the role expected of businesses in achieving the SDGs.
Mabuchi Motor is also committed to this approach and isactively pursuing environmental and social initiatives.

Making Environment-Friendly Products
Our products are environmentally friendly, high-performance and low-cost, and they can be flexibly produced and supplied. They canbe used in a wide range of fields in various applications, and this makes us the world’s top brand with a production rate of about 1.6
billion units a year.
Mabuchi Motor’s missions as a specialized motor manufacturer are to supply better and cheaper products, to contribute to
reducing the size and weight of our customers’ final products, thereby conserving energy and resources society-wide, and to make thelives of our customers more convenient, comfortable, and safe. Therefore, we are striving to thoroughly develop the potential uses andbenefits of motors and enhance their values.
Please refer to page 11 (Research and Development Activities) for details on new products.

Workplace Experience and Observation
The Head Office regularly accepts students from elementary
schools in the community to cooperate in their career education
at school.
Overseas bases are also inviting local students to observe
their workplaces.

Support for Education at Overseas Bases
Our bases in China have been continuously providing educational support
such as offering a scholarship program and donating books and schoolsupplies for students of various ages from local elementary school to college.

• Internship Program
We hold an internship program for students to provide them with anopportunity to deepen their understanding of Mabuchi’s mind-set throughactual work. The Head Office thus accepted advanced vocational school
students, graduate students, and U.S. college students as interns.

13

MABUCHI MOTOR CO., LTD.

Annual Report 2017

Support for Manufacturing/Education
Mabuchi aims to contribute to the development of society by extending various
types of support to local communities and international society. This is an effort
in line with our management principle “Contributing to international society
and continuously increasing our contribution.” As one such activity, we provide
educational support to the young people who will lead the next generation to
help them grow up surrounded by the joy of science and manufacturing.

• Co-sponsoring Robot Contests
Mabuchi has been co-sponsoring the National Technical College Robot Contest, the ABU Robot
Contest and the College Robot Contest by providing motors and funds. We support these
events in the hope that we can help foster future engineers and develop science andtechnology.
Providing support for the National Technical College Robot Contest and the College Robot
Contest (around 24,000 motors provided in total)

We are teaching the fun aspects of science to children.
Visiting Classes

Exhibition and Events at Science Museum

We have been sending our employees to elementary schools
in the Head Office area (Matsudo City) as science instructors
every year. We have received
comments from children saying things
such as theyfound science tobe fun as theyexperimented
with magnets
using motor
components.

Mabuchi has been presenting a permanent exhibition at the
Science Museum (Chiyoda-ku, Tokyo) to support scientificeducation for young people. Displays include an explanationon the mechanism of motors, various motors used in ourdaily lives, and handicrafts
powered by motors. We alsooffer a science experiment classin collaboration with themuseum.

Summer Vacation Handicraft Class

Wooden Craft Event

We hold the “summer vacation handicraft class for parents
and children” every year for children (fourth through sixth
graders) living in the area aroundthe Head Office (Matsudo City).
We plan to continue thishandicraft class so that more
students can enjoy the pleasureof creating something.

Besides the summer vacation classes, children enjoyedwooden crafts with our motors in the Hobby Show held in
Shizuoka in May and the
Chiba Museum of Science andIndustry in September.

Supporting Local Communities
The entire Mabuchi Group continuously conducts various community activities,
including those to protect the environment, and social and welfare activities.

• Head Office Aiming to Coexist with Local Communities
When the Head Office building was being constructed, a gentle flowing waterscapeand field called the Bio Garden was built in the spacious front garden of thepremises to convey one of the concepts of “coexistence with the local community.”
Vegetation management continues today, 12 years after the construction of thebuilding. Such management improves the regional environment by reproducing
vegetation that is unique to the region for biodiversity and eliminating alien species.
WEB

https://www.mabuchi-motor.com/csr/report/ 14

Management’s
Discussion and Analysis
Analyses and studies of the Mabuchi Group’s performance and financial position are,in principle, based on the consolidated financial statements.

Analysis of Operating Results
Business Development and Results

promotion of manufacturing innovation, and establishment of
new production bases.
As a result, consolidated net sales for fiscal 2017 were146,925 million yen (a 4.4% increase on a year-on-year basis).
Motors sales, which account for the majority of consolidated net
sales, were 146,915 million yen (a 4.4% increase on a year-onyear basis).
Operating income for fiscal 2017 was 24,066 million yen (a0.7% decrease on a year-on-year basis), as the negative impactof an increase in selling, general and administrative expenses andcost increases due to factors including the start of mass
production at the plant in Mexico exceeded the positive impactof an increase in sales volume, improvement in the product mix,
and a weaker yen compared with the previous fiscal year.
Profit before income taxes was 27,485 million yen (a 3.6%
increase on a year-on-year basis) as a result of the recording of again on reversal of foreign currency translation adjustments inconnection with completion of the liquidation of an overseas
subsidiary as other income. Profit attributable to owners ofparent was 20,303 million yen (a 1.4% decrease on a year-onyear basis).

Business Development and Results During the fiscal year that
ended on December 31, 2017 (fiscal 2017), the world economy ingeneral showed underlying strength. The U.S. economy
experienced sustained growth supported by strong consumer
spending spurred by improvement in the employment
environment. The European economy was strong, against a
backdrop of expansion of capital investment. In the Japanese
economy, moderate growth continued as a result of expansion of
consumer spending accompanying improvement in theemployment environment. A gradual adjustment phase
continued in the Chinese economy, and overall growth remained
low in emerging market economies.
In the markets in which the Mabuchi Group operates, healthy
demand in the Automotive Products Market continued overall.
Although demand in the Consumer and Industrial Products
Market remained stable, markets for some applications
continued to contract.
Under these business conditions, the Mabuchi Groupaddressed several issues: continued strengthening and expansionof the automotive products business and realization of newactivities in the consumer and industrial products businesses,

Analysis of Financial Position
Assets, Liabilities and Net Assets

plant and equipment of 7,974 million yen accompanying capital
expenditures, including establishment of a new production base,inventories of 6,312 million yen and short-term investments of
2,448 million yen, and decreases in cash and bank deposits ofTotal assets as of December 31, 2017 stood at 269,318 million
yen, increasing by 10,930 million yen from the end of theprevious fiscal year. Major changes include increases in property,

Net Sales/Gross Profit Ratio(Millions of yen)

32.8
29.1

24.8

30.4
143,143

140,69932.2
146,925

Net income attributable to owners of the parent/ROE

Capital Expenditures/Depreciation and Amortization(Millions of yen)

(Millions of yen)

8.2

8.0

8.6

20,59820,303

16,187

5.4

122,5448.8

18,09018,546

12,844

108,401

11,236
9,597
10,519

2013

2014

2015

Gross profit ratio (%)

15

MABUCHI MOTOR CO., LTD.

2016

2017

2013

2014

ROE (%)

2015

2016

2017

5,755
4,301

4,771

2013

2014

Capital Expenditures

6,386

6,016

2015

2016

7,143

2017

Depreciation and Amortization

Annual Report 2017

amounted to 118,956 million yen, a decrease of 3,345 million
yen from the end of the previous fiscal year.

4,514 million yen and trade notes and accounts receivable of
1,269 million yen.
Total liabilities stood at 27,138 million yen, an increase of
1,668 million yen compared with the end of the previous fiscal
year. The most noticeable changes were increases in deferred tax
liabilities (non-current) of 876 million yen and trade notes andaccounts payable of 516 million yen.
Total net assets increased by 9,262 million yen from the endof the previous fiscal year, to 242,179 million yen. Retained
earnings increased by 7,571 million yen, and net unrealized
holding gains on securities increased by 1,838 million yen.

The indicators have been calculated using the following
formulae, and are based on figures in the consolidated
financial statements.
•	Shareholders’ equity ratio = Shareholder’s equity / Total
assets•	Shareholders’ equity ratio based on market value = Total
market value of shares / Total assets
The total market value of shares has been calculated using
the following formula:
Closing stock price at the end of the period × Number ofshares outstanding at the end of the period (less treasury
stock)
Since the Company does not bear substantial interest-bearing
liabilities and the relevant interest paid, the ratio of interestbearing liabilities to cash flows and interest coverage ratio are
omitted.

Cash FlowsNet cash provided by operating activities amounted to 22,585
million yen, a decrease of 5,372 million yen from the previous
fiscal year. Cash flows from operating activities decreased as aresult of factors including an increase in inventories.
Net cash used in investing activities amounted to 14,027
million yen, an increase in cash used of 10,586 million yen fromthe previous fiscal year. Purchase of property, plant andequipment increased 3,463 million yen due to the newly
established Poland Mabuchi and new capital expenditures.
Net cash used in financing activities amounted to 13,844
million yen, an increase in cash used of 1,984 million yen fromthe previous fiscal year. This is a result of factors including an
increase in cash dividends paid of 1,825 million yen.
As a result, the balance of cash and cash equivalents

Total Assets

Liabilities

Net Assets(Millions of yen)

(Millions of yen)

(Millions of yen)

256,368

256,196258,387

269,318

25,47023,055

227,253

27,13822,950233,312233,245

232,917242,179

2014

2015

2016

2017

208,791

18,461

2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

2013

Outlook for Fiscal 2018
In the outlook for fiscal 2018, the forecast is for the U.S.
economy to remain strong. Despite a sense of uncertainty about
the outlook for the U.K. economy, the European economy as awhole is expected to maintain growth. In the Japanese economy,
modest growth is expected to continue. Economic growth inChina is expected to continue, although the growth rate willslow, India and Brazil are showing a recovery trend, and gradual
growth in emerging countries overall is expected to continue.
Regarding the markets in which the Mabuchi Group
operates, gradual growth is expected to continue in the
Automotive Products Market. In the Consumer and Industrial
Products Market, while demand for motors for home appliances,
power tools, and office equipment in the business-use market is
expected to be flat, contraction of demand for motors for officeequipment in the personal-use products market is forecast.

As a result, in fiscal 2018 we expect to record net sales of
154,000 million yen (a 4.8% increase on a year-on-year basis).
In terms of our business results, although the positive effecton our earnings growth from an increase in sales volume andimprovement in the product mix is expected to continue, we
expect a decline in earnings due to such factors as the strong yen
and higher prices for copper, steel and other commodities. We
expect to record operating income of 23,100 million yen (a 4.0%
decrease on a year-on-year basis) as a result of an increase in
selling, general and administrative expenses reflecting start-up
costs for a production base in Europe and active engagement in
R&D. We anticipate ordinary income of 24,100 million yen (a6.7% decrease) and profit attributable to owners of parent of
17,900 million yen (an 11.8% decrease), without theconsideration of foreign exchange gains or losses.

