2009
Annual Report
Year ended December 31, 2009

Small Motors:
Vit l andVital
d Ubiquitousbi it s

Driving every
ProfileSmall direct-current (DC) motors are deployed in a broad range of applications
that impact the way we live. Although often not visible, they facilitate the convenience and comfort that enhance our everyday lives, through uses in automotive
products, audio and visual equipment, optical and precision equipment, home
appliances, tools, toys, models and recreational equipment. Small DC motors havetransformed our lifestyles, providing unimagined flexibility and ease of living by
freeing an array of machines from the restrictions of plugs and lengthy cables.
As we move into the 21st century, with the full-fledged manifestations of the
problems of an ageing population and low birth rate, we are witnessing the advent of a truly ubiquitous society. This is supported by networks of interconnected
machinery and equipment, which will generate new applications and markets
heretofore unrealized.

01

MABUCHI MOTOR CO., LTD. Annual Report 2009

aspect of life
Since its establishment, the Mabuchi Motor Co., Ltd., has conducted corporate
activities as a specialist small DC motor manufacturer adhering to its management
principle of “Contributing to International Society and Continuously
Increasing Our Contribution.” This approach has enabled theCompany to pursue its vision of a society that features prosperity andwell-being through a more stable supply of superior,less-expensive products.
Mabuchi is making concerted efforts to stepup this contribution by consolidating its
technologies and expertise, accumulated overmany years, to create new markets and pursue
the unlimited potential of small DC motors.

MABUCHI MOTOR CO., LTD. Annual Report 200902

Contents
01
03
04

Driving Every Aspect of Life
Contents/Forward-Looking Statements
Consolidated Financial Highlights

05 To Our Shareholders
We are promoting a new axis of growth andoptimizing costs to drive progress in new
growth areas.

09 Segment Information by Motor Application
With the automotive products market as its
core, the Mabuchi Group is developing
business in four key markets for small motors.

11
12
13
15
16
17
19

37
38

09 Automotive Products
09 Audio & Visual Equipment
10 Optical & Precision Instruments
10 Home Appliances, Power Tools, Toys & Hobbies
Research and Development Activities
Mabuchi’s Management VisionCorporate Governance
Board of Directors, Corporate Auditors, and Executive Officers
Corporate Social Responsibility
Business and Other Risks
Financial Section
19 Five-year Financial Summary
20 Management’s Discussion and Analysis
23 Consolidated Balance Sheets
25 Consolidated Statements of Income
26 Consolidated Statements of Changes in Net Assets
27 Consolidated Statements of Cash Flows
28 Notes to Consolidated Financial Statements
36 Independent Auditors’ Report
Investor Information
Corporate Data

Forward-Looking Statements
This annual report contains forward-looking statements about Mabuchi’s future plans, beliefs, strategies and performance that are not historicalfacts. These statements are based on current expectations, forecasts, estimates and projections about the industry in which Mabuchi operates andthe beliefs and assumptions made by its management. As such expectations, forecasts, estimates and projections are subject to a number of risks,
uncertainties and assumptions, they may cause actual results to differ materially from those projected. Mabuchi therefore cautions readers not toplace undue reliance on forward-looking statements. Furthermore, the Company undertakes no obligation to update any forward-looking
statements as a result of new information, future events or other developments.
Risks, uncertainties and assumptions mentioned above include, but are not limited to, exchange rates and economic conditions; the outcomeof pending and future litigation; commodity prices; and the continued status of financing, financial instruments and financial resources.

03

MABUCHI MOTOR CO., LTD. Annual Report 2009

2009
Annual Report

Consolidated Financial Highlights
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
Years ended December 31

Millions of yen

Thousands of
U.S. dollars

Rate ofchange

2007

2008

2009

2009

2009

For the Year:Net sales
Operating income
Income before income taxes
Net income
Capital expenditures
Depreciation and amortization
R&D expenses¥ 107,640
11,685
16,53010,914
3,700
4,913
4,187

¥ 92,602
5,652
5,330
3,565
3,777
4,408
3,892

¥ 70,369
3,019
3,013
5,450
3,659
4,031
3,298

$ 764,880
32,81532,75059,23939,771
43,81535,847-24.0%-46.6%-43.5%+52.9%-3.1%-8.6%-15.3%Cash Flows:
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash used in financing activities¥ 15,447
3,687(13,531)

¥

6,542
45
(18,641)¥ 10,708(1,630)(3,927)$ 116,391(17,717)(42,684)+63.7%-3722.2%-78.9%At Year-end:
Total assets
Net assets
Number of employees (Persons)¥ 230,960
213,31445,601¥ 188,691
178,291
41,328¥ 192,362
180,311
38,251$2,090,891
1,959,902
–

+1.9%
+1.1%
-7.4%

Per Share Data:
Net income
Net assets
Dividends payable¥ 280.90
5,577.84
123.00¥ 155.54
5,146.04
100.00

$

1.69
55.93
1.08

+64.1%+1.1%-18.7%–––-1.8 pts+1.2 pts-0.8 pts(Yen and U.S. dollars)

Key Ratios:
Operating income margin
ROE
Shareholders’ equity ratio¥ 94.77
5,088.18
123.00
(%)

10.9
5.0
92.4

6.1
1.8
94.5

4.3
3.0
93.7

Notes 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥92=U.S.$1, the approximate exchange rate on December 31, 2009.
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.

Composition of motor sales
by application

Composition of motor sales
by region
11.5%
23.2%

23.1%
43.2%

FY2009Motor sales¥70,280 million
18.5%

15.2%

8.5%

Automotive Products
Audio & Visual Equipment
Optical & Precision
Instruments
Home Appliances,Power Tools,
Toys & Hobbies

FY2009Motor sales¥70,280 million
15.0%

14.9%

Japan
North & Latin America
EuropeChina & Hong Kong
Asia Pacific

41.9%

MABUCHI MOTOR CO., LTD. Annual Report 2009

04

2009
Annual Report

To Our Shareholders

Takaichi Mabuchi,
Representative Director
and Chairman

Shinji Kamei,
Representative Director
and President

Mabuchi is preparing for its next stage of expansion bysteadily promoting such strategies as establishing a new
foundation for growth and rationalizing costs in keeping withthe business environment.
Overview of Sales during Fiscal 2009
During fiscal 2009, ended December 31, 2009, the global economy was affected by the financial crisis,
which had its roots in the previous fiscal period. Although the year began in a serious recessionary phase,
progress with economic stimulus policies implemented by various countries, combined with inventory
adjustments and other corporate measures gradually led toward an upturn beginning in the second quarter.
However, underlying conditions in advanced nations remained fragile, with no signs of alleviation of the
supply-demand gap, leaving it to robust emerging nations to spearhead recovery.
Although the Japanese economy began to turn around in the second quarter, bolstered by overseas
trends and government economic stimulus policies, the impetus for recovery was weak, hindered by yen
appreciation, lackluster exports, a slowdown in capital investment, worsening employment conditions andother factors.

05

MABUCHI MOTOR CO., LTD. Annual Report 2009

Business conditions for the Mabuchi Group mirrored these trends. We suffered a drastic drop in orders
through the first quarter, which forced our operational levels to unprecedented lows. We strove to minimize
the negative impact of these conditions on our operating performance by taking emergency measures toimprove profitability. The efforts, as well as our reorganizing of production bases, were in line with our
medium-term policy of optimizing our global production system.
As a result, consolidated net sales fell 24.0% compared with the previous fiscal year, to ¥70,369 million.
Sales of motors, which account for the majority of net sales, decreased 24.0%, to ¥70,280 million. Operating income dropped 46.6%, to ¥3,019 million. This arose because cuts in costs attributable to inexpensive
procurement of copper (a major raw material used by the Company), successful measures to improve
profitability, a rapid improvement in the gross profit ratio in step with market recovery from the second
quarter and a higher-than-expected reduction effect on selling, general and administrative expenses failed tooffset the decrease in net sales. Nevertheless, net income for the year climbed 52.9%, to ¥5,450 million,
arising from lower tax expenses on the back of reversal of deferred tax liabilities, which had been recorded
against undistributed earnings of foreign subsidiaries, posted during the first quarter in accordance withrevisions to the tax system.

Results beyond Forecasts, Boosted by Improvements to Profitability andEnhanced Productivity
During the first quarter of fiscal 2009, orders fell to unprecedented levels and business decelerated across all
markets in which Mabuchi products are used. The accompanying drop in operational levels far surpassed ourability to respond, even though we had considered ourselves flexible enough to weather fluctuating production levels.
In this environment, we inaugurated the Profitability Improvement Committee to formulate emergency
measures to improve profitability, spanning various expense items. Leading these efforts were employment
adjustments at production bases, with drastic revisions to factory utilization ratio configurations, further
reduction of waste and other measures, as well as a 10% cut in headquarters selling, general and administrative expenses. As a result, we reduced SG&A by ¥2.6 billion and cut manufacturing costs across theGroup by ¥8.2 billion.
At the same time, we restructured our production bases to achieve global optimization as part of our
medium-term policy of pursuing cost efficiency. This reorganization included establishing new production
bases and reallocating models and volumes between existing production bases.
Through these initiatives, Mabuchi did its utmost to rationalize costs. We believe that in achieving thisobjective we demonstrated unfailing responsiveness in an adverse environment.