Risk Information

https://www.mabuchi-motor.com/investor/management/risks.html 16

Consolidated Balance Sheet
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2016 and 2017

U.S. Dollars(Thousands)

Yen(Millions)(Note 1)

2016

2017

2017

¥122,477¥117,963$1,043,920

28,34827,079239,640

Less – Allowance for doubtful accounts

(102)

(148)

(1,314)

Short-term investments (Note 4)

499

2,948

26,094Merchandise and finished goods

18,631

22,177

196,260

Work in process

1,296

1,608

14,230Raw materials and supplies

6,765

9,221

81,607

Deferred tax assets – current (Note 8)

1,667

1,706

15,101Other current assets

5,292

4,456

39,438

184,878

187,0121,654,978

Land

6,197

6,661

58,951

Buildings and structures

46,13145,955

406,686

Machinery and equipment

65,66972,962645,689

Construction in progress

4,966

10,62894,059122,966

136,208

1,205,387(62,629)(67,898)(600,869)

60,336

68,310604,517

10,504

11,411

100,986

488

424

3,756

2,179

2,159

19,11013,173

13,995

123,853¥258,387¥269,318$2,383,349

ASSETS
Current Assets:
Cash and bank deposits (Notes 3, 4)Trade notes and accounts receivable (Note 4)

Total current assets

Property, Plant and Equipment:Less – Accumulated depreciation
Property, plant and equipment, net

Investments and Other Assets:
Investment securities (Note 4)
Deferred tax assets – non-current (Note 8)
Other investments and other assets
Total investments and other assets

Total Assets

17

MABUCHI MOTOR CO., LTD.

Annual Report 2017

U.S. Dollars(Thousands)

Yen(Millions)

LIABILITIES AND NET ASSETS(Note 1)

2016

2017

2017

¥  7,340
113
2,462
252
145
65
9,556
19,935¥  7,856
56
2,854
259
143
80
9,547
20,798$   69,528
502
25,259
2,296
1,265
715
84,487
184,055

56
77
2,620
13
2,476
289
5,534
25,470

–
130
2,532
16
3,353
306
6,340
27,138–1,156
22,415
148
29,676
2,715
56,112
240,167

20,704
20,579193,141

20,704
20,419200,713183,228
180,706
1,776,222(6,633)
227,792(7,486)234,351(66,252)
2,073,904

2,708
(472)
4,222
(1,443)5,014
110
232,917¥258,387

4,546
(87)
4,443
(1,203)7,698
130242,179¥269,318

40,236(776)
39,320(10,654)
68,125
1,152
2,143,182$2,383,349

Current Liabilities:
Trade notes and accounts payable (Note 4)
Short-term loans payable
Accrued income taxes
Accrued bonuses due to employees
Accrued bonuses due to directors
Deferred tax liabilities – current (Note 8)
Other current liabilities
Total current liabilities
Long-term Liabilities:
Long-term loans payable
Accrued benefits for stock payment
Liability for retirement benefits (Note 7)
Asset retirement obligations
Deferred tax liabilities – non-current (Note 8)
Other long-term liabilities – non-current
Total long-term liabilities
Total liabilities
Net Assets (Note 2):
Shareholders’ Equity
Common stock, no par value:
Authorized: 200,000,000 shares
Issued: 69,927,562 shares in 2016
69,125,962 shares in 2017
Additional paid-in capital
Retained earnings
Treasury stock, at cost: 1,558,170 shares in 2016 and1,513,962 shares in 2017
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized holding gains on securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Retirement benefits liability adjustments (Note 7)
Total accumulated other comprehensive income
Subscription rights to shares
Total net assets
Total Liabilities and Net Assets
See notes to consolidated financial statements.

18

Consolidated Statement of Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2016 and 2017
U.S. Dollars(Thousands)

Yen(Millions)
Net Sales (Note 17)
Cost of Sales
Gross profit
Selling, General and Administrative Expenses (Notes 12,14)
Operating income
Other Income (Expenses):
Interest and dividend income
Exchange gain, net
Gain on sale of raw material scrap
Gain on disposal of fixed assets, net (Note 15)
Gain (loss) on sales of investment securities, net
Business structure improvement expenses
Impairment loss (Note 16)
Gain on reversal of foreign currency translation adjustments
resulting from liquidation of foreign subsidiary
Other, net
Profit before Income Taxes
Income Taxes (Note 8):
Current
DeferredProfitProfit attributable to owners of parent(Note 1)

2016
¥140,699
94,51046,18821,96324,2252017¥146,925
99,61947,30523,23924,0662017$1,300,223
881,587
418,636
205,661
212,974

521
493
832
196
433
(133)
(90)

588
280
1,080
445
(36)
–
–

5,211
2,479
9,564
3,943
(327)
–
–

–

1,259

11,14361
2,314
26,539(198)
3,419
27,485(1,753)30,260243,235

6,833
(893)
5,940
20,598¥ 20,598

7,132
50
7,182
20,303¥ 20,303

63,116446
63,563
179,672$  179,672

2016

2017

U.S. Dollars
2017¥ 300.70
300.59120.00¥ 299.74
299.61120.00$     2.65
2.65
1.06

Yen
Per Share Data (Note 11):
Profit attributable to owners of parent - Basic- Diluted
Dividends applicable to current year earnings
See notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2016 and 2017

U.S. Dollars(Thousands)

Yen(Millions)
ProfitOther Comprehensive Income (Note 9)
Net unrealized holding gains on securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Retirement benefits liability adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
See notes to consolidated financial statements.

19

MABUCHI MOTOR CO., LTD.

(Note 1)

2016
¥20,5982017¥20,3032017$179,672

266(472)(8,553)(478)(9,236)¥11,361

1,838
384
220
239
2,683
¥22,986

16,267
3,404
1,954
2,122
23,748$203,421¥11,361¥     –

¥22,986¥     –

$203,421$      –

Annual Report 2017

Consolidated Statement of Changes in Net Assets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2016 and 2017
Number of Shares(Thousands)
2016
2017

U.S. Dollars(Thousands)(Note 1)

2017

2017

¥ 20,704–¥ 20,704¥ 20,704–¥ 20,704$  183,228–$  183,228¥ 20,419
159–¥ 20,579¥ 20,579(8)(151)¥ 20,419$  182,121(74)(1,340)$  180,706¥183,853¥193,141$1,709,220

20,59820,303

179,672(7,047)(4,263)¥193,141(8,873)(3,858)¥200,713(78,526)(34,145)$1,776,222

Treasury Stock:
Beginning balance
Treasury stock acquisition
Treasury stock disposal
Treasury stock cancellation
Ending balance¥  (6,046)(5,442)591
4,263¥  (6,633)¥  (6,633)(5,001)138
4,009¥  (7,486)$   (58,706)(44,260)
1,228
35,485$   (66,252)

Net Unrealized Holding Gains on Securities:
Beginning balance
Net change during the year
Ending balance¥  2,441
266¥  2,708¥  2,708
1,838¥  4,546$   23,968
16,267$   40,236

Deferred Gains or Losses on Hedges:
Beginning balance
Net change during the year
Ending balance¥       –(472)¥    (472)¥    (472)384¥     (87)$    (4,181)
3,404$      (776)Foreign Currency Translation Adjustments:
Beginning balance
Net change during the year
Ending balance¥ 12,775(8,553)¥  4,222¥  4,222220¥  4,443$   37,366
1,954$   39,320

Retirement Benefit Liability Adjustments:
Beginning balance
Net change during the year
Ending balance¥    (965)(478)¥  (1,443)¥  (1,443)239¥  (1,203)$   (12,776)
2,122$   (10,654)

Total Accumulated Other Comprehensive Income:
Beginning balance
Net change during the year
Ending balance¥ 14,251(9,236)¥  5,014¥  5,014
2,683¥  7,698$   44,377
23,748$   68,125

Subscription Rights to Shares:
Beginning balance
Net change during the year
Ending balance¥     6148
¥    110¥    11019¥    130$      975176$    1,152¥233,245¥232,917$2,061,216

20,59820,303

179,672(7,047)(5,442)751(8,873)(5,001)
130(78,526)(44,260)
1,154

Common Stock:
Beginning balance
Treasury stock cancellation
Ending balance

70,927(1,000)69,927

Additional Paid-in Capital:
Beginning balance
Treasury stock disposal
Treasury stock cancellation
Ending balance
Retained Earnings:
Beginning balance
Profit attributable to owners ofparentDividends paid
Treasury stock cancellation
Ending balance

Total Net Assets:
Beginning balance
Profit attributable to owners ofparentDividends paid
Treasury stock acquisition
Treasury stock disposal
Net changes in items other thanthose in shareholders’ equity
Ending balance

69,927(801)
69,1252016

Yen(Millions)(9,188)2,703

23,925¥232,917¥242,179$2,143,182

See notes to consolidated financial statements.

20

Consolidated Statement of Cash Flows
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2016 and 2017

U.S. Dollars(Thousands)

Yen(Millions)

2016
Cash Flows from Operating Activities:
Profit before income taxes
Depreciation and amortization
Impairment loss
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Exchange (gain) loss
(Gain) loss on sales of short-term investments and investment
securities(Gain) loss on disposal of fixed assets
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Gain on reversal of foreign currency translation adjustments resulting
from liquidation of foreign subsidiary
Other, net
SubtotalInterest and dividends received
Income taxes paid
Net cash provided by operating activities2017¥ 26,539 ¥ 27,485
6,359
7,383
90
–
610
104
(521)
(588)
131
136

$  243,235
65,340–925(5,211)
1,209

(433)

36

327

(196)
(4,082)
1,960
2,081

(445)
2,168
(5,255)126(3,943)
19,187(46,510)
1,118–(1,259)(11,143)

1,423
33,963519(6,524)27,958(1,005)28,887587(6,889)22,585(8,894)
255,641
5,197(60,965)
199,873

Cash Flows from Investing Activities:
Increase in time deposits
Proceeds from withdrawal of time deposits
Purchases of short-term investments
Proceeds from sales of short-term investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Payments for establishment of subsidiary
Other, net
Net cash used in investing activities

(170)
326
(2,000)6,000(11,352)
429
–
5,808
(2,019)(462)(3,440)–168(1,000)500(14,815)
802
(504)
1,093
–
(271)
(14,027)–
1,495(8,849)4,424(131,112)
7,102(4,464)
9,677–(2,406)(124,132)

Cash Flows from Financing Activities:
Repayment of long-term loans payable
Cash dividends paid
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities(113)(7,046)(5,451)751(11,860)(56)(8,872)(5,004)
88(13,844)(502)(78,515)(44,291)
787(122,521)

Effect of exchange rate changes on cash and cash equivalents(3,311)
Net increase (decrease) in cash and cash equivalents
9,345
Cash and Cash Equivalents at the Beginning of Year112,956
Increase in cash and cash equivalents from newly consolidated subsidiary–
Cash and Cash Equivalents at the End of Year¥122,302(78)(5,365)
122,3022,019¥118,956(699)(47,480)
1,082,319
17,873$1,052,713

See notes to consolidated financial statements.

21(Note 1)

2017

MABUCHI MOTOR CO., LTD.

Annual Report 2017

Notes to Consolidated Financial Statements
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2016 and 2017

1. Summary of Significant Accounting Policies
a Basis of presentation
The accompanying consolidated financial statements of Mabuchi Motor Co., Ltd. (the “Company”) and consolidated subsidiaries areprepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects to theapplication and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated
financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.
For the purpose of this report, certain reclassifications have been made to present the accompanying consolidated financial
statements in a format which is familiar to readers outside Japan.
The consolidated financial statements are expressed in Japanese yen. However, the consolidated financial statements as of, and forthe year ended December 31, 2017, have been translated into U.S. dollars at the rate of ¥113 = U.S.$1, the approximate exchange rate
prevailing on December 31, 2017. Those U.S. dollar amounts presented in the consolidated financial statements and related notes areincluded solely for the convenience of the reader. This translation should not be construed as a representation that all the amounts
shown could be converted into U.S. dollars.
b Principles of consolidation
The consolidated financial statements include the accounts of the Company and all significant subsidiaries. All significant intercompany balances, transactions, and profits have been eliminated on consolidation. Investments in an unconsolidated subsidiary arestated at cost.
c Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statement of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets which are translated at their historical exchange rates. Revenue andexpense accounts are translated at the average rate of exchange in effect during the year. Differences arising from the translation arepresented as foreign currency translation adjustments in the consolidated financial statements.
d Cash equivalents
For the purposes of the consolidated statement of cash flows, the Company considers all highly liquid debt instruments purchasedwith an original maturity of three months or less to be cash equivalents.
e Short-term investments and investment securities
The Company classifies securities as “trading securities,” when they are held for the purpose of earning capital gains in the short-term,“held-to-maturity,” where management has the positive intent and ability to hold the securities to maturity, and “other securities,”
where those securities are not classified as either trading or held-to-maturity, which represent primarily available-for-sale securities.
Held-to-maturity securities are reported at amortized cost. Available-for-sale securities are stated at fair value with changes in
unrealized holding gains or losses, net of the applicable income taxes, presented in a separate component of net assets. However,when the fair value of held-to-maturity securities and available-for-sale securities declines significantly and the decline is considered tobe irrecoverable, such unrealized holding losses are recognized as impairment losses. Available-for-sale securities for which fair value is
not readily determinable are stated at moving average cost.
Corporate bonds classified as held-to-maturity securities and debt securities (corporate bonds) classified as available-for-salesecurities include compound financial instruments.
The Company considers a decline in the value of securities to be irrecoverable where market values decline to more than 50% of
acquisition costs. Where market values decline to between 30% and 50% of acquisition costs, the Company judges the necessity ofrecognizing any impairment losses by assessing the potential of market values to recover taking into consideration declining pricetrends and other individually relevant factors.
f Inventories
Finished goods, work in process and raw materials are stated at average cost, however, where net realizable value is lower than cost,
the carrying value of the inventory is reduced.
g Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. Depreciation is computed primarily using the declining-balance method for theCompany (except for certain buildings) and for overseas subsidiaries, principally using the straight-line method over their estimateduseful lives. Buildings acquired by the Company on or after April 1, 1998 and facilities attached to buildings and structures acquired on
or after April 1, 2016 are depreciated using the straight-line method. Maintenance and repairs, including minor repairs andimprovements, are charged to income as incurred.
h Leased assets
Assets under finance leases, except for those under lease agreements which stipulate the transfer of ownership of the leased assets tothe lessee, are depreciated using the straight-line method over the lease period with the assumption that there is no residual value.
i Allowance for doubtful accounts
The allowance to provide for potential loss on receivables is provided at the estimated amount of irrecoverable receivables. Allowancefor ordinary debt is computed based on the historical rate of default. For certain debts, such as those where recovery is doubtful, thelikelihood of recovery is considered on an individual basis.
The allowance for doubtful accounts is adjusted after offsetting receivables and payables between consolidated subsidiaries.
j Accrued bonuses due to employees
Accrued bonuses due to employees are provided at the estimated amount to be paid to employees for the services rendered by thebalance sheet date.
k Accrued bonuses due to directors
Accrued bonuses due to directors are provided at the estimated amount to be paid to directors for the services rendered by thebalance sheet date.
l Accrued benefits for stock payment
Accrued benefits for stock payment are provided at the amount of stocks to be paid to directors through the trust by the balance
sheet date based on the performance-linked stock compensation plan.
m Retirement benefitsa. Allocation of projected retirement benefit obligation
In calculating the retirement benefit obligation, the benefit formula basis is used to allocate the projected retirement benefit obligation
to the estimated years of service of eligible employees.

22b. Method for amortizing actuarial gain or loss and prior service cost
Actuarial gains and losses are amortized commencing from the year following the year in which the gains or losses arose, primarily
using the straight-line method within the average remaining years of service of the employees, which is mainly 10 years.
Prior service costs are amortized using the straight-line method mainly over 10 years.
c. Application of simplified method at smaller-sized companies, etc.
Certain subsidiaries have pension plans similar to the Company or unfunded retirement and termination allowance plans for qualifying
employees. Any amounts required under the rules of the plans have been fully accrued.
n Income taxes
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases ofassets and liabilities and their reported amounts using current enacted tax rates.
o Derivative and hedging activities
If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, the Company
defers recognition of gains or losses on revaluation of the forward foreign exchange contract until the related losses or gains on thehedged items are recognized.
p Additional information(Accounting Treatment for Transactions of Delivering the Company’s Own Stock to Employees, etc., through Trusts)
1. Outline of transactions
The ESOP Trust is a trust-type employee incentive plan that uses the mechanism of an employee shareholding association, with the
purpose of attempting to expand the savings system that promotes the asset accumulation of employees who own the Company’s
shares (enhancement of the employee welfare programs). It is based on the Employee Stock Ownership Plan (ESOP) system in the
United States.
The major purpose of introducing the ESOP Trust is to improve welfare programs for employees who support the Company’s
growth. The introduction thereof also aims to enhance the Company’s corporate value over the medium to long term by granting an
incentive toward high stock prices and creating greater awareness of the Company’s business performance and stock value among its
employees.
The Company has established a trust with those employee members of Mabuchi Motor Employee Shareholding Association(hereinafter “Our Shareholding Association”) who meet certain requirements as its beneficiaries, and during a predetermined period
for acquisition, said trust, or the ESOP Trust, will acquire the number of the Company’s shares that Our Shareholding Association is
expected to acquire over the next several years. Afterward, the ESOP Trust sells off the Company’s shares to Our Shareholding
Association on a fixed day every month. The remaining funds will be distributed according to the contribution ratio of the employees
as beneficiaries when there are ESOP Trust earnings resulting from an upward swing in stock prices when the term of the ESOP Trustends. There is no additional burden on the employees as the Company will pay back the loan payable collectively to the bank based on
its guarantee clause in the loan agreement with the bank if a liability associated with the trust estate resulting from a loss is caused bya drop in stock prices.
The Company applied the “Revised Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc.
through Trusts” (ASBJ PITF No.30 revised on March 26, 2015).
2. Treasury shares remaining in the trust
Shares of the Company remaining in the trust are recorded as treasury stock under net assets through the carrying value (net of
associated costs) in the trust. The carrying value was ¥251 million at December 31, 2016 and ¥162 million ($1,439 thousand) at
December 31, 2017.
Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the ESOP trust
account. The number at year-end and the weighted average number of such treasury shares were 98,700 and 116,973 shares,
respectively, during the fiscal year ended December 31, 2016, and 63,800 and 84,621 shares, respectively, during the fiscal year ended
December 31, 2017.
3. Carrying value of loans recorded through application of the gross price method
As of December 31, 2016: ¥170 million; as of December 31, 2017: ¥56 million ($502 thousand)(Accounting Treatment for Performance-based Stock Compensation Plan for Directors and Executive Officers)
1. Outline of transactions
The Company has introduced the Executive Compensation BIP (Board Incentive Plan) Trust Plan, the executive remuneration systemclosely linked to the achievement of performance targets as set out in the medium-term management plan, with the purpose ofenhancing the motivation of Directors to contribute to improved business performance and increased corporate value over the medium
term.
Under the Plan, the Company’s shares acquired through the BIP Trust and money equivalent to the amount obtained by converting
the Company’s shares into cash (collectively, the “Company Shares, etc.”) will be delivered and paid (the “Delivery, etc.” or “delivered,etc.”) to those serving as Directors, etc., during the target period based on factors such as the status and level of attainment of
performance targets throughout the trust term. Directors, etc., will receive the Delivery, etc., of Company Shares, etc., during a certain
timeframe following the end of the target period. At first, the target period is over the three-year period from the fiscal year ended
December 31, 2016, to the fiscal year ending December 31, 2018.
The Company applied the “Revised Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc.,
through Trusts” (ASBJ PITF No. 30 revised on March 26, 2015).
2. Treasury shares remaining in the trust
Shares of the Company remaining in the trust are recorded as treasury stock under net assets through the carrying value (net of
associated costs) in the trust. The carrying value was ¥669 million at December 31, 2016 and ¥651 million ($5,767 thousand) at
December 31, 2017.
Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the BIP trust
account. The number of such treasury shares at December 31, 2016 was 119,600 shares, and at December 31, 2017 was 116,386
shares, and the number of such treasury shares during the fiscal year ended December 31, 2016 was 67,643 shares and during the
fiscal year ended December 31, 2017 was 117,442 shares.
(Applying Revised Implementation Guidance on Recoverability of Deferred Tax Assets)
The company adopted “Revised Implementation Guidance on Recoverability of Deferred Tax Assets”(ASBJ Guidance No.26, March 28,2016) from the beginning of the year ended December 31, 2017.

23

MABUCHI MOTOR CO., LTD.