Net sales

Operating income/Operating income margin

Net income(Millions of yen)

(Millions of yen)

(Millions of yen)

93,927

100,517

107,640

8.7
92,602(%)

10.6
10,70070,36910.9
10,603 10,914
11,685

6.1
4.3
7,350

8,149

5,450

5,652
3,565
3,019

2005

2006

2007

2008

2009

2005

2006

2007

2008

2009

2005

2006

2007

2008

2009

MABUCHI MOTOR CO., LTD. Annual Report 2009

06

2009
Annual Report

Promoting a New Axis of Growth and Optimizing Costs to Drive Progress in
New Growth Areas
To maximize the results of emergency measures to improve profitability and the various structural improvements implemented during the year, as well as to lay stepping stones to lead the Company into new growthareas, Mabuchi has determined three important management themes for fiscal 2010: optimization of costs,
development of priority operations and restructuring of production bases.

Optimization of Costs
We are optimizing the operating costs incurred in our current business environment as part of an ongoing
drive to transform to a leaner, more powerful business structure that makes it possible to secure a certain
level of earnings even under severe business conditions. Specifically, we are fortifying our budgeting
management system and procedures and carrying out rational budget allocation to strategic business areas,
while reviewing the operational profitability and effectiveness of all budgets in a bid to thoroughly purge
superfluous costs groupwide. Furthermore, we are constructing more efficient systems by revising and fully
restructuring overlapping functions and roles at production bases.

Development of Priority Operations
Our policy is to explore all possibilities for our core small DC brush motor business. In line with this principle,
we continue to focus on highly marketable and new applications. Specifically, we have identified two key
priorities: expanding sales of automotive products, particularly power window lifter and power seat applications; and developing new applications by launching compact, high-torque products in the automotive
products market.
We maintain our belief that this market, centered on newly emerging nations, will sustain high levels of
growth over the long term. By continuously cultivating this market, we will form the base to expand ouroperations and return to higher levels of profitability.

Restructuring of Production Bases
The Chinese government is reviewing its system of incentives for foreign direct investment. This reality,
coupled with ongoing market-oriented economic reforms in the country, make it evident that we will be
unable to sustain our operations in China in their current form. Owing to these circumstances, Mabuchi will
persist in its policy of establishing a 6:4 production ratio between China and Vietnam by 2011 to ensure astable supply system and enhance Group management efficiency.
As part of this approach, we plan to terminate one of the three contract manufacturing agreements inwhich motor production is outsourced by Mabuchi Industry Co., Ltd., a wholly owned subsidiary, on expiryof the contract in December 2010. To replace the capacity of the closed plants, we will transfer motor
manufacturing activities to bases in Vietnam and other locations in China. Through this shift, Mabuchi will
ensure the stable supply of products and improve production efficiency.

07

MABUCHI MOTOR CO., LTD. Annual Report 2009

Basic Policy on Returning Profit to Shareholders and Dividends for the Year
Mabuchi’s basic policy is to return profits to shareholders in line with business performance, while securing
sufficient retained earnings to conduct robust business activities and maintain a strong financial position.
Our standard for calculating dividends is to pay an annual dividend of ¥60 per share as a long-term,
stable payout, supplemented with a special performance-linked dividend equivalent to 20% of consolidated
net income (calculated per share). Furthermore, the actual dividend for the full fiscal year is calculated suchthat it does not fall below the dividend forecast announced during the period, which takes into account thepayout ratio, dividend levels up to the previous fiscal term, internal reserves, cash flow and other conditions.
As a result, a year-end dividend of ¥50 per share was paid for fiscal 2009, comprising an ordinary
dividend of ¥30 per share and a special dividend of ¥20 per share. A mid-term dividend of ¥50 per share (anordinary dividend of ¥30 per share and a special dividend of ¥20 per share) was also paid. Accordingly, total
dividends for the year were true to our dividend forecasts during the period, at ¥100 per share, composedof an ordinary dividend of ¥60 per share and a special dividend of ¥40 per share.
From 2002 through 2009, Mabuchi acquired approximately 12 million of its own shares through tender
offers and by purchasing shares on the open market and acquiring odd-lot shares. During fiscal 2009, theCompany cancelled 2.0 million of these shares, bringing the total number of these shares cancelled to 3.2
million.
In the future, Mabuchi will continue to be responsive to changes in its share price and management
environment and will review appropriate implementation of its capital employment and shareholder return
policies. At the same time, we shall maintain sufficient internal reserves to boost corporate value by fortifying existing business and making the requisite investments for future growth.

Outlook
We expect the economies of China and other emerging nations to continue growing steadily through thenext fiscal term. Nevertheless, a major question mark remains as to the ability of developed nations to get
on a track to recovery. Despite expectations that economic policies implemented by these countries will bear
fruit, it will be some time before the overall world economy overall benefits from a full-blown demand
recovery.
Although recovery in demand has yet to reach the markets that affect the Mabuchi Group, inventory
adjustments were largely completed across all relevant markets during fiscal 2009. Accordingly, uptrends areevident in the markets for automotive products, audio and visual equipment, optical and precision instruments, home appliances, power tools, toys and hobby equipment. The Mabuchi Group is positioned torespond to all trends toward a demand upswing and is mounting a concerted effort to implement various
management strategies. We appreciate your ongoing understanding and encouragement.

Takaichi Mabuchi,
Representative Director and Chairman

Shinji Kamei,
Representative Director and President

MABUCHI MOTOR CO., LTD. Annual Report 2009

08

2009
Annual Report

Segment Information by Motor Application

During fiscal 2009, harsh conditions prevailed across all Mabuchi’s operating
segments, which were impacted by the deterioration of global markets andappreciation of the yen. As a result, during the year, sales in the Group’s mainstay
motor business fell 24.0% from the same term last year to ¥70,280 million.
Furthermore, sales volumes were down 372 million, at 1,271 million units.

Automotive
Products

Audio & Visual
Equipment

Major Applications
Car mirrors, door locks, air conditioning damper
actuators, power window lifters, steering locks, etc.

Major Applications
DVD player/recorders, CD players,
car component systems, video games, etc.

Automotive Products Market

Audio & Visual Equipment Market

Sales of motors for power window lifters, one of Mabuchi’s

The market for in-car CD players, which accounts for the majority

strategic products, surpassed forecasts, bolstered by favorableof CD player motor sales, mirrored the upturn evidenced in thesales for small vehicle applications and expanded sales in develop-

automotive products market. Furthermore, sales of motors foring countries. In terms of new applications, sales of motors for

DVD players surpassed forecasts on the back of rising demand

power seats and power parking brakes were steady, supported byfrom developing countries. Nevertheless, diminishing vehicle sales

an upturn in the automotive market from the third quarter arisingvolumes and lackluster demand for game console motors, whichfrom policies by various governments to stimulate consumption.

contribute to sales of Others, drove down sales of all major

However, a slump in car sales volumes compared with the

products from the previous year’s figures.

previous year, led by advanced nations, resulted in significant

Consequently, sales in this market dropped 32.9%, todecreases in sales of all major items.

¥10,679 million. Sales in the audio and visual equipment market

As a result, Mabuchi’s sales in the automotive products

represented 15.2% of total motor sales, 2.0 percentage points

market declined 21.5%, to ¥30,346 million. During the year, totallower than during the previous year.

sales to this market accounted for 43.2% of motor sales, up 1.4
percentage points from the previous fiscal year.

Net sales

Net sales by principal item

Net sales

Net sales by principal item

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)(Compared withprevious year)

42,82023,061 22,361

38,63336,781
31,59730,346

4,000
4,000
8,800
8,500
13,100

2005

09

2006

2007

2008

2009

3,600
2,400

90.1%
62.0%

7,900

90.1%

6,200

72.7%

9,900

76.0%

2008
2009
Door locks
Car mirrors (including
Power window lifters retractable rearview mirrors)
Air conditioning damper actuators
OthersMABUCHI MOTOR CO., LTD. Annual Report 2009

21,308(Compared withprevious year)

1,800
15,908

4,900

800
47.3%

10,679

4,200

84.6%

5,600

61.6%

9,100

2005

2006

2007

2008

2009

2008

CD players
Others2009
DVD player/recorders

Optical & Precision
Instruments

Home Appliances,Power Tools,
Toys & Hobbies
Major Applications
Personal care products, power tools, toys, health andwellness products, etc.

Major Applications
Inkjet printers, PCs CD/DVD drives, digital cameras, etc.

Optical & Precision Instruments Market

Home Appliances, Power Tools, Toys & Hobbies Markets

Sales of motors for inkjet printers and PC drives rose during theGiven that consumers in developed countries represent the final

second half, in step with an increase in personal computerdestination for products in this segment, the speed of recovery®

shipments arising from the launch of Windows 7, leading to an

over the course of the year was mild. Sales fell year on year,

earlier recovery than initially anticipated. Performance by motors

despite an underlying recovery for motors for beauty-related

for inkjet printers was strengthened by growth in sales of en-equipment, health-related equipment, power tools and othercoder-equipped motors. Mabuchi also acquired additional market

such products. Specifically, motors for beauty-related products

share in motors for PC drives. A surge in new customers for digitalwere impacted by severe price competition in the market for

camera motors proved insufficient to offset a first-half slump,

motors for driers and weak sales of vibro-shavers. Sales of motors

leading to a drop in overall sales compared to the previous year.

for power tools suffered from flagging demand as a result of
cutbacks in housing starts arising from the recession.

These factors led to sales in the Optical & Precision Instruments Market of ¥13,024 million, down 18.1% year on year.

Sales in these markets decreased 26.5%, to ¥16,230 million

Sales in this market were equivalent to 18.5% of total motor

during the year. Total sales in these markets accounted for 23.1%

sales, 1.3 percentage points more than for the preceding year.

of motor sales, 0.7 percentage point down on the previous year.