Annual Report 2017

2. Changes in Net Assets
Information regarding changes in net assets for the years ended December 31, 2016 and 2017, is as follows:a Shares issued and outstanding/Treasury stock2016
Shares Issued (Thousands)
Common stock
70,927–1,000
69,927

Type of shares
Number of shares as of December 31, 2015
Increase in number of shares
Decrease in number of shares
Number of shares as of December 31, 2016

Treasury Stock (Thousands)
Common stock
1,589
1,119
1,151
1,558

Note: 1. T he decrease in the number of shares issued and the number of shares of treasury stock was due to the cancellation of 1,000
thousand shares.
2. The increase in the number of shares of treasury stock was due to the purchase of 1,000 thousand shares of treasury stock,
the purchase of 119 thousand shares by the BIP Trust and the purchase of 0 thousand shares of less than one unit.
3. The decrease in the number of shares of treasury stock was, other than Note 1, due to sales of 119 thousand shares to the BIP
Trust and sales of 32 thousand shares to Our Shareholding Association by the ESOP Trust.
4. There were 130 thousand shares and 98 thousand shares of treasury stock held by the ESOP Trust included in the number ofshares of treasury stock as of January 1, 2016 and December 31, 2016, respectively, and there were 0 shares and 119
thousand shares of treasury stock held by the BIP Trust included in the number of shares of treasury stock as of January 1,
2016 and December 31, 2016, respectively.
2017
Shares Issued (Thousands)
Common stock
69,927–
801
69,125

Type of shares
Number of shares as of December 31, 2016
Increase in number of shares
Decrease in number of shares
Number of shares as of December 31, 2017

Treasury Stock (Thousands)
Common stock
1,558
801
846
1,513

Note: 1. T he decrease in the number of shares issued and the number of shares of treasury stock was due to the cancellation of 801
thousand shares.
2. The increase in the number of shares of treasury stock was due to the purchase of 801 thousand shares of treasury stock andthe purchase of 0 thousand shares of less than one unit.
3. The decrease in the number of shares of treasury stock was, other than Note 1, due to sales of 34 thousand shares to Our
Shareholding Association by the ESOP Trust, the exercise of 6 thousand stock options, the issue of 1 thousand shares andsales of 1 thousand shares held by the BIP Trust.
4. There were 98 thousand shares and 63 thousand shares of treasury stock held by the ESOP Trust included in the number ofshares of treasury stock as of January 1, 2017 and December 31, 2017, respectively and there were 119 shares and 116
thousand shares of treasury stock held by the BIP Trust included in the number of shares of treasury stock as of January 1,
2017 and December 31, 2017, respectively.
b Share subscription rights
2016
Number of shares issued
Company

Number ofshares at
January 1,
2016Type of sharesissuedDescription
Subscription rights
as stock options
Total

Parent Company

Increase

Number ofshares at
December 31,
2016

Decrease

Balance at
December 31,
2016
Yen (Millions)

–

–

–

–

–

¥110

–

–

–

–

–

¥110

2017
Number of shares issued
Company

Description
Subscription
rights as stock
options
Total

Parent Company

Type of sharesissuedNumber ofshares at
January 1,
2017

Increase

Decrease

Number ofshares at
December 31,
2017

Balance at
December 31,
2017
Yen (Millions)

U.S. Dollars(Thousands)

–

–

–

–

–

¥130

$1,152

–

–

–

–

–

¥130

$1,152c Dividends
Dividends paid during the fiscal year ended December 31, 20162016
Resolution by
Total amount of dividends
Dividends per share
Record date
Effective date

Shareholders’ Meeting
March 30, 2016
¥4,029 million¥58
December 31, 2015
March 31, 2016

Board of Directors’ Meeting
August 12, 2016
¥3,017 million¥44
June 30, 2016
September 20, 2016

Note: Dividends approved at the shareholders’ meeting on March 30, 2016 paid to the ESOP Trust in the amount of ¥7 million havebeen included in the total amount of dividends. Dividends approved at the Board of Directors’ meeting on August 12, 2016 paid
to the ESOP Trust and BIP Trust in the amount of ¥10 million have been included in the total amount of dividends.

24

Dividends whose record date was in the fiscal year ended December 31, 2016, but whose effective date was in the following fiscal year
2016
Shareholders’ Meeting
March 30, 2017
¥5,212 million¥76
December 31, 2016
March 31, 2017

Resolution by
Total amount of dividends
Dividends per share
Record date
Effective date

Note: Dividends paid to the ESOP Trust and BIP Trust in the amount of ¥16 million have been included in the total amount ofdividends.
Dividends paid during the fiscal year ended December 31, 20172017
Shareholders’ Meeting
March 30, 2017
¥5,212 million($46,129 thousand)¥76($0.67)
December 31, 2016
March 31, 2017

Resolution by
Total amount of dividends
Dividends per share
Record date
Effective date

Board of Directors’ Meeting
August 10, 2017
¥3,660 million($32,396 thousand)¥54($0.47)
June 30, 2017
September 15, 2017

Note: Dividends approved at the shareholders’ meeting on March 30, 2017 paid to the ESOP Trust and BIP Trust in the amount of ¥16
million ($146 thousand) have been included in the total amount of dividends. Dividends approved at the Board of Directors’
meeting on August 10, 2017 paid to the ESOP Trust and BIP Trust in the amount of ¥10 million ($96 thousand) have been
included in the total amount of dividends.
Dividends whose record date was in the fiscal year ended December 31, 2017, but whose effective date was in the following fiscal year2017
Shareholders’ Meeting
March 29, 2018
¥4,474 million($39,595 thousand)¥66($0.58)December 31, 2017
March 30, 2018

Resolution by
Total amount of dividends
Dividends per share
Record date
Effective date

Note: Dividends paid to the ESOP Trust and BIP Trust in the amount of ¥11 million ($105 thousand) have been included in the total
amount of dividends.
d Stock options
The Company issued the following share subscription rights for the purchase of new shares of common stock in accordance with the
Corporation Law of Japan.
For the years ended December 31, 2016 and 2017, the Company recognized and allocated share-based compensation costs asfollows:
Yen (Millions)
2016
¥48
¥48

Selling, general and administrative expenses
Total

2017
¥43
¥43

U.S. Dollars (Thousands)
2017
$383
$383

A description of the 2013, 2014, 2015, 2016 and 2017 Stock Option Plans as of December 31, 2016 and 2017, respectively, aresummarized as follows:2013 Stock
Option Plan

2014 Stock
Option Plan

2015 Stock
Option Plan

2016 Stock
Option Plan

Grantee categories andnumber of grantees

6 directors of theCompany

6 directors of theCompany

6 directors of theCompany

6 directors of the Company
5 executive officers of theCompany

Number of shares

11,940 shares ofcommon stock
May 20, 2013
None
None
May 21, 2013 to
May 20, 2033

7,980 shares ofcommon stock
April 21, 2014
None
None
April 22, 2014 toApril 21, 2034

4,650 shares ofcommon stock
April 20, 2015
None
None
April 21, 2015 toApril 20, 2035

10,360 shares ofcommon stock
April 20, 2016
None
None
April 21, 2016 toApril 20, 2036

Grant date
Vesting conditions
Service period
Exercisable period

2017 Stock
Option Plan
6 directors of theCompany
4 executive officers of
the Company
8,180 shares ofcommon stock
April 20, 2017
None
None
April 21, 2017 toApril 20, 2037

Note: The Company conducted a 2-for-1 stock split of its common stock on January 1, 2015. The number of shares for fiscal 2013 and2014 reflect the stock split.

25

MABUCHI MOTOR CO., LTD.

Annual Report 2017

The following table summarizes the option activity under the stock option plans referred to above.
2013 Stock
Option Plan

2014 Stock
Option Plan

Number of shares2016 Stock
Option Plan

2015 Stock
Option Plan

2017 Stock
Option Plan

Non-vested:
Outstanding as of December 31, 2016
GrantedForfeited
VestedOutstanding as of December 31, 2017

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
8,180
–
8,180
–

Vested:Outstanding as of December 31, 2016
VestedExercised
Forfeited
Outstanding as of December 31, 2017

7,960
–
2,160
–
5,800

5,320
–
1,440
–
3,880

4,650
–
840
–
3,810

10,360
–
1,920
–
8,440

–
8,180
–
–
8,180

Note: Number of stock options are listed after conversion to share numbers.
Price information of stock options for the 2013, 2014, 2015, 2016 and 2017 Stock Option Plans are summarized as follows:

Exercise price
Average price on exercise
Fair value on grant date2013 Stock
Option Plan
Yen¥    1
6,270
4,967

2014 Stock
Option Plan
Yen¥    1
6,270
6,158

2015 Stock
Option Plan
Yen¥    1
6,270
5,465

2016 Stock
Option Plan
Yen¥    1
6,270
4,699

2017 Stock
Option Plan
Yen¥    1–
5,304

2017 Stock
Option Plan
U.S. Dollars
$ 0
–
46

Fair value as of the grant date for the stock options issued during the year ended December 31, 2017, was estimated using the BlackScholes option pricing model with the following assumptions:2017 Stock Option Plan
30.3%
5.6 years¥120 per share($1.06 per share)-0.17%

Expected volatility*1
Expected remaining period*2
Expected dividend yield*3
Risk-free interest rate*4

The expected volatility is estimated based on a period of 5 years and 7 months (September 5, 2011 to April 10, 2017).
The expected remaining period is based on the estimated term of incumbency of directors.
The expected dividend yield is based on the actual dividend amount for the interim and year-end dividend of 2016.
*4	Risk-free interest rate represents the interest rate of Japanese government bonds whose remaining period corresponds to the
expected remaining period of the stock options.
		 Since it is fundamentally difficult to reasonably estimate the forfeited number of stock options for future periods, an estimation of
the vested number is based upon actual forfeitures in prior periods.
*1

*2
*3

3. Cash and Cash Equivalents
Cash and cash equivalents at the end of the year in the accompanying consolidated statement of cash flows are reconciled to cash andbank deposits reported in the accompanying consolidated balance sheet as of December 31, 2016 and 2017, as follows:
Yen (Millions)
Cash and bank deposits
Time deposits with maturities over three months at the time of purchase
Short-term investments
Securities exposed to price risk
Cash and cash equivalents

2016¥122,477
(175)
499
(499)
¥122,302

2017¥117,963(6)
2,948(1,948)¥118,956

U.S. Dollars (Thousands)
2017$1,043,920(56)
26,094(17,245)$1,052,713

Significant non-cash transactions for the years ended December 31, 2016 and 2017, were as follows:
Yen (Millions)
Treasury stock cancellation

2016¥4,2632017¥4,009U.S. Dollars (Thousands)
2017$35,485

4. Financial Instruments(1) Financial instrumentsa. Policies for financial instruments
The Company funds R&D expenditure and equipment investment through retained earnings to maintain a sound financial position.
According to this policy, the Company limits the management of surplus funds to short-term deposits and other highly secure financial
assets. The Company uses derivatives to mitigate risks as described below and does not engage in speculative transactions.
b. Financial instruments description and risks
Trade notes and accounts receivable are exposed to customer credit risk and some are also exposed to foreign currency risk.
Short-term investments and investment securities, primarily securities and investments in stocks of trading partners, are exposed to
the risk of fluctuations in market prices.
Trade notes and accounts payable are due within one year, and some are exposed to foreign currency risk.
The Company uses forward foreign exchange contracts to hedge the risk of foreign exchange fluctuations associated withreceivables and payables and forecasted transactions denominated in foreign currencies.

26

c. Risk management of financial instruments
1. Management of credit risk (risks associated with the default of counterparties)
The Company and its consolidated subsidiaries manage credit risk in compliance with internal control rules and procedures. The due
dates and the balances of trade notes and accounts receivable from major counterparties are monitored and managed regularly toensure early detection and to mitigate the risk of doubtful receivables.
2. Management of market risk (risks associated with fluctuations in foreign exchange rates and interest rates)
The Company and some of its consolidated subsidiaries hedge the risk of foreign exchange rate fluctuations on foreign currency
denominated receivables and payables and forecasted transactions, using foreign exchange forward contracts on a monthly andindividual currency basis. The Company enters into exchange contracts based on the decision of the Board of Directors and these aremonitored regularly by the head office administrative department.
The Company monitors the fair value and the financial position of the respective issuers of short-term investments and investment
securities regularly in the head office administrative department, and continually reviews the condition of stocks held. The Company
reports the condition of stocks held and their fair value to the Board of Directors, and monitors the rating and financial conditions ofissuers.
3. Management of liquidity risk related to financing activities (risk of non-payment on due date)
The Company manages liquidity risk centrally through the administrative department, which ensures a certain amount of liquidity
through the preparation and update of cash forecasts based on reports from each department and the finance plans prepared by theaccounting departments of each subsidiary.
d. Supplemental information on the fair value of financial instruments
The Company calculates the fair value of financial instruments based on market prices, or by using reasonable estimates when market
prices are not available.
These estimates include variable factors, and therefore may change depending on changes in the underlying assumptions. The
contract amounts of the derivatives described in Note 6. Derivative Financial Instruments are not indicative of the market risk
associated with derivatives transactions.
(2) Fair value of financial instruments
The carrying value, fair value and variance for financial instruments as of December 31, 2016 and 2017, were as follows. Fair values thatare not readily determinable are not included in the following table.

Assets:(1) Cash and bank deposits(2) Trade notes and accounts receivable(3) Short-term investments and investment securities
Total assets
Liabilities(1) Trade notes and accounts payable
Total liabilities

Assets:(1) Cash and bank deposits(2) Trade notes and accounts receivable(3) S hort-term investments and investment
securities
Total assets
Liabilities(1) Trade notes and accounts payable
Total liabilities

Carrying value

Yen (Millions)
2016
Fair value

Variance¥122,477
28,348
10,892¥161,718¥122,477
28,348
10,892¥161,718

¥–
–
–
¥–

¥  7,340¥  7,340¥  7,340¥  7,340¥–¥–

Carrying value

Yen (Millions)
2017
Fair value

Variance¥117,963
27,079¥117,963
27,079¥––U.S. Dollars (Thousands)
2017
Carrying value
Fair value$1,043,920
239,640$1,043,920
239,640

Variance$––

14,24814,248–126,089

126,089–¥159,290¥159,290¥–$1,409,650$1,409,650$–¥  7,856¥  7,856¥  7,856¥  7,856¥–¥–$   69,528$   69,528$   69,528$   69,528$–$–

1: Method for calculating the fair values of financial instruments, short-term investments and derivative transactions
Assets:(1) Cash and bank deposits, (2) Trade notes and accounts receivable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
(3) Short-term investments and investment securities
Market prices on securities exchanges are used to determine the fair value of stock. Prices quoted by exchanges or financial institutions
are used to determine the fair value of bonds.
Liabilities:(1) Trade notes and accounts payable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
Derivative instruments:
Please refer to Note 6. Derivative Financial Instruments.
2: Carrying value of financial instruments for which fair values were extremely difficult to determine
Yen (Millions)
Unlisted stocks

2016
¥111

2017
¥112

U.S. Dollars (Thousands)
2017
$991

These items are not included in “(3) Short-term investments and investment securities” because market prices do not exist for these
items and their fair values are not readily determinable.

27

MABUCHI MOTOR CO., LTD.

Annual Report 2017

3: Redemption schedule for receivables and marketable securities with maturities at December 31, 2016 and 2017

Cash and bank deposits
Trade notes and accounts receivable
Short-term investments and investment securities
Other securities
Corporate bonds
Total

Cash and bank deposits
Trade notes and accounts
receivable
Short-term investments andinvestment securities
Other securities
Corporate bonds
Total

Within 1 year
¥122,477
28,348

Yen (Millions)2016
1–5 years¥    ––

500¥151,326

1,000¥1,000

5–10 years
¥–
–

–
¥–

Within 1 year
¥117,963

Yen (Millions)2017
1–5 years¥–

U.S. Dollars (Thousands)
2017
1–5 years$–

5–10 years¥–

Within 1 year
$1,043,920

27,079––239,640

–

–

3,000
¥148,042

–
¥–

–
¥–

26,548$1,310,109

–
$–

–
$–

5–10 years$–

5. Investment Securities
The carrying value, fair value and variance for held-to-maturity securities as of December 31, 2016 and 2017, were as follows:(1) Held-to-maturity securities
They were not applicable for the years ended December 31, 2016 and 2017.
The acquisition cost, carrying value and variance for other securities as of December 31, 2016 and 2017, were as follows:(2) Other securities
Carrying value

Yen (Millions)2016
Acquisition cost

Variance¥ 7,499–
7,499¥3,529–3,529¥3,969
–
3,969

883
1,444
1,065
3,393
¥10,892

999
1,500
1,126
3,625
¥7,154

(116)
(55)
(60)
(231)
¥3,737

Securities whose carrying value exceeds their acquisition cost
Stock
Corporate bonds
Subtotal
Securities whose acquisition cost exceeds their carrying value
Stock
Corporate bonds
Other
Subtotal
Total

Notes: 1. Corporate bonds include compound financial instruments.
2. U nlisted stocks of ¥41 million are not included in “Other securities” because their market prices do not exist and their fairvalues are not readily determinable.

Securities whose carrying value
exceeds their acquisition cost
Stock
Corporate bonds
Other
Subtotal
Securities whose acquisition costexceeds their carrying value
Stock
Corporate bonds
Subtotal
Total

Carrying value

Yen (Millions)2017
Acquisition cost

Variance

U.S. Dollars (Thousands)
2017
Carrying value
Acquisition cost

Variance¥10,788
2,000
511
13,299¥4,528
2,000
500
7,028

¥6,2590
116,270$ 95,470
17,701
4,524
117,696$40,077
17,6994,424
62,201$55,392
2
100
55,495–948
948¥14,248

–
1,000
1,000
¥8,028–(51)(51)¥6,219

–
8,392
8,392
$126,089

–
8,849
8,849
$71,050

–
(456)
(456)
$55,038

Notes: 1. Corporate bonds include compound financial instruments.
2. U nlisted stocks of ¥42 million ($371 thousand) are not included in “Other securities” because their market prices do not exist
and their fair values are not readily determinable.

28

(3) Other securities soldYen (Millions)

Other
Total

Sold amount
¥–
¥–

2016
Total gain¥–¥–

Total loss¥–¥–

Sold amount¥1,093¥1,0932017
Total gain¥–¥–

Total loss
¥36
¥36

U.S. Dollars (Thousands)
2017
Sold amount Total gain
Total loss
$9,677$–$327$9,677$–$327

Total gain¥–¥–

U.S. Dollars (Thousands)
2017
Acquisition cost Sold amount Total gain
$–
$–
$–
$–
$–
$–

(4) Held-to-maturity securities soldYen (Millions)

Bonds (Corporate bonds)
Total

2016
Acquisition cost Sold amount¥3,375¥3,808¥3,375¥3,808

Total gain
¥433
¥433

2017
Acquisition cost Sold amount
¥–
¥–
¥–
¥–

6. Derivative Financial Instruments
The Company enters into forward exchange contracts and options, and forward precious metal contracts, as a normal part of risk
management efforts. The Company also utilizes compound financial instruments for the purpose of efficient management of surplus
funds. However, only principal guaranteed instruments are used, and derivatives are not used for speculative trading purposes. As aresult, the Company is exposed to risk of currency rate fluctuations and commodity price risk. The Company is also exposed to credit
related losses in the event of the nonperformance of the counterparties to foreign exchange contracts, precious metal contracts andcompound instruments. Management believes such credit risks are minor because of the high credit worthiness of the counterparties
and as such financial instruments are not held for trading purposes.
Forward precious metal contracts are used by the Company to hedge the risk of changes in market prices resulting from thepurchase of precious metals as raw materials for motor products. These contracts are long-term purchase contracts of raw materials,
and are also not in the scope of the accounting standards of financial instruments.
The fair value of derivative transactions for which hedge accounting is not applied is the forward foreign exchange quotation or the
price provided by correspondent financial institutions.
(1) Derivative transactions for which hedge accounting is not applied
1. Forward exchange contracts and currency option transactions

Contract amountNon-market transactions
Forward exchange contracts
Sell US$
Total¥15,852¥15,852

Contract amountNon-market transactions
Forward exchange contracts
Sell US$
Total¥21,239¥21,239

Contract amountNon-market transactions
Forward exchange contracts
Sell US$
Total$187,963$187,963

Yen (Millions)2016
Maturity over 1 year
Fair value

¥–
¥–

¥(11)
¥(11)

Yen (Millions)2017
Maturity over 1 year
Fair value

¥–
¥–

¥1
¥1

U.S. Dollars (Thousands)
2017
Maturity over 1 year
Fair value

$–
$–

$13
$13

Revaluation gain/loss

¥(11)
¥(11)

Revaluation gain/loss¥1¥1

Revaluation gain/loss

$13
$13

2. Forward precious metal contracts

Contract amountNon-market transactions
Buy
Total

¥17,853¥17,853

Contract amountNon-market transactions
Buy
Total

29

MABUCHI MOTOR CO., LTD.