*Mabuchi changed the name of this market segment from the Information &Communication Equipment Market to the Optical & Precision Instruments
Market from the second quarter of the year. However, this does not represent
any reclassification of the motor applications covered.

Net sales

Net sales by principal item

Net sales

Net sales by principal item

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)800

18,13916,402 16,658(Compared withprevious year)

15,896
13,024

1,000
2,200

22,772
700

900
1,800

23,90025,17822,071

91.2%
83.0%
81.5%

1,500
16,230

3,900
6,300

11,600

9,400

2006

2007

2008

2009

2008

2009

Inkjet printers
Digital cameras

PCs CD/DVD drives
Others

1,200
800
2,900

74.2%
53.8%
74.2%

4,900

78.1%

6,200

73.4%

81.2%
8,400

2005

(Compared withprevious year)

1,700

2005

2006

2007

2008

2009

2008

2009

Personal care products
OthersPower tools
Toys
Health and wellness products

MABUCHI MOTOR CO., LTD. Annual Report 2009

10

2009
Annual Report

Research and Development Activities

Mabuchi maintains its lead in the small motor market by continually meeting
demands for motors that offer higher performance, reduced noise and other superior
characteristics. These small functional components showcase the technologicalexpertise accumulated through Mabuchi’s basic research, product development andplanning, production technologies and development of application technologies.
Mabuchi’s R&D System
Under the auspices of the Research and Development Headquarters, Mabuchi has established Research and Development Dept.
1, Research and Development Dept. 2, Production Engineering
Dept., and Production Engineering Innovation Center, each with
its own specialist area of responsibilities, supported by collaborative system.
Spurred by market demands for product diversification andshorter lead times, Mabuchi is striving to improve its basic
research and product development capacities, focused on noise
reduction, miniaturization, higher performance (higher torque)and lower costs. We apply our core competence in this manner todevelop future product applications. Furthermore, in response tocalls for shorter lead times, we are stepping up the use of
concurrent engineering, while promoting a comprehensive
development system that integrates CAD, CAM and CAE fromdesign and equipment through die making and machining.
Moreover, we are endeavoring to raise efficiency and lower
manufacturing costs through production process innovations,such as reducing inventories, shortening man-hours and saving
space.

ment models on an ongoing basis and enhance our ability torespond to customer needs. For other markets, we are conducting R&D to remodel existing products. Through ongoing R&D andthe growth of core technologies, Mabuchi plans to continue
developing and manufacturing standard motors for various
markets.

The Fruits of Recent R&D Endeavors
Motors for Tilt/Telescoping Automobile
Steering Wheels
This addition to Mabuchi’s small, high-torque lineup realizes areduction in volume of approximately 38% compared withconventional products. It achieves the high-torque and low-noisecharacteristics required for tilt/telescoping, while facilitating
weight savings that help meet automobile market demands forlower fuel consumption. Mabuchi’s tilt/telescoping automobile
steering wheel motor is a product that transcends the existing
markets; it is positioned as a base model to cater to the market
expansion of the future. We plan to extend applications for thisproduct during the next fiscal year.

Lumbar Support Motors
Strategic R&D Fields
Mabuchi offers a lineup of low- and medium-torque models in
the new business area of power window motors and has enjoyedsteady increases in demand from Japanese and overseas
automakers. We are also reinforcing our position in the automotive products market in the field of small electric motors bydeveloping a new lineup that will allow us to introduce develop-

Offering weight savings of 50% over conventional products,
lumbar support motors are a new player in Mabuchi’s small, hightorque lineup. These products realize the quiet operation required
for lumbar support, while opening up possibilities for smaller,
lighter actuators. Lumbar support motors can be mounted inheadrests and other actuators and are otherwise suitable forgeneral use.

R&D expenses /R&D expenses ratio

R&D personnel

Number of patents(Millions of yen)

(Persons)(Patents)

4.5
4,196

(%)

4.1

3.9

4,076

4,187

4.2

4.7
329

335

338

348

542
496

3,892

135
3,298

247

407

2005

2006

2007

2008

2009

2005

2006

2007

2008

2009

2005

133

132

363

365

2006

Overseas patents

11

MABUCHI MOTOR CO., LTD. Annual Report 2009

536

497

2007

545

129

126

407

419

2008

2009

Domestic patents

Mabuchi’s Management Vision

MANAGEMENT
PRINCIPLE

Our Missions
MANAGEMENTGUIDELINES

Mabuchi's missions embrace a set of values thatall Mabuchi Group employees are to share to
overcome various difficulties and conflicts that
occur in carrying out their duties and achieving
further growth.

MANAGEMENT POLICIESMANAGEMENT SCHEME

Our Management Vision

MANAGEMENT PRINCIPLE

Contributing to International Society andContinuously Increasing Our Contribution
Mabuchi believes that a company can continue to exist and grow only if its business activities contribute to society on an ever-expanding
basis. It goes without saying that a company cannot expand or even remain in business unless it generates profits. However, profit is not
Mabuchi’s sole management objective.
Our ultimate objective is to continue raising our level of contribution to society through our business activities and remain a company
that society considers essential. This management principle is at the core of all our activities, unchanging through time and irrespective of
the people at the management helm.

MANAGEMENT GUIDELINESMANAGEMENT POLICIESMANAGEMENT SCHEME

Management guidelines, which flow fromour management principle, spell out
specifically how we “contribute.” These
guidelines outline the mission of
Mabuchi’s business activities.

Mabuchi’s management policies provide
guidelines for its corporate activities,
which are to be a starting point to create
value leading to greater levels of social
contribution and to achieve soundgrowth.

Based on Mabuchi’s business policy of
maximizing the potential of small DC
brush motors as our core business, wemobilize our organizational skills andpromote business activities in which we
can continuously exert a unique“Mabuchi-ism” that cannot easily beemulated. Naturally, we do not aim atdiversification without contributing tosociety, namely, diversification only to
expand sales. We generate revenues andprofits as a result of our contributions tomarkets in which we are truly welcome.
We plan to continue reflecting thismanagement philosophy, which hasserved us well in the past, into the future.
MABUCHI MOTOR CO., LTD. Annual Report 2009

12

2009
Annual Report

Corporate GovernanceWe strive to fulfill the mission stated in the Mabuchi Group’s management principle,“Contributing to international society and continuously increasing our contribution,”through the small DC motor business.
Basic Approach to Corporate GovernanceWe understand that realizing this principle is our raison d’être,and we recognize that corporate governance comprises theorganizational/management systems and various managerial
measures that support those systems. Accordingly, we believethat the fundamental objective in establishing and implementing
an appropriate corporate governance framework is to further theinterests of our shareholders and other stakeholders on an
ongoing basis through the creation of fair profits and the enhancement of corporate value.
Constructing and maintaining a corporate governance systemalong the lines given below are indispensable for Mabuchi as alisted company.

3. To appoint a suitable number of independent corporate
officers whose interests do not conflict with those of generalshareholders to ensure the objectivity and neutrality of management supervision functions,4. To foster a corporate culture in which all Group employees
recognize and share the understanding that the practices ofcorporate ethics and compliance support the organization’ssocial impartiality and are fundamental to living up to the trustand expectations of all stakeholders, and5. To disclose corporate information to shareholders andother stakeholders in an appropriate, fair, timely and clear
manner and to ensure accountability through the Board of
Directors, the Board of Auditors and other bodies.

1. To clearly separate management decision-making andefficient business execution, and to clarify the scope ofaccountability,
2. To build and operate a sound internal control system,
namely, to effectively work the internal control system and the
management supervision system,

The Mabuchi Group employs a simple corporate management
structure by establishing a corporate group consisting of Mabuchi
Motor Co., Ltd., and its wholly owned subsidiaries as well as
focusing and specializing its business resources on and in thesmall DC motor business. The Mabuchi Group employs the
Corporate Auditor System as the best-suited organizational

General Meeting of Shareholders
Appoint/Dismiss
LiaiseReportIndependent Auditors

Board of Auditors(Including three external
auditors/independent officers)

Advise
Audit

ReportDirectInternal Audit Department

Other Supervisory Frameworks• Environmental Management
Committee (Audit of the Environmental
Management System)

AdviseConsult
Executive Committee(Executive Managing Officers)
ExecuteCompany Departments(Responsible for Compliance)

Internal Audit
Subsidiaries(Internal Audit Committee)

MABUCHI MOTOR CO., LTD. Annual Report 2009

Meeting of Head of Group Offices(Risk Management Committee)

Internal Reporting
SystemSupervise
Representative Directors

Report13■ Management Principle■ Group Management Vision■ Basic Policy on Internal Control■ Group Ethical Standards

ReportAuditors

Accounting
Audit

Board of Directors(Director Responsible forInternal Control)• Quality Management Committee (Auditof the Quality Management System)• Design Reviews• Division of Duties/Company Rules andRegulations• Ringi System and Other Regulations• (Subsidiaries) Regulations on Powers ofApproval

design after considering such matters as directors’ duties,
management efficiency and the maintenance of a management
supervisory system that is appropriate to the above business
contents and corporate management structure.

Outline of Corporate Institutions
Board of Directors and Executive Committee
Management decision-making is carried out by the Board of
Directors, consisting of seven directors (including six resident inJapan) familiar with the Company’s management environmentand business, and an Executive Committee, primarily composedof executive managing directors. The Board of Directors
quintessentially serves the function of supervising management
decision-making and the execution of directors’ duties and, as
required by laws and ordinances, reporting on important executive management decisions and conditions. Responsibility forexecuting decisions that have been made by the Board of
Directors is transferred to the representative directors and theexecutive managing directors. The Board of Directors convenes
regularly once a month and at other times as required.
Mabuchi has established an Executive Committee, primarily
composed of executive managing directors, with the objectives of
supporting the functions of the Board of Directors, conducting
preliminary consultations relating to important issues for deliberation by the Board of Directors, carrying out executive businessdecision-making outside the scope of the Board of Directors’ legal
powers, and reporting on executive business conditions. This
arrangement enhances the Board of Directors function, as itallows the Board to prioritize deliberation of reports and proposals, making decisions on these topics and monitoring andsupervising the execution of duties. The Executive Committee
meets regularly once a month.
In addition, Mabuchi has introduced an Executive Officer
System that centralizes strategic decision-making and supervisionfunctions on the Board of Directors and delegates powers andresponsibilities to executive officers for the everyday execution of
their duties. This system serves to enhance the functions of boththe Board of Directors and the executive officers.

Board of Auditors

attend meetings of the Board of Directors and the Management
Council and other important meetings, oversee major businessexecution decisions and documentation related to their execution, if necessary requesting directors and employees to provide
such documents or to submit reports, in order to audit andsupervise execution of duties by the directors. The Board ofAuditors convenes every second month and holds regularmonthly meetings for the exchange of opinions between auditorsand essential deliberations regarding the execution of duties by
the Board of Directors.

Internal Audit Department
Mabuchi has established an Internal Audit Department, withthree full-time members, under the direct control of the president. This body liaises with the Appropriate Auditing Committee
and the Director Responsible for Internal Control and conducts
ongoing supervision of the upgrading, running and effectivenessof the internal control framework for Mabuchi and its Group
companies. The Internal Audit Department reports its findings to
the president, the Board of Directors and the Board of Auditors.

Disclosure of Corporate Management Data
Mabuchi’s basic policy is to strive to carry out impartial, timely andclear information disclosure to ensure a fair evaluation of theCompany’s corporate value and to gain the trust of its shareholders and investors. We innovate and improve our information
disclosure to ensure highly effective data delivery that will
cultivate broad understanding of the Company’s businessactivities.

Risk Management System
In order to prevent or reduce damage arising from the various
risks relating to its corporate activities and to ensure earlyrecovery and minimize damage that materializes from such risks,
Mabuchi has established a Risk Management Committee to
identify and evaluate risk from a Group-wide perspective and toformulate strategic countermeasures. In addition, we haveformed a Group Emergency Response System to prepare forcontingencies, with the objective of securing systems for communications and initial response in the event of a crisis.

The corporate auditors (three of whom are independent outside
auditors) carry out audits of the execution of duties by the Boardof Directors and other bodies in accordance with legal stipulations and the auditing standards, policies, plans and apportioned
duties determined by the Board of Auditors. Specifically, auditors
MABUCHI MOTOR CO., LTD. Annual Report 2009

14

2009
Annual Report

Board of Directors, Corporate Auditors, and Executive Officers(As of December 31, 2009)

Directors
Representative Director and Chairman
Takaichi Mabuchi
Representative Director and President
President and CEO
Shinji Kamei
Executive Managing Director
Senior Managing Executive Officer
Nobuyo Habuchi

Representative Director
and Chairman
Takaichi Mabuchi

Representative Director
and President
Shinji Kamei

Executive Managing
Director
Nobuyo Habuchi

Managing Director
Shunroku Nishimura

Director
Akira Okuma

Director
Takashi Kamei

Director
Kaoru Kato

Full-time Auditor
Masahiro Gennaka

AuditorIchiro Ando

AuditorToyokuni Yazaki

Executive Officer
Hiroo Okoshi

Executive Officer
Masato Itokawa

Managing Director
Managing Executive Officer
Shunroku Nishimura
Director
Executive Officer and General Manager
of Research and Development
Headquarters
Akira Okuma
Director
Executive Officer and General
Manager of Operations Control
Headquarters
Takashi Kamei
Director
Executive Officer and General
Manager of Sales Headquarters
Kaoru Kato

Corporate Auditors
Full-time Auditor

Masahiro Gennaka
AuditorIchiro Ando
AuditorToyokuni Yazaki
AuditorKeiichi Horii

Executive Officers(excluding those also serving as directors)

Executive Officer and General Manager
of Administration Headquarters
Hiroo Okoshi
Executive Officer and General Manager
of Quality Assurance Dept.
Masato Itokawa

15

MABUCHI MOTOR CO., LTD. Annual Report 2009

AuditorKeiichi Horii

Corporate Social Responsibility

Mabuchi’s wide-ranging CSR activities include a social action program for which theGroup is particularly well suited—sharing the importance and wonder of manufacturing.
Basic Approach to CSR Activities
Mabuchi conducts corporate activities in line with its management principle, which expresses the Company’s aim of “contributing to international society and continuously increasing ourcontribution.” In other words, Mabuchi’s business objective is not
the pursuit of profit for its own sake, but rather a high priority on
continued existence and development, which are achieved bycontinued increases in its contribution to society. The ultimate
objectives of the Company’s corporate activities are to raise thelevel of its social contributions through the business of small DC
motors and to remain an enterprise that society considers
essential.

Science Lessons for Fifth and Sixth-year Elementary
School Pupils by the Company’s Technical Staff
The aim of this program was to encourage children to experience
the joys and wonders of science classes, while knowing that what
they learned was useful in their everyday lives. Based on thisprinciple, Mabuchi dispatched employees to teach science classes
for fifth and sixth year elementary school students at four schoolsin Matsudo City, Chiba.
The sessions took place as a group activity, with a lead
instructor facilitating the overall progress of the lesson, while
assistant instructors took charge of five or six pupils each. Lessons
primarily comprised dismantling equipment and experiments,using the Company’s motors as educational aids. During theclasses, pupils also learned how the rotational mechanism,
direction and speed of the motors were attributable to electromagnetic properties. In addition, we illustrated just how many
motors support our everyday lives through a display of productsthat contain motors.
Children working in groups tocarry out investigations by
dismantling motors andexperiments under an assistant
instructor

Every Friday during the summer holidays, we invited 24 parent/child duos to build pieces of engineering featuring spinning topsthat rotate using electromagnetic induction from motors alongwith such easily available materials as unwanted CDs, CD cases,
aluminum foil and magnets.
Parents working with theirchildren to build their own
engineering masterpieces

Robot Contest SponsorshipTo support the education of tomorrow’s technologists andencourage developments in science and technology, Mabuchi hassponsored various robot contests every year since 2002, providing
funding and motors. Mabuchi agrees with the overarching
objective of these contests, which is to share with young people
the importance of creativity and the fun of manufacturing
through the building of robots.

Providing Educational Opportunities
Since 1996, Dalian Mabuchi has been supporting the establishment of schools and carrying out other activities with the objective of providing children with the opportunity of gaining an
education. To date, the company has helped to establish three
Mabuchi Hope Primary Schools in cities in the north of Dalian. In
2007, Dalian Mabuchi assisted in the foundation of a Mabuchi
Hope Junior High School in Liaoning Province. Subsequently, thecompany has continued to furnish the school’s students withinvitations to tour its factories and to provide them with facilities
and equipment. In addition, Dalian Mabuchi has established ascholarship system to support children and young people whose
economic circumstances prevent them from attending schools
and universities. This program helps reduce the economic burdenof poor families, enabling their children to focus on their studies
so they can grow into adults who will benefit society.

Summer Vacation Handicraft Workshops
Mabuchi held Summer Vacation Handicraft Workshops forparents and children to provide kids—the leaders of the next
generation—with experience in the magnificence of making
things and the mysteries of science and thus to stimulate theirinterest in manufacturing.

MABUCHI MOTOR CO., LTD. Annual Report 2009

16

2009
Annual Report

Business and Other Risks

Changes in Economic Conditions
The demand for Mabuchi products, which are incorporated into our customers’ products, is influenced by
the economic conditions present in the diverse markets in which our group operates. Consequently, ourgroup’s business results and financial position may be adversely affected by economic recessions andcorresponding contractions in demand in Mabuchi’s key markets, including Japan, North America, Europe
and Asia.

Fluctuations in Foreign Exchange Rates
Items denominated in local currencies on the financial statements of our overseas subsidiaries are converted
into Japanese yen to prepare the consolidated financial statements. Consequently, amounts that are to berecorded after being converted into Japanese yen are subject to the foreign exchange rates at the time of
conversion. In particular, appreciation of the Japanese yen against the U.S. dollar has a negative effect on
our group’s consolidated business results, and conversely, any depreciation of the Japanese yen has apositive effect. Appreciation of local currencies in regions where the Mabuchi Group carries out production
pushes up manufacturing and procurement costs, which are denominated in those local currencies. Suchincreased costs lower our group’s profit margins and price competitiveness, and negatively affect ourbusiness results.

Development of New Products and New Technologies
The new product development and sales processes, by their very natures involve both complexities anduncertainties, and include a broad array of risks. In the event our group cannot fully predict changes inmarket needs, is unable to develop appealing new products in a timely fashion, or a technological innovation or the like emerges that causes our products to become obsolete could have a significant adverse effecton our group’s business results and financial position.

Price Competition
Our customers are businesses in a diverse range of sectors that belong to the electrical/electronic equipment
and machinery manufacturing industries, and price competition in these industries is extremely severe. In
these environments, prices are a major contributing factor to competition in all sectors, and with the rise ofrival Chinese manufacturers, competition is becoming even more intense. The inability of our cost-reduction
activities to keep up with falling prices over the long term could have a significant adverse effect on ourgroup’s business results and financial position.