¥13,403¥13,403

Yen (Millions)2016
Maturity over 1 year
Fair value¥13,817¥13,817¥16,971¥16,971

Yen (Millions)2017
Maturity over 1 year
Fair value¥9,554¥9,554¥17,118¥17,118

Revaluation gain/loss¥(881)¥(881)

Revaluation gain/loss¥3,715¥3,715

Annual Report 2017

Contract amountNon-market transactions
Buy
Total

U.S. Dollars (Thousands)
2017
Maturity over 1 year
Fair value$118,614$118,614$84,555$84,555$151,492$151,492

Revaluation gain/loss$32,878$32,878(2) Derivative transactions for which hedge accounting is applied
Dividends receivable from foreign subsidiaries

Hedge accounting method
Principle-based accounting

Hedging instrument
Forward exchange
contracts
Sell US$

Total

Hedge accounting method
Principle-based accounting

Hedging instrument
Forward exchange
contracts
Sell US$

Total

Hedge accounting method
Principle-based accounting

Hedging instrument
Forward exchange
contracts
Sell US$

Total

Yen (Millions)
2016
Hedged item
Contract amount
Dividends

Maturity over 1 year

Fair value¥–¥–¥(681)¥(681)

Maturity over 1 year

Fair value¥–¥–¥(126)¥(126)

Maturity over 1 year

Fair value$–$–$(1,120)$(1,120)¥6,234¥6,234

Yen (Millions)
2017
Hedged item
Contract amount
Dividends¥5,463¥5,463

U.S. Dollars (Thousands)
2017
Hedged item
Contract amount
Dividends$48,347$48,347

7. Retirement Benefit Plans
The table below sets forth the plans’ status and amounts recognized in the consolidated balance sheets at December 31, 2016 and2017.
1. Movement in retirement benefit obligations
Yen (Millions)
Beginning balance
Service cost
Interest cost
Actuarial loss (gain)
Benefit paid
Other
Ending balance

2016

2017

U.S. Dollars (Thousands)
2017¥11,679
438
99
600
(624)
(68)
¥12,123¥12,123
470
76
(107)
(611)
178
¥12,130$107,290
4,163
673
(947)
(5,411)
1,576$107,346

2016

2017

U.S. Dollars (Thousands)
2017¥10,017
107
21
449
(624)
(54)
¥ 9,916¥ 9,916
103
11
462
(611)
130
¥10,013$87,755
917
105
4,092
(5,411)
1,151$88,611

2016

2017

U.S. Dollars (Thousands)
2017

¥419
30
(16)
(19)
¥413

¥413
44
(33)
(8)
¥415

$3,659
389
(293)
(74)
$3,6802. Movement in plan assets
Yen (Millions)
Beginning balance
Expected return on plan assets
Actuarial gain (loss)
Contributions paid by the employer
Benefit paid
Other
Ending balance

3. Movement in retirement benefit obligations calculated using the simplified method
Yen (Millions)
Beginning balance
Retirement benefit cost
Benefit paid
Other
Ending balance30

4. Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits
2016

Yen (Millions)
2017

U.S. Dollars (Thousands)
2017

Unfunded retirement benefit obligations
Total net liability for retirement benefits at December 31¥12,123(9,916)2,207413¥ 2,620¥ 12,130(10,013)2,117415¥  2,532$107,346(88,611)18,7343,680$ 22,415

Liability for retirement benefits
Total net liability for retirement benefits at December 31

2016¥2,620¥2,620Funded retirement benefit obligations
Plan assets

Yen (Millions)2017¥2,532¥2,532

U.S. Dollars (Thousands)
2017$22,415$22,415

2016

2017

U.S. Dollars (Thousands)
2017

¥ 438
99
(107)
100
20
30
158
¥ 741

¥ 470
76
(103)
164
20
44
34
¥ 707

$4,163
673
(917)
1,457
185
389
303
$6,2562016

2017

U.S. Dollars (Thousands)2017¥   20(621)¥(600)

¥ 20
283
¥304

$   1852,510$2,696

5. Retirement benefit costs
Yen (Millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial gain
Amortization of prior service cost
Retirement benefit costs applying a simplified method
Other
Total retirement benefit costs for the fiscal year ended December 31

6. Retirement benefits liability adjustments before tax effect in other comprehensive income
Yen (Millions)
Prior service cost
Actuarial loss
Total balance amount for the year

7. Retirement benefits liability adjustments before tax effect in accumulated other comprehensive income
Yen (Millions)
Unrecognized prior service cost
Unrecognized actuarial loss
Total balance amount for the year

2016

2017

U.S. Dollars (Thousands)2017¥   22
1,843¥1,865¥    1
1,559¥1,561$    14
13,801$13,816

8. Plan assets
The fair values of plan assets, by major category, as a percentage of total plan assets were as follows:① Plan assets at December 31, 2016 and 2017, comprise:
General accounts
Bonds
Cash and deposits
Other
Total

2016
73.6%
14.5%
5.3%
6.6%
100.0%

2017
75.2%
13.6%
4.5%
6.7%
100.0%② Long-term expected rates of return
The expected rates of return on plan assets have been estimated based on the anticipated allocation to each asset class and the
expected long-term returns on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
Discount rates
Expected rates of return on plan assets
Expected rates of salary increase

31

MABUCHI MOTOR CO., LTD.

2016
Mainly 0.4%
Mainly 1.0%
Mainly 2.8%

2017
Mainly 0.4%
Mainly 1.0%
Mainly 2.7%

Annual Report 2017

8. Income Taxes
1. Income taxes in Japan applicable to the Company consist of corporation tax, inhabitant’s taxes and enterprise tax, which, in theaggregate, resulted in statutory rates of approximately 32.8% and 30.7% for the years ended December 31, 2016 and 2017,
respectively. Income taxes of the foreign consolidated subsidiaries are based generally on the tax rates applicable in their countries ofincorporation. The reconciliation between the effective tax rates reflected in the consolidated statement of income and the effective
statutory tax rates for the years ended December 31, 2016 and 2017 was as follows:
2016
Percentage
32.8
0.8
(8.0)
(0.5)
(3.9)
0.4
0.8

Effective statutory tax rates
Tax credits on dividend income
Different tax rates applied to foreign subsidiaries
Tax deduction
Undistributed earnings in foreign subsidiaries
Valuation allowance
Other, net
Effective tax rates

2017
Percentage
30.7
0.6
(5.7)
(2.1)
0.8
0.4
1.4
26.1

22.4

2. The significant components of deferred tax assets and liabilities at December 31, 2016 and 2017, were as follows:
Yen (Millions)Deferred tax assets:
Enterprise tax payable
Depreciation
Liability for retirement benefits
Allowance for retirement benefits for officers
Valuation losses on investment securities and other assets
Valuation losses on golf club membership
Impairment loss
Net unrealized holding gains on securities
Deferred gains or losses on hedges
Unrealized profits on inventories and fixed assets
Loss carried forward
Other
Subtotal
Valuation allowance
Total
Deferred tax liabilities:
Tax on undistributed earnings in foreign subsidiaries
Reserve for reduction entry
Unrealized holding gains on securities
Other
Total
Net deferred tax assets (liabilities)
As reported in the consolidated balance sheet:
Deferred tax assets – Current
Deferred tax assets – Non-current
Deferred tax liabilities – Current
Deferred tax liabilities – Non-current

2016

2017

U.S. Dollars (Thousands)
2017¥   132
165
598
21
247
71
476
70
209
1,475
368
339
4,176
(1,353)¥ 2,823¥   144
138
585
–
247
71
12
15
38
1,558
485
354
3,653
(914)
¥ 2,738$   1,278
1,222
5,178
–
2,192
630
110
140
343
13,796
4,297
3,138
32,329(8,097)$ 24,232¥(2,009)(58)(1,029)(111)¥(3,208)¥  (385)¥(2,227)(56)(1,688)(68)¥(4,041)¥(1,303)$(19,715)(501)(14,942)(606)$(35,766)$(11,533)¥ 1,667488(65)(2,476)¥ 1,706424(80)(3,353)$ 15,101
3,756
(715)
(29,676)32

9. Consolidated Statement of Comprehensive Income
The following table presents reclassification adjustments and tax effects for each component of other comprehensive income for theyears ended December 31, 2016 and 2017.
Yen (Millions)
Unrealized holding gains (losses) on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectUnrealized holding gains (losses) on securities
Deferred gains or losses on hedges:
Amount arising during the year
Tax effect
Deferred gains or losses on hedges
Foreign currency translation adjustments:
Amount arising during the year
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effect
Retirement benefits liability adjustments
Total other comprehensive income

2016

2017

U.S. Dollars (Thousands)
2017¥    378
–
378
(111)
266

¥2,444
36
2,481
(643)
1,838

$21,633
327
21,960(5,693)
16,267

(681)
209
(472)

555
(170)
384

4,912
(1,507)3,404(8,553)

220

1,954

(722)
121
(600)
122
(478)
¥(9,236)

119
185
304
(64)
239
¥2,683

1,053
1,643
2,696
(574)
2,122
$23,748

10. Shareholders’ Equity
Under the Japanese Corporation 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 ofthe new shares as additional paid-in capital, which is included in capital surplus.
Under the Law, where a distribution of earnings is made, the smaller of an amount equal to 10% of the dividend or the excess, ifany, of 25% of common stock over the total of additional paid-in capital and the legal earnings reserve must be set aside as additional
paid-in capital or as part of the legal earnings reserve. The legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
As of December 31, 2017, the total amount of additional paid-in capital and the legal earnings reserve exceeded 25% of thecommon stock; therefore, no additional transfer is required.
Additional paid-in capital and the legal earnings reserve may not be distributed as dividends. However, by a resolution at ashareholders’ meeting, additional paid-in capital and the legal earnings reserve may be transferred to other retained earnings andcapital surplus, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statementsof the Company in accordance with the Law.
Year-end dividends are approved by the shareholders after the end of each fiscal year, and semiannual interim cash dividends are
declared by the Board of Directors after the end of each interim six-month period.
On September 15, 2017, interim dividends (¥54 or $0.47 per share) totaling ¥3,660 million ($32,396 thousand) were paid toshareholders based on the shareholders’ record at June 30, 2017. On March 29, 2018, the shareholders approved the declaration ofdividends (¥66 or $0.58 per share) totaling ¥4,474 million ($39,595 thousand).

11. Amounts per Share
Yen
2016

2017

Profit attributable to owners of parent
Basic
Diluted¥  300.70¥  300.59¥  299.74¥  299.61

Net assets

2016¥3,405.14

Yen
2017¥3,579.98

U.S. Dollars
2017$ 2.65$ 2.65
U.S. Dollars
2017$31.68Notes: 1. P er share amounts are computed based on the number of shares outstanding less treasury stock including shares of the ESOP
trust account and BIP trust account.
2. The number at year end of such treasury shares were 98,700 and 119,600 shares, respectively, during the fiscal year ended
December 31, 2016, and 63,800 and 116,386 shares, respectively, during the fiscal year ended December 31, 2017.
3. The weighted average number of such treasury shares were 116,973 and 67,643 shares, respectively, during the fiscal year
ended December 31, 2016, and 84,621 and 117,442 shares, respectively, during the fiscal year ended December 31, 2017.

33

MABUCHI MOTOR CO., LTD.

Annual Report 2017

The bases for calculation (net assets per share) are as follows:
Yen (Millions)
Total net assets
Amounts deducted from total net assets:
Share subscription rights
Net assets attributable to shares of common stock
Number of common stock on December 31 (Shares)

2016

2017

U.S. Dollars (Thousands)2017¥   232,917
110
110¥   232,807
68,369,392¥   242,179
130
130¥   242,049
67,612,000$2,143,182
1,152
1,152
$2,142,029–

The bases for calculation (basic and diluted profit attributable to owners of parent per share) are as follows:
Yen (Millions)
Profit attributable to owners of parent per share
Profit attributable to owners of parent
Amounts not attributable to ordinary shareholders
Profit attributable to owners of parent in relation to common stock
Average number of common stock (Shares)
Diluted profit attributable to owners of parent per share
Profit attributable to owners of parent adjustments
Increase in number of shares of common stock (Shares)
Share subscription rights (Shares)

2016

2017

U.S. Dollars (Thousands)
2017¥    20,598–
20,59868,501,074¥    20,303–
20,30367,735,198$179,672–
179,672––
25,172
25,172–
29,23029,230–––12. Selling, General and Administrative Expenses
The main components of “Selling, General and Administrative Expenses” for the years ended December 31, 2016 and 2017, were as
follows:
Yen (Millions)
Packing and freightage expenses
Salaries and wages
Provision for bonuses due to employees
Provision for bonuses due to directors
Retirement benefit expenses
Employee benefit costs
Depreciation
Provision of allowance for doubtful debts
Research expenses

2016

2017

U.S. Dollars (Thousands)
2017¥1,167
8,701
247
141
477
1,630
1,532
199
1,242

¥1,168
9,031
260
143
615
1,739
1,584
44
1,140

$10,337
79,925
2,307
1,265
5,445
15,395
14,023395
10,09013. Contingent Liabilities
As of December 31, 2016 and 2017, the Company is contingently liable principally for forward precious metal contracts in the amountsof ¥17,853 million and ¥13,403 million ($118,614 thousand), respectively.

14. Research and Development Expenses
Expenditures relating to research and development activities are charged to income as incurred and amounted to ¥5,024 million and¥5,233 million ($46,310 thousand) for the years ended December 31, 2016 and 2017, respectively.

15. Other Income (Expenses)
A gain of ¥412 million and ¥567 million ($5,020 thousand) on the sale of buildings and structures was recognized for the years ended
December 31, 2016 and 2017, respectively, and included in gain on disposal of fixed assets, net.

16. Impairment of Fixed Assets
There were no impairment losses relating to fixed assets to be disclosed in the notes for the fiscal years ended December 31, 2016 and2017.

17. Segment Information
1. Overview of reporting segments
The reporting segments of the Company and its consolidated subsidiaries are regularly reviewed by the Board of Directors using thesegregated financial information available within each segment of the Company and its consolidated subsidiaries, to determine theallocation of management resources and evaluate business results.
The Company and its consolidated subsidiaries specialize in small motors manufacturing and sales as a single line of business. The
Company is in charge of the business activities in Japan. Meanwhile, subsidiaries located overseas are in charge of operations in Asia,
North and Latin America, Europe, etc. Subsidiaries located overseas are independent management units and propose comprehensive
product strategies while pursuing business expansion.

34

Since the Company and its consolidated subsidiaries are composed of regional segments based on a manufacturing and sellingsystem, the Company and its consolidated subsidiaries have designated “Japan,” “Asia,” “North and Latin America” and “Europe” astheir reporting segments.
2. Methods for calculating net sales, profits or losses, assets, liabilities and other items by reporting segment
The accounting policies and methods for the Group’s reporting segments are the same as described in “1. Summary of Significant
Accounting Policies.”
Intersegment net sales are based on prevailing market prices.
3. Information concerning net sales, profits or losses, assets, liabilities and other items by reporting segment
Yen (Millions)
Net sales:Japan
External customers
Intersegment
Total
Asia
External customers
Intersegment
Total
North and Latin America
External customers
Intersegment
Total
EuropeExternal customers
Intersegment
Total
Corporate and elimination
Consolidated
Segment profit or loss:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Segment assets:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Others:Depreciation and amortization:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Increase in tangible and intangible fixed assets:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated

2016

2017

U.S. Dollars (Thousands)2017¥   11,851
87,996
99,847¥   12,424
90,313
102,738$    109,954
799,236
909,191

81,37075,201
156,572

81,35878,213
159,571

719,982
692,157
1,412,139

17,360017,36018,37626
18,402

162,620
235
162,855

30,117–30,117(163,197)¥ 140,699

34,766–
34,766(168,554)¥ 146,925

307,666–
307,666(1,491,628)$ 1,300,223¥   8,703
14,546
228
1,112
(366)
¥   24,225¥   10,137
13,596
(449)
1,202
(421)
¥   24,066$    89,710
120,324(3,975)
10,642(3,728)$    212,974¥   95,262
157,238
13,745
15,784(23,644)¥ 258,387¥ 103,338
162,854
19,526
20,332(36,734)¥ 269,318$    914,503
1,441,192
172,805
179,936(325,088)$ 2,383,349¥   1,124
5,406
125
6
(303)
¥   6,359¥   1,215
6,074
397
5
(308)
¥   7,383$    10,753
53,7523,514
49(2,729)$    65,340¥     904
8,740
1,652
10
(105)
¥   11,202¥   1,667
7,855
3,128
1,357
(528)
¥   13,480$    14,754
69,516
27,68912,016(4,677)$    119,299

Notes: 1. (1) C orporate and elimination for segment profit or loss of ¥366 million in fiscal 2016 and ¥421 million ($3,728 thousand) in
fiscal 2017 represent intersegment transaction eliminations.
		 (2) T he segment assets eliminations include: corporate assets of ¥75,026 million in fiscal 2016 and ¥70,970 million ($628,054
thousand) in fiscal 2017, not allocated to each segment; intersegment debt and credit eliminations of ¥98,671 million in
fiscal 2016 and ¥107,705 million ($953,142 thousand) in fiscal 2017. Corporate assets primarily include the parent
company’s surplus funds for investment (e.g., cash and bank deposits and short-term investments) and long-term
investment funds (e.g., investment securities).
		 (3) T he depreciation and amortization eliminations of ¥303 million in fiscal 2016 and ¥308 million ($2,729 thousand) in fiscal
2017 represent intersegment transaction eliminations.
		 (4) Increase in tangible and intangible fixed assets eliminations of ¥105 million in fiscal 2016 and ¥528 million ($4,677
thousand) in fiscal 2017 represent intersegment transaction eliminations.
2. Segment profit or loss is adjusted for operating income reported in the consolidated statement of income.
Related information
Information on net sales, tangible fixed assets and impairment losses by geographic area is summarized as follows. For the fiscal year
ended December 31, 2016, sales to one specific major customer in the amount of ¥14,154 million accounted for 10% or more of
consolidated net sales. For the fiscal year ended December 31, 2017, sales to one specific major customer in the amount of ¥14,729
million ($130,352 thousand) accounted for 10% or more of consolidated net sales.

35

MABUCHI MOTOR CO., LTD.

Annual Report 2017

Geographical Information
Yen (Millions)
Net sales
Japan
Asia
North and Latin America
Europe
Total

2016

2017

U.S. Dollars (Thousands)
2017¥ 12,018
81,20317,36030,117¥140,699¥ 12,540
81,241
18,376
34,766¥146,925$  110,981
718,955
162,620
307,666$1,300,223

2016

2017

U.S. Dollars (Thousands)
2017¥16,123
40,2273,955
30¥60,336¥17,115
43,1216,691
1,381¥68,310$151,465
381,604
59,21912,228$604,517

2017

U.S. Dollars (Thousands)
2017

Yen (Millions)Tangible fixed assets
Japan
Asia
North and Latin America
EuropeTotal

Yen (Millions)2016
Impairment loss
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Total

¥ –
90
–
–
–
¥90

¥–
–
–
–
–
¥–

$–
–
–
–
–
$–

18. Subsequent Events
Purchase and cancellation of treasury stock
On February 14, 2018, the Company resolved, at the Board of Directors’ meeting, to purchase treasury stock pursuant to the provisionsof Article 156 of the Companies Act, applied by replacing terms pursuant to the provisions of Article 165, Paragraph 3, of said Act,and resolved to cancel treasury stock pursuant to the provisions of Article 178 of the Companies Act, as described below.
1. Reasons for the purchase and cancellation of treasury stock
The Company will purchase and cancel treasury stock in order to implement a flexible capital policy to respond to changes in thebusiness environment and to improve shareholder returns and capital efficiency.
2. Details of matters pertaining to the purchase of treasury stock(1) Class of shares to be purchased: Common stock of the Company(2) Total number of shares to be purchased: 800,000 shares (maximum)(1.18% of the total number of shares issued [excluding treasury stock])(3) Total amount of purchase cost: ¥3.0 billion ($26,548 thousand) (maximum)(4) Purchase period: February 16, 2018 to March 23, 2018(5) Purchase method: Purchase in the open market through discretionary trading(6) As a result, the Company purchased 563,500 shares of common stock (total amount ¥2,999 million ($26,547 thousand)).
3. Details of matters pertaining to the cancellation of treasury stock(1) Class of shares to be cancelled: Common stock of the Company(2) Number of shares to be cancelled: All shares of treasury stock purchased as stated in item 2 above(3) Scheduled date of cancellation: April 16, 2018(4) The Company will cancel 563,500 shares of common stock, pursuant to the above-mentioned Board of Director’s resolution.
Introduction of the restricted stock compensation plan
The Company, at its Board of Directors’ meeting held on February 23, 2018, revised the executive remuneration system and resolved
the introduction of a Restricted Stock Compensation Plan (the “Plan”). The Plan was approved at its Shareholders’ Meeting held on
March 29, 2018.
1. Purpose of the introduction of the Plan
The introduction of the Plan is intended to grant Directors of the Company (the “Directors Covered by the Plan”, excluding outside
directors) an incentive to continuously increase the corporate value of the Company, and to further share it with the shareholders.
2. Overview of the Plan
Based on the Plan, the Directors Covered by the Plan will be granted monetary compensation claims by the Company, and makepayments in kind using all such monetary compensation claims as contributed assets. The Company shall then issue or dispose of its
common stock to them.
The total amount of such remuneration to be paid to Directors shall not exceed ¥60 million ($530 thousand) per year, which is thesame amount as the total amount of remuneration concerning stock options, apart from the conventional remuneration for Directors.
The total number of the Company’s common stock to be issued or disposed of under the Plan shall not exceed 50,000 per year, whichis the same number of shares to be issued by stock options. However, in the event of a stock split or reverse stock split of theCompany’s common stock, requiring unavoidable adjustments to the number of shares, the number of shares to be issued or disposedof will be adjusted reasonably.
The transfer restriction period of the restricted stock shall be the period from the issue date of the restricted stock to the date therelevant Directors Covered by the Plan retire, or resign from the post of Director of the Company, or other post specified by theCompany’s Board of Directors, which will meet the purpose for the introduction of the Plan to achieve the aim of strengthening
shareholder value over the medium- to long-term period. The specific payment timing to each Director Covered by the Plan and its
allocation shall be decided by the Board of Directors.
The amount paid in per common stock issued or disposed of under the Plan shall be determined by the Board of Directors withinreasonable range that is not particularly advantageous to the Directors Covered by the Plan, based on the closing price of theCompany’s common stock on the Tokyo Stock Exchange on the business day before the day of the relevant resolution of the Board of
Directors (if no trading is reported on the day, it shall be the closing price on the immediately preceding day).