Potential Risks in International Economic Transactions andExpanding Business Overseas
The majority of our group’s business activities are conducted in various countries in Europe, North Americaand Asia. These overseas business activities involve certain intrinsic risks, including changes in political andeconomic environments, inadequate infrastructures, changes in laws, tax affairs and various other systems,
and social upheaval. For example, much of our group’s production takes place in China and Vietnam. The
occurrence of an unexpected event (such as a change in the political or legal environment, a change ineconomic conditions, or a change in the social environment, including the employment environment) may
lead to significant problems for our production and/or sales activities, and these may have a significant
adverse effect on our group’s business results and financial position.

Product Quality
There is no guarantee that all of our group products will have no major quality issues. If a quality issue
occurs, the amount of compensation may be influenced by the effect on the quality of the final product inwhich the Mabuchi product is incorporated. The unlikely event of a product defect that leads to a largescale, recall or product liability compensation may trigger an accrual of large amount of costs or downturnin sales due to a loss of credibility, and may have significant adverse effects on our group’s business results
and financial position.
17

MABUCHI MOTOR CO., LTD. Annual Report 2009

Protection of Intellectual Property
We recognize that the acquisition of intellectual property can greatly influence the growth of the Mabuchi
Group. However, in certain regions, for certain inherent reasons, our group’s intellectual property rights may
not be completely protected. In such instances, any third party may use our group’s intellectual property
without permission to manufacture similar products, and we may suffer damage as a result. In addition, ourcompetitive superiority may suffer from outflows of other of our technologies or expertise, which was thenexploited by other companies. Furthermore, the Mabuchi Group could face claims of infringing on theintellectual property of another company. The failure of protection by or the violation of intellectual property
rights, or the outflow of intellectual property could have significant adverse effects on our group’s businessresults and financial position.

Securing and Developing Human Resources
The Mabuchi Group operates in a highly competitive corporate arena. This situation renders essential the
recruitment and development of employees who are highly skilled in related areas: engineers with specialist
scientific and technological expertise, and managers with top business strategy acumen and executive
capacities. Mabuchi is fully cognizant of the need for the continuous enhancement and improvement of its
human resources for the next generation and beyond. The failure to recruit and cultivate such a workforce
on an ongoing basis through the requisite expenditure and long-term human resource development vision
would invite adverse impact on the Group’s future performance and financial position.

Procurement of Raw Materials
Depending on the type of raw material that our group procures from external sources, we may be dependent on a limited number of suppliers. There is a possibility that the supply of a raw material may besuspended due to an accident befalling a supplier or for some other reason, or that a shortage of supply
may transpire due to a sudden upsurge in demand. If such conditions continue over a long period of timeand it is difficult to obtain alternative materials, our group’s production activities could be affected dramatically, which in turn would undermine the assurance of delivery and quality of products to our customers.
Also possible are sharp increases in the prices of such materials, which would trigger a rise in manufacturingcosts. If such an event were to occur, our group’s business results and financial position may be subject tosignificant adverse effects.

Natural Disasters and Accidents
The Mabuchi Group has established a specialized international system. We conduct business activities invarious countries throughout the world, and at each of our bases we own facilities and equipment, including factories and offices. Our group has implemented measures to prevent our exposure to risks associatedwith the occurrence of disasters and accidents at these bases, and we have implemented measures toreduce damage from disasters and accidents, including insurance. However, there is no guarantee that suchmeasures will completely protect us against, or can reduce as planned, the effects of disruptions to ourbusiness activities caused by disasters or accidents at our Head Office or individual bases. In the event thesekinds of unforeseeable events occur, our group’s business results and financial position may be subject tosignificant adverse effects.

MABUCHI MOTOR CO., LTD. Annual Report 2009

18

2009
Annual ReportFive-year Financial Summary
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
Years ended December 31

Thousands of
U.S. dollars

Millions of yen

2005

2006

2007

2008

2009

2009

¥ 93,927
66,479¥ 100,517
71,919¥ 107,640
77,207¥ 92,602
68,799¥ 70,369
51,805$ 764,880
563,097

19,298
8,149
11,597
7,350
5,543
5,734
4,196

17,89810,70015,914
10,603
3,627
5,360
4,076

18,747
11,685
16,53010,914
3,700
4,913
4,187

18,150
5,652
5,330
3,565
3,777
4,408
3,892

15,544
3,019
3,013
5,450
3,659
4,031
3,298

168,956
32,81532,75059,23939,771
43,81535,847¥ 11,034¥ 17,500¥ 15,447

6,542¥ 10,708$ 116,391(719)(10,343)(6,321)(4,009)3,687(13,531)45(18,641)(1,630)(3,927)(17,717)(42,684)

At Year-end:
Total assets
Net assets¥ 227,375
211,875¥ 236,999
219,217¥ 230,960
213,314¥ 188,691
178,291¥ 192,362
180,311$2,090,891
1,959,902

Per Share Data:
Net income
Net assets
Dividends payable¥ 180.72
5,354.64
92.00¥ 268.03
5,541.46
114.00¥ 280.90
5,577.84
123.00¥ 94.77
5,088.18
123.00¥ 155.54
5,146.04
100.00

$

8.7
3.6
93.2

10.6
4.9
92.5

10.9
5.0
92.4

6.1
1.8
94.5

4.3
3.0
93.7

–
–
–

40,46946,412

39,56045,01538,24345,60135,04041,32835,03838,251––For the Year:Net sales
Cost of sales
Selling, general andadministrative expenses
Operating income
Income before income taxes
Net income
Capital expenditures
Depreciation and amortization
R&D expenses
Cash Flows:
Net cash provided by operating activities
Net cash provided by (used in)investing activities
Net cash used in financing activities

Other Data:
Operating income margin (%)
ROE (%)
Shareholders’ equity ratio (%)
Number of shares outstanding(Thousands of shares)
Number of employees (Persons)¥(Yen and U.S. dollars)

1.69
55.93
1.08

Notes 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥92=U.S.$1, the approximate exchange rate on December 31, 2009.
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.

Contents
19
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25
26
27
28
36

19

MABUCHI MOTOR CO., LTD. Annual Report 2009

Five-year Financial Summary
Management’s Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ ReportManagement’s Discussion and Analysis

Market Conditions
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During the year under review, the global economy continued to be affected by the financial crisis thatbegan in 2008. The year began in a recessionary phase, but the decline bottomed out and conditions
began to recover in the second half, helped by economic stimulus policies implemented by various
countries, as well as inventory adjustments. The Japanese economy also began to turn around, influenced by overseas economic trends and government stimulus policies. However, the pace of therecovery was weakened by such factors as yen appreciation, which caused lackluster exports, a slowdown in capital investment and worsening employment conditions.

Operating Results
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Net sales/
Gross profit margin(Millions of yen)

29.2

93,927

Costs, Expenses and Operating Income
Throughout the year, Mabuchi worked to improve operating income. Rapid progress in improving thegross profit ratio resulted from efforts to improve the product mix, revise selling prices and procure
copper (the main material used in motors) at lower prices. In addition, Mabuchi made better-thanexpected progress in cutting selling and administrative expenses. Consequently, profitability improved.
However, this improvement was not enough to offset lower sales volumes and yen appreciation. As aresult, operating income decreased 46.6% during the year, to ¥3,019 million (US$32 million).
Other Expenses, Income before Income Taxes and Net Income
Other expenses stood at ¥6 million (US$0.06 million), a ¥315 million (US$3 million) improvement, but
income before income taxes fell 43.5%, to ¥3,013 million (US$32 million). Principal reasons for thechanges were as follows: Exchange losses on foreign currency transactions turned to gains, owing to alower year-end yen exchange rate, although interest income fell because of lower interest rates.
Mabuchi also recorded losses from a subsidiary’s closure of production bases during the year. In 2008,
Mabuchi posted extraordinary losses stemming from the revaluation of investment securities andcompensation paid for products. These losses were absent in 2009.
Mabuchi’s income taxes were ¥4,202 million (US$45 million) lower than in 2008, resulting in anegative total of ¥2,436 million (US$26 million). This situation arose from lower taxes paid because of
reduced income and negative deferred income taxes arising from the reversal of deferred tax liabilities,
which had been recorded against undistributed earnings of foreign subsidiaries, accompanying
revisions to the tax regulations in 2009.
As a result, net income for fiscal 2009 was ¥5,450 million (US$59 million), up 52.9% from theprevious term.

28.5

28.3

100,517

25.7

26.4

107,640
92,60270,369○2005

Net Sales
During fiscal 2009, consolidated net sales fell 24.0% from the previous fiscal year, to ¥70,369 million(US$764 million). Sales of motors, which account for the majority of net sales, decreased 24.0%, to¥70,280 (US$763 million). The main reason for the drop was a sharp falloff in orders through the firstquarter of the year, forcing operational levels to unprecedented lows. Signs of recovery appeared in thesecond half, encouraging us to revise our original forecasts. Nevertheless, over the full year performance was down in all markets for Mabuchi’s products.

(%)

2006

2007

2008

2009

Operating income/Operating income margin(Millions of yen)

(%)

10.9

10.6
8.7
10,70011,685

6.1
4.3

8,149
5,652
3,019

2005

2006

2007

2008

2009

Net income/
ROE(Millions of yen)

4.9

(%)

5.0

3.6

3.0
10,603 10,914

1.8

7,350
5,450
3,565

2005

2006

2007

2008

2009

MABUCHI MOTOR CO., LTD. Annual Report 2009

20

2009
Annual Report

Net Sales by Application

Thousands of
U.S. dollars

Millions of yen

Automotive Products
Audio & Visual Equipment
Optical & Precision Instruments
Home Appliances, Power Tools, Toys & Hobbies
Other
Total

2005

2006

2007

2008

2009

2009

¥31,597
23,061
16,402
22,772
93¥93,927¥ 36,781
22,361
16,65823,900815¥100,517¥ 42,820
21,30818,13925,178194¥107,640¥ 38,633
15,90815,89622,07192¥ 92,602¥30,346
10,67913,024
16,23088¥70,369$329,847
116,076
141,565
176,413956$764,880

Note: Other includes parts and equipment sales.

Net Sales by Geographic Area

Thousands of
U.S. dollars

Millions of yen

Japan
North & Latin America
EuropeChina & Hong Kong
Asia Pacific
Other
Total

2005

2006

2007

2008

2009

2009

¥10,928
8,728
13,06841,665
19,443
93¥93,927¥ 10,902
10,45914,43041,10522,804815¥100,517¥ 10,980
11,697
16,912
41,29026,564
194¥107,640¥10,663
8,487
13,91436,68622,75892¥92,602¥ 8,056
5,995
10,47629,423
16,327
88¥70,369$ 87,565
65,163
113,869
319,815
177,467956$764,880

Note: Other includes parts and equipment sales.

Financial Position

Total assets○(Millions of yen)

227,375

236,999 230,960
188,691 192,362

2005

2006

2007

2008

2009

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Assets
As of December 31, 2009, total assets stood at ¥192,362 million (US$2,090 million), up ¥3,670 million(US$39 million), or 1.9%, from one year earlier. Major causes of this rise were increases of ¥11,031
million (US$119 million) in cash and bank deposits, a ¥2,118 million (US$23 million) rise in trade notes
and accounts receivable and a decline of ¥3,528 million (US$38 million) in finished goods and otherinventories. In addition, short-term investments rose ¥2,698 million (US$29 million), while investment
securities dropped ¥7,785 million (US$84 million).
Liabilities
Total liabilities increased ¥1,650 million (US$17 million), or 15.9%, to ¥12,050 million (US$130 million).
This was primarily attributable to a rise in trade notes and accounts payable of ¥1,375 million (US$14
million), allowance for losses on closures of production bases of ¥1,834 million (US$19 million), and areduction of ¥1,697 million (US$18 million) in deferred tax liabilities.
Net Assets
Net assets at year-end were up ¥2,020 million (US$21 million), or 1.1%, from a year earlier, at¥180,311 million (US$1,959 million). This growth was largely due to a decrease in retained earnings,
which arose from cash dividends paid and increases in consolidated net income and revaluation/translation differences. As a result, net assets per share were ¥5,146.04 (US$55.9), ¥57.86 higher thanat the end of the previous year, and the shareholders’ equity ratio was 93.7%, down 0.8 percentage
point.

21○

MABUCHI MOTOR CO., LTD. Annual Report 2009

Cash Flows
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Net Cash Provided by Operating Activities
Net cash provided by operating activities was ¥10,708 million (US$116 million), up ¥4,166 million(US$45 million) from the previous year. Lower income taxes paid was the main reason.

Shareholders' equity/
Shareholders' equity ratio(Millions of yen)

93.2

(%)

92.5

94.5

92.4

211,875 211,284 208,671

93.7

193,597 193,895

Net Cash Used in Investing Activities
Net cash used in investing activities was ¥1,630 million (US$17 million), down ¥1,675 million (US$18
million). This was mainly because short-term investments were higher than proceeds from short-term
investments.
Net Cash Used in Financing Activities
Net cash used in financing activities amounted to ¥3,927 million (US$42 million), down ¥14,714
million (US$159 million) from the previous year. A cutback in the purchase of treasury stock was largely
responsible for the decrease.

2005

2006

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The outlook for fiscal 2010 involves uncertainty about the extent of recovery in developed nations.
Despite robust growth in China and other emerging economies and expectations of positive resultsfrom various countries’ economic stimulus packages, it will be some time before the world economy
recovers completely.
Although demand has only just begun to recover, inventory adjustments are largely complete andall Mabuchi’s markets are trending upward. Accordingly, next fiscal year Mabuchi expects net sales torise 15.1%, to ¥81 billion. Despite wage increases at certain production bases and the possibility ofhigher raw materials costs, Mabuchi expects income to grow as a result of increased sales and higher
production volumes, which will bring down per-unit manufacturing costs. Accordingly, operating
income is expected to jump 115.3%, to ¥6.5 billion, and net income to rise 4.6%, to ¥5.7 billion.

2009

(%)

13.9
10.8

97,445

11.3

10.2

9.8
106,779

114,520
103,186

94,621○

During the year, Mabuchi reduced capital expenditures ¥118 million (US$1 million), to ¥3,659 million(US$39 million). Major components were capital expenditures of ¥1,764 million (US$19 million) to
upgrade facilities for production subsidiaries and invest in the mass-production of new products,
construction costs of ¥1,041 million (US$11 million) for Mabuchi Motor Danang Ltd., ¥676 million(US$7 million) for a dormitory for head office employees, and ¥176 million (US$1 million) for researchand development by Mabuchi and its subsidiaries.
Depreciation and amortization dropped ¥376 million (US$4 million), to ¥4,031 million (US$43
million).

Outlook

2008

Working capital/
Current ratio

As a result of the above factors, cash and cash equivalents grew ¥5,566 million (US$60 million), from
¥56,073 million (US$609 million) at the end of fiscal 2008 to ¥61,639 million (US$669 million) on
December 31, 2009.

Capital Expenditures, Depreciation and Amortization

2007

2005

2006

2007

2008

2009

Capital expenditures/
Depreciation and amortization(Millions of yen)

5,734

5,360

5,543

3,627

2005

2006

4,913

3,700

4,408

4,031

3,777

3,659

2008

2009

○

2007

Capital expenditures
Depreciation and amortization

MABUCHI MOTOR CO., LTD. Annual Report 2009

22

2009
Annual Report

Consolidated Balance Sheets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2008 and 2009

Thousands of
U.S. Dollars

Millions of Yen

ASSETS

2008

2009

2009

¥ 45,655¥ 56,687$ 616,163

Trade notes and accounts receivable

9,543

11,661

126,750

Less—Allowance for doubtful receivables

(195)

(246)

(2,673)

Short-term investments

26,16828,867313,771

Inventories

17,060——Current Assets:
Cash and bank deposits

Finished goods and merchandises

—

8,375

91,032Work in process

—

870

9,456

Raw materials and supplies

—

4,285

46,576

777

655

7,119

Deferred tax assets—current

1,584

846

9,195

Other current assets

1,359

1,166

12,673

Total current assets

101,955

113,169

1,230,097

Land

6,023

6,022

65,456

Buildings

40,124

41,684453,086

Machinery and equipment

51,88551,801

563,054

Construction in progress

1,993

1,200

13,043100,027

100,709

1,094,663(65,156)(66,914)(727,326)

34,87033,795367,336

50,60642,821

465,445

Long-term loans receivable

97

82

891

Deferred tax assets—non-current

124

1,332

14,478

Income taxes receivable

Property, Plant and Equipment, at cost:

Less—Accumulated depreciation
Property, plant and equipment, net

Investments and Other assets:
Investment securities

Other investments and other assets

1,036

1,161

12,619Total investments and other assets

51,86545,397493,445¥188,691¥192,362$2,090,891

Total assets

23

MABUCHI MOTOR CO., LTD. Annual Report 2009

Thousands of
U.S. Dollars

Millions of Yen

LIABILITIES AND NET ASSETS

2008

2009

2009

Current Liabilities:
Trade notes and accounts payable¥

Accrued income taxes

2,110

¥

3,485

$

37,880

—

187

2,032

Accrued bonus to employees

246

210

2,282

Accrued bonus to directors

—

37

402

Accrued expenses for loss on the restructuring of production bases

—

1,834

19,934

Other current liabilities

4,976

4,227

45,945

Total current liabilities

7,333

9,982

108,500

Long-term Liabilities:
Allowance for retirement benefits for employees

222

939

10,206

Deferred tax liabilities

1,706

10

108

Other long-term liabilities

1,137

1,118

12,152

Total long-term liabilities

3,066

2,067

22,467

10,40012,050130,978

Total liabilities

Net Assets:
Shareholders' Equity
Common stock, no par value :Authorized: 100,000,000 shares
20,70420,704225,043

Additional paid-in capital

Issued: 45,875,881shares in 2008 and 43,875,881 shares in 2009

20,41920,419221,945

Retained earnings

230,288

216,230

2,350,326

Treasury stock, at cost: 10,835,574 shares in 2008 and 8,837,029 shares in 2009

(77,816)(63,459)(689,771)

193,597

193,895

2,107,554

Total shareholders' equity
Revaluation/Translation adjustments
Net unrealized holding gains (losses) on securities(1,122)

(32)

(347)

Foreign currency translation adjustments(14,183)(13,551)(147,293)(15,305)(13,584)(147,652)

Total net assets

178,291

180,311

1,959,902

Total liabilities and net assets¥188,691¥192,362$2,090,891

Total Revaluation/Translation adjustments

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

MABUCHI MOTOR CO., LTD. Annual Report 2009

24

2009
Annual Report

Consolidated Statements of Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2008 and 2009

Thousands of
U.S. Dollars

Millions of Yen

2008

2009

2009

Net Sales¥92,602¥70,369$764,880

Cost of Sales

68,79951,805563,097

23,802

18,564

201,782

18,15015,544

168,956

5,652

3,019

32,815Interest and dividend income

2,489

1,080

11,739Exchange (losses) gains, net(1,567)

596

6,478

Gain on sale of raw material scrap

1,446

548

5,956

Gain on disposal of fixed assets

1,209

85

923

Gross profit
Selling, General and Administrative Expenses
Operating income
Other Income (Expenses):

Loss on disposal of fixed assets
Compensation relating to product sales

(81)

(86)

(934)

(1,774)———(1,863)(20,250)

Allowance for loss on the restructuring of production bases
Loss on revaluation of investment securities
Other, net
Income before Income Taxes(2,457)

(35)

(380)

415

(330)

(3,586)

(321)

(6)

(65)

5,330

3,013

32,750

1,971

532

5,782

Income Taxes:
Current—(452)(4,913)(205)(2,515)(27,336)

1,765(2,436)(26,478)¥ 3,565¥ 5,450$ 59,239

Income taxes refundable
Deferred
Net Income

Yen

U.S. Dollars

2008

2009

Net income¥ 94.77¥155.54

Dividends applicable to current year earnings

123.00100.002009

Per Share Data:

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

25

MABUCHI MOTOR CO., LTD. Annual Report 2009

$

1.69
1.08

Consolidated Statements of Changes in Net Assets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2008 and 2009

Number of Shares(thousands)

Thousands of
U.S. Dollars

Millions of Yen

2008

2009

2008

2009

2009

Beginning balance

47,07545,875¥ 20,704¥ 20,704$ 225,043

Treasury stock cancellation(1,200)(2,000)———Ending balance

45,87543,875¥ 20,704¥ 20,704$ 225,043

Beginning balance¥ 20,419¥ 20,419$ 221,945

Ending balance¥ 20,419¥ 20,419$ 221,945¥240,983¥230,288$2,503,130—(1,221)(13,271)

Net income

3,565

5,450

59,239Dividends payable(4,667)(3,924)(42,652)

Treasury stock cancellation(9,592)(14,363)(156,119)¥230,288¥216,230$2,350,326

Common Stock:

Additional Paid-in Capital:

Retained Earnings:
Beginning balance
Decrease due to subsidiaries’ accounting policy changes

Ending balance
Net Unrealized Holding Gains (Losses) on securities:
Beginning balance¥

Net change during the year
Ending balance

1,956 ¥ (1,122) $(12,195)(3,078)

11,836¥ (1,122) ¥1,089(32) $(347)

Foreign Currency Translation Adjustments:
Beginning balance
Net change during the year
Ending balance¥

2,686 ¥ (14,183) $ (154,163)(16,870)

631

6,858

¥ (14,183) ¥ (13,551) $ (147,293)

Treasury Stock:
Beginning balance
Net change during the year
Ending balance¥ (73,436) ¥ (77,816) $ (845,826)(4,379)14,357156,054¥ (77,816) ¥ (63,459) $ (689,771)

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

MABUCHI MOTOR CO., LTD. Annual Report 2009

26

2009
Annual Report

Consolidated Statements of Cash Flows
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2008 and 2009

Thousands of
U.S. Dollars

Millions of Yen

2008

2009

2009

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Allowance for retirement benefits, net of payments
Decrease in allowance for loss on reorganization of a subsidiary
Interest and dividend income
Foreign exchange losses (gains)(Gain) Loss on sales of short-term investments and investment securities
Gain on disposal of fixed assets
Losses on revaluation of investment securities(Increase) Decrease in trade notes and accounts receivable(Increase) Decrease in inventories
Increase (Decrease) in trade notes and accounts payable
Allowance for loss on the restructuring of production bases
Other, net
Sub totalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refunded
Net cash provided by operating activities¥ 5,330
4,408
171
443
(346)
(2,489)1,186(421)(1,129)2,457
3,598(3,946)(1,404)
—
2,086
9,945
2,397
—
(5,799)—6,542¥ 3,013
4,031
27
(974)
—
(1,080)
(33)
162
(18)
35
(1,988)
3,712
1,641
1,834
(1,308)
9,057
1,146
(0)
(940)
1,445
10,708$ 32,750
43,815
293(10,586)—(11,739)
(358)
1,760
(195)
380
(21,608)
40,347
17,836
19,934(14,217)
98,445
12,456(0)(10,217)
15,706116,391

Cash Flows from Investing Activities:
Increase of time deposit
Proceeds from withdrawal of time deposit
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
Other, net
Net cash provided by (used in) investing activities(27,505)
23,987(13,994)
20,997(5,138)2,032(8,834)
8,604
(102)
45

(31,572)
32,293(22,649)
23,722(3,029)72(11,259)
10,883(89)(1,630)(343,173)
351,010(246,184)
257,847(32,923)
782(122,380)
118,293(967)(17,717)

Cash Flows from Financing Activities:
Cash dividends paid
Purchases of treasury stock
Net cash used in financing activities(4,669)(13,972)(18,641)(3,921)(6)(3,927)(42,619)(65)(42,684)

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year

(8,771)(20,824)
76,897¥ 56,073

414
5,566
56,073¥ 61,639

4,500
60,500609,489$ 669,989

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

27

MABUCHI MOTOR CO., LTD. Annual Report 2009

Notes to Consolidated Financial Statements
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2008 and 2009

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 are prepared on the basis of accounting principles generally accepted in Japan, which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards, andare 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 for the year ended December 31, 2009 have been translated into United States dollars at therate of ¥92 = U.S.$1, the approximate exchange rate prevailing on March 31, 2009. Those U.S. dollar amounts
presented in the consolidated financial statements and related notes are included solely for 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 inter-company balances, transactions, and profits have been eliminated in consolidation. Investments inunconsolidated subsidiaries are stated at cost.
(c) Translation of foreign currencies
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rate of exchange in
effect at the balance sheet date. Exchange gains and/or losses resulting from such translations are included inincome.
Foreign subsidiaries' assets and liabilities are translated into yen at the rates of exchange in effect at the balance
sheet date. The components of net assets are translated at historical rates. Revenues and expenses are translated at
the average rates of exchange for the year. The resulting foreign currency translation adjustments are shown as aseparate component of net assets.
(d) Cash equivalents
For purposes of the statements 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", which are held for the purpose of earning capital gains inthe short-term, "held -to-maturity", for which management has the positive intent and ability to hold to maturity,and "available-for-sale", which represent securities not classified as either trading or held-to-maturity.
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 is considered to be 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 asavailable-for-sale securities include compound financial instruments.
The Company considers 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 thenecessity for recognizing any impairment losses by assessing the recoverability of market values taking into consideration declining price trends and other individual relevant factors.
Until the year ended December 31, 2008, the Company assessed securities for irrecoverability when market
values declined to between approximately 40% and 50%. However, effective for the year ended December 31,
2009, the Company changed this to reflect the changes in the financial environment and now assesses securities forirrecoverability when market values decline to between approximately 30% and 50%. There was no effect of thischange on income.
(f) Inventories
Finished goods, work in process and raw materials are stated at average cost, however, where net realizable value islower than cost, the carrying value of the inventory is reduced. Raw materials, such as copper, gold, silver andpalladium, which can be traded in an active market, are stated at the lower of average cost or market.

MABUCHI MOTOR CO., LTD. Annual Report 2009

28

2009
Annual Report(g) Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. Depreciation is computed primarily by the declining-balancemethod for the Company (except for certain buildings) and for overseas subsidiaries, principally by the straight-line
method over their estimated useful lives. Buildings acquired by the Company on and after April 1, 1998 are depreciated by the straight-line method. Maintenance and repairs, including minor and improvements, are charged toincome as incurred.
The Company changed the useful lives of machinery and equipment from 4-11 years to 4-7 years from thecurrent fiscal year after having reviewed useful lives in accordance with the 2008 amendment to the Corporate Tax
Law. The effect of this change on income was immaterial.
(h) Leased assets
Assets under finance leases, except for those under lease agreements which stipulate the transfer of ownership ofthe leased assets to the lessee, are depreciated using the straight-line method over the lease period and assuming noresidual value.
Finance leases, which existed at January 1, 2009 and which do not transfer ownership of the leased assets to thelessee, continue to be accounted for as operating lease transactions as permitted by the standard.
(I) Income taxes
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using current enacted tax rates.
(j) Retirement benefits
The Company and certain subsidiaries have funded noncontributory pension plans covering substantially all qualifying full-time employees. Under the plan, eligible employees are entitled to a 10-year annuity or a lump-sum payment
based on the rate of pay at the time of retirement or termination, length of service and certain other factors. Annual
payments to the trustees for the pension plan, which are deductible for tax purposes, are based on the actuariallydetermined costs of the plan.
Allowance for retirement benefits are provided based on the amount of retirement benefit obligation reduced by
the fair value of pension plan assets at the end of each fiscal year.
Actuarial gains and losses are amortized commencing in the year following the year in which the gains or losses
arose primarily by the straight-line method within the average remaining years of service of the employees, which ismainly 10 years.
Prior service costs are amortized using straight-line method over mainly 10 years.
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.
(k) 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 the hedged items are recognized.
(l) Allowance for loss on the closure of production bases
On January 28, 2010, the Board of Directors resolved that the one of the commission based processing contracts
entered between Mabuchi Industry Co., Ltd., a wholly owned subsidiary, and a Chinese company be terminated at
the expiry date in December 2010. In this connection, the Company accrued certain expenses and losses as at
December 31, 2009 which are expected to be incurred from the gradual reduction or discontinuation of operationsof the processing plants. Impairment losses in respect of buildings intended to be disposed of, which had a bookvalue of ¥68 million, are included in the related loss in the current period.
(m) Reclassification
Certain reclassifications have been made to the accompanying 2008 financial statements to conform to the 2009presentation, except for in respect of inventories as below.
(Change in presentation)
Effective for the year ended December 31, 2009, the Company changed the presentation of "Inventories" andseparated the account into "Finished goods and merchandise", "Work in process", and "Raw material and supplies", because the "Cabinet Office Ordinance to revise a part of Regulation for Terminology, Forms and Preparationof Financial Statements" was applied. "Finished goods and merchandise", "Work in process", and "Raw materialand supplies" included in "Inventories" at December 31, 2008 were ¥10,911 million, ¥681 million and ¥5,467
million, respectively.

29

MABUCHI MOTOR CO., LTD. Annual Report 2009

(n) Change in accounting policies(Accounting standard for measurement of inventories)
Effective for the year ended 31 December 2009, the Company and its subsidiaries adopted the new accounting
standard for the valuation of inventories. Accordingly, the company changed its method of valuing inventories fromthe average cost method to the average cost method with reduction to the carrying value of inventory where net
realizable value is lower than cost. The effect of this change was to decrease gross profit, operating income andincome before income taxes by ¥32 million, respectively, in the current fiscal year.
The effects of this change in specific segments are described in segment information section. (Note 13)(Unification of accounting policies applied to foreign subsidiaries for the consolidated financial statements)
Effective for the year ended December 31, 2009, the Company adopted "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements" and made necessary
adjustments on consolidation. The effect of this change was to decrease the beginning balance of retained earningsby ¥1,221 million.
(Accounting standard for lease transactions)
Until the year ended December 31, 2008, the Company accounted for finance leases, that do not transfer ownershipof the leased assets, as operating lease transactions. Effective for the year ended December 31, 2009, the Company
adopted "Accounting Standard for Lease Transactions" and "Guidance on Accounting Standard for Lease Transactions" and accounted for finance lease transactions, which commenced on or after January 1, 2009, as financeleases, recognizing lease assets and lease obligations on the balance sheet.
In addition, finance leases, which existed at January 1, 2009 and which do not transfer ownership of the leased
assets to the lessee, continue to be accounted for as operating lease transactions as permitted by the standard.
There was no effect of this change on income.
2. Cash and Cash Equivalents
Cash and cash equivalents as of the years ended December 31, 2008 and 2009 are reconciled to the accounts
reported in the consolidated balance sheets as follows:
Thousands of
U.S. Dollars

Millions of Yen

Cash and bank deposits
Time deposits with maturities over threemonths at the time of purchase
Short-term investments
Securities under the risk value fluctuation
Cash and cash equivalents

2008¥ 45,655

2009¥ 56,687

2009$ 616,163(5,142)
26,168(10,609)¥ 56,073(4,552)
28,867(19,362)¥ 61,639(49,478)
313,771(210,456)$ 669,989

3. Investment Securities
The Company and its consolidated subsidiaries do not hold securities for trading purposes.
The cost, fair value and net unrealized gains (losses) for securities classified as available-for-sale and held-tomaturity as of December 31, 2008 and 2009 were as follows:
Millions of Yen

Available-for-sale:
Debt securities
Equity securities
Other

Held-to-maturity:
Debt securities

Cost

2008
Fair
value

Net unrealized
gains (losses)¥17,2103,401
7,522¥28,135¥16,335
3,488
6,427¥26,251¥ (875)86(1,095)¥(1,883)¥33,853¥29,912¥(3,941)

MABUCHI MOTOR CO., LTD. Annual Report 2009

30

2009
Annual Report

Millions of Yen

Available-for-sale:
Debt securities
Equity securities
Other

Held-to-maturity:
Debt securities

Thousands of U.S. Dollars

Cost

2009
Fair
value

Net unrealized
gains (losses)

Cost

2009
Fair
value

Net unrealized
gains (losses)¥20,963
3,390
3,972¥28,327¥20,833
4,048
3,390¥28,272¥ (130)657(582)¥ (55)$227,858
36,84743,173$307,902$226,445
44,00036,847$307,304$ (1,413)
7,141(6,326)$ (597)¥31,259¥29,715¥(1,544)$339,771$322,989$(16,782)

Securities for which fair values were not available as of December 31, 2008 and 2009 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Securities with no available fair value
Commercial paper
Money Management Funds
Certificates of deposit
Money in trust
Equity securities of a non-consolidated subsidiary
Other equity securities

2008

2009

2009

¥10,991
3,000
2,500
—
70
108
¥16,670¥ 5,497
2,505
2,000
2,000
70
83
¥12,156$ 59,750
27,22821,73921,739760
902$132,130

The contractual maturities for securities classified as available-for-sale and held-to-maturity at December 31,
2008 and 2009 were as follows:
Millions of Yen

2008
Corporate bonds
Commercial paper
Certificates of deposit
Other

Within 1
year

1-5
years

5 - 10years

Over 10
years

Total

¥ 8,427
10,9912,500
1,182¥23,101¥ 9,907——2,177¥12,085¥23,853———¥23,853¥8,000———¥8,000¥50,189
10,991
2,500
3,359¥67,040
Thousands of
U.S. Dollars

Millions of Yen

2009

2009

Corporate bonds
Commercial paper
Certificates of deposit
Money in trust
Other

31

MABUCHI MOTOR CO., LTD. Annual Report 2009

Within 1
year

1-5
years

5 - 10years

Over 10
years

Total

Total

¥16,864
5,497
2,000
2,000
—
¥26,361¥9,372———
137¥9,509¥17,856————¥17,856¥8,000————¥8,000¥52,092
5,497
2,000
2,000
137
¥61,727$566,217
59,75021,73921,7391,489$670,945

4. Retirement Plans
The table below sets forth the plan's status and amounts recognized in the balance sheets at December 31, 2008
and 2009.
Thousands of
U.S. Dollars

Millions of Yen

Projected benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Unrecognized prior service cost
Unrecognized actuarial gains
Net retirement benefit obligation
Prepaid pension costAccrued retirement benefits

2008¥(7,075)
6,985
(90)
182
(313)
(222)
—
¥ (222)

2009¥(8,631)
7,990
(640)
162
(301)
(780)
158
¥ (939)2009$(93,815)
86,847(6,956)
1,760(3,271)(8,478)
1,717$(10,206)

Effective as of April 1,2008, the Company amended its retirement benefit plan to introduce a "point" based
retirement benefit plan. Under the amended plan, the estimated amount of all retirement benefits to be paid uponretirement is allocated to each service year based on the points earned.
Effective for the year ended 31 December 2009, the Company adopted the new accounting standard "Practical
Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements"
to align the accounting policies of overseas subsidiaries with those of the Company. The effect of this change was toincrease the projected benefit obligation in Mabuchi Taiwan Co., Ltd. and Mabuchi Motor Taiwan Co., Ltd.
The components of net periodic pension cost for the years ended December 31, 2008 and 2009 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost
Interest cost
Amortization of prior service cost
Expected return on plan assets
Amortization of unrecognized actuarial gain or loss
Net periodic pension cost

2008
¥516
120
20
(64)
(23)
¥568

2009
¥474
169
20
(82)
(24)
¥556

2009
$5,152
1,836
217
(891)
(260)
$6,043

Other than the above pension cost, temporary severance benefit costs of ¥23 million in 2008 and ¥339 million
in 2009 were incurred, respectively.
The assumptions used in accounting for the above plans were as follows:

Discount rate
Expected rate of return on plan assets

2008
2.0%
1.0%

2009
mainly 2.0%
mainly 1.0%

5. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of taxes based on income with anormal tax rate aggregating approximately 40.4% for the years ended December 31, 2008 and 2009. Foreignsubsidiaries are subject to income taxes in the countries in which they operate.
The following table summarizes the significant differences between the Japanese statutory income tax rate andthe effective income tax rate on pre-tax income for the years ended December 31, 2008 and 2009.
As a result of a revision of the Corporate Tax law in Japan in 2009, dividends received from overseas subsidiaries
are no longer subject to Japanese income tax. Accordingly, part of the deferred tax liability that had previously beenrecorded in respect of the undistributed earnings in foreign subsidiaries has been reversed.

MABUCHI MOTOR CO., LTD. Annual Report 2009

32

2009
Annual Report

Statutory income tax rate
Different tax rates applied to foreign subsidiaries
Effect on elimination of dividend income from foreignsubsidiaries for consolidation purposes
Foreign and R&D tax credit utilization
Undistributed earnings in foreign subsidiaries
Reversal of tax effects on undistributed earnings in foreign subsidiaries
Tax credits on dividend income
Other, net
Effective income tax rate

2008
%
40.4
(19.1)

2009
%
40.4
8.5

57.0
(36.9)
(0.9)
—
(4.5)
(2.9)
33.1

—
(11.6)—(121.3)(1.3)
4.4(80.9)

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities at December 31, 2008 and 2009 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Deferred tax assets:
Unrealized profits on inventories and fixed assets
Evaluation losses on investment securities and other assets
Depreciation
Allowance for retirements benefits
Unrealized loss on securities available for sale
Other
Total
Deferred tax liabilities:
Tax on undistributed earnings in foreign subsidiaries
Other
Total
As reported in the consolidated balance sheet:
Deferred tax assets
Deferred tax liabilities

2008

2009

2009

¥ 860
1,684
156
16
761
1,122
¥4,601

¥ 432
1,441
84
144
22
960
¥3,086$ 4,695
15,663
913
1,565
239
10,434$33,543¥4,443157¥4,600

¥ 789
129
¥ 918

$ 8,576
1,402$ 9,978¥1,7091,708¥2,178
11$23,673119

6. Compensation Relating to Product Sales
Compensation relating to product was attributed to unexpected factors and was extraordinary compensation relating
to product claims from certain customers and includes an estimate based on the number of claims received.
7. Shareholders' Equity