36

When issuing or disposing of the Company’s common stock based on the Plan, the Company shall conclude a restricted stock
allocation agreement (the “Allocation Agreement”) with the Directors Covered by the Plan, which shall contain the following
conditions.
1) The Directors Covered by the Plan are not allowed to transfer, set collateral rights for or otherwise dispose of the common stock
granted pursuant to the Allocation Agreement during a predetermined period; and2) In the event that a prescribed event should occur, the Company shall acquire the relevant common stock free of charge.
3. Grants to the Company’s Executive Officers
The Company grants restricted stock similar to the above-mentioned restricted stock for the Company’s Executive Officers living inJapan, while granting stock-price based compensation under similar or corresponding conditions to the above-mentioned restricted
stock to the Company’s Executive Officers living outside of Japan.
The Company, at its Board of Directors’ meeting held on March 29, 2018, resolved the total amount of compensation receivables andthe total number of shares to be allotted for granting the restricted stock.
Number of directors to be grants
12

Total compensation receivable¥47,775,700($422,793)

The total amount of shares to be allotted
9,170 shares

The Company, at its Board of Directors’ meeting held on March 29, 2018, resolved the treasury stock disposal as part of the restricted
stock compensation plan.
(1) Payment date(2) Class and number of shares to be disposed(3) Disposal value(4) Total disposal value(5) Grantees and number of grantees and number of shares to be allotted

37

MABUCHI MOTOR CO., LTD.

April 27, 2018
9,170 shares of common stock¥5,210 per share($46 per share)¥47,775,700($422,793)
6 directors of the Company (excluding outside directors) : 6,890 shares of common stock
6 executive officers of the Company : 2,280 shares of common stockAnnual Report 2017

Independent Auditor’s Report38Board of Directors, Audit & Supervisory Board
Members, and Executive Officers(As of March 30, 2018)

Hiroo Okoshi

Masato Itokawa

Representative Director
and President,
President & CEO

Representative Director,
Managing Executive Officer,
Chief Quality Officer and Senior
General Manager - Quality
Assurance Headquarters, incharge of Internal Controls

Tadashi Takahashi

Hirotaro Katayama

Tadahito Iyoda

Director, Managing
Executive Officer, Chief
Technology Officer andSenior General Manager- Manufacturing
Headquarters

Director, Managing
Executive Officer andChief Business Operation
Officer

Director, Group Exective
Officer and Chief Regional
Officer in the Americas

Eiji Uenishi

Ichiro Hashimoto

Naoki Mitarai

Director, Executive Officer
and Senior General
Manager- Product Development
Headquarters

Outside Director

Outside Director

Kazuyuki Someya

Nobutaka Motohashi

Full-time Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Board of Directors

Audit & Supervisory
Board Members

Toru Masuda

Takashi Asai

Outside Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Tsuyoshi Nakamura

Toichi Koyata

Executive Officer and
Deputy Chief Business
Operation Officer

Executive Officer andSenior General Manager- Business Platform
Innovation Headquarters

Kentaro Shirai

Isao Ichikawa

Shinichi Taniguchi

Executive Officer andSenior General Manager- Purchasing Headquarters

Executive Officer andSenior General Manager- Sales & Marketing
Headquarters

Executive Officer and
Deputy Senior General
Manager- Product Development
Headquarters

Toru Shibasaki

Quan Da Yong

Executive Officer and
Deputy Senior General
Manager- Manufacturing
Headquarters

Group Exective Officer andChief Regional Officer in
China

Executive Officers(excluding those also serving
as directors)

39

MABUCHI MOTOR CO., LTD.

WEB

https://www.mabuchi-motor.com/investor/management/executives/

Annual Report 2017

Corporate Data
(As of December 31, 2017)

Company Name

Number of Employees

Shareholders’ Register Custodian

MABUCHI MOTOR CO., LTD.

806 (Non-consolidated)

Mitsubishi UFJ Trust and Banking Corporation

23,936 (Consolidated)

Corporate Agency Department

Corporate Headquarters

Tel: +81-120-232-711

430 Matsuhidai, Matsudo City,
Chiba 270-2280, Japan
Tel: +81-47-710-1111

Ordinary General Meeting of
Shareholders

Stock Listing

The Ordinary General Meeting of Shareholders

Japanese Stock Exchange Listing

will be held every March at Corporate

Tokyo Stock Exchange

Established

Headquarters.

January 18, 1954

Independent Accountants

Paid-in Capital

Ernst & Young ShinNihon LLC
Tokyo, Japan¥20,704 million

Corporate
Directory

SHANGHAI MABUCHIJIANGSU MABUCHI *1

EUROPE MABUCHI *2
POLAND MABUCHISHENZHEN MABUCHIDONGGUAN MABUCHI *2

DALIAN MABUCHIAMERICA MABUCHIWAFANGDIAN MABUCHI
KOREA MABUCHIMEXICO MABUCHI *1

Corporate Headquarters
LUDONG MABUCHI
HONG KONG MABUCHIDANANG MABUCHI *1
THAILAND MABUCHIJIANGXI MABUCHITAIWAN MABUCHI *1
KAOHSIUNG MABUCHI(Date of founding: January 11, 2018)

VIETNAM MABUCHIDAOJIAO MABUCHI

Sales offices
Production bases

SINGAPORE MABUCHI*1 Includes sales functions*2 Includes R&D functions

Nonconsolidated
SubsidiaryWEB

MABUCHI REAL ESTATE CO., LTD.

https://www.mabuchi-motor.com/company/profile.html 40

Investor Information(As of December 31, 2017)

Stock Data

Composition of Shareholders

Number of Shares Authorized...................... 200,000,000
Number of Shares Issued.................................. 69,125,962
Number of Shareholders......................................... 14,876

Major Shareholders
Number of
Ratio of
Shares Held Shareholders(Thousands)(%)

Major Shareholders
Takaichi Mabuchi
Mabuchi International ScholarshipFoundation
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Japan Trustee Services Bank, Ltd.
(Trust Account)Premiere Corporation
Takashi Mabuchi
Tamotsu Mabuchi
Taka Corporation Co., Ltd.
TEXAS Inc.
BBH FOR MATTHEWS JAPAN FUND

5,000

7.4

3,000

4.4

2,989

4.4

2,966

4.4

2,068
2,060
2,060
2,056
1,856
1,418

3.1
3.0
3.0
3.0
2.7
2.1

Treasury Stock

Financial Institutions
24.5%

1.9%
Individuals andOthers24.0%

Other Companies
15.7%

Foreign Companies
32.2%

100-499 2.9%

Less than 100 0.0%500-999 1.1%
1,000-9,999 4.7%
10,000-99,999 9.7%
More than 1,000,000
37.9%

By number ofshares held

Notes: 1. In addition to the above, Mabuchi Motor Co., Ltd. retains
1,333,776 shares of treasury stock.
2. The number of shares of treasury stock is excluded from “Ratio of
Shareholders.” The percentages are rounded to one decimal place.
3. Our company stock held by ESOP trust of employee
shareholders association and the Executive Compensation BIP(Board Incentive Plan) Trust is not included in treasury stock.

Cash Dividends per Share/Payout Ratio

100,000-999,999 43.7%

Share RepurchaseTransaction period

Number of shares
repurchased

Amount(Millions of yen)Mar. 1, 2018 - Mar. 20, 2018357,100

1,888

Feb. 16, 2018 - Feb. 28, 2018

206,400

1,111

Mar. 1, 2017 - Mar. 24, 2017

474,800

2,978

Feb. 16, 2017 - Feb. 28, 2017

326,800

2,021

1,000,000

4,771

(%)
46.6

(Yen)

41.5

41.2

39.9

40.0

214.0
140.0

131.0

87.0

110.0

120.0

120.0

58.0

76.0

66.0

53.0

83.0

52.0

44.0

54.0

Feb. 16, 2016 - Feb. 25, 2016

2013

2014

2015

2016

2017

Mar. 13, 2015 - Mar. 23, 2015

219,200

1,393

Feb. 17, 2015 - Mar. 12, 2015

605,000

3,605

InterimYear-end

Payout Ratio* We split each share of our common stock into two shares on January 1,
2015.

Changes in Standards for Calculating Dividends
Year

Financial Instruments
Firms
1.6%

By type ofshareholders

Ordinary Dividendper Share2015

30 yen*1

Trend of Stock Price and Related Indicators

Standard Value for Calculating
Special Dividend

2013

2014

2015

2016

2017

30% of consolidated net income

High (Yen)

6,380

10,540

8,230

6,740

6,740

2014

60 yen30% of consolidated net income

Low (Yen)

3,675

5,430

4,385

3,810

5,020

2007 *2

60 yen20% of consolidated net income

At year-end (Yen)

6,250

9,620

6,640

6,100

6,110

2005

60 yen20% of consolidated net income

PER

20.8

18.6

24.9

20.3

20.4

2003

50 yen20% of consolidated net income

PBR

1.0

1.4

2.0

1.8

1.7

1999

50 yen5% of consolidated net income*1 We split each share of our common stock into two shares on
January 1, 2015.
*2 [Additional policy] Actual full-year dividend amount shall be basedon the above calculation standards and shall not be less than the
expected dividend amount announced during the full-year period
unless a significant profit warning is issued.

41

MABUCHI MOTOR CO., LTD.

WEB

https://www.mabuchi-motor.com/investor/stock/info.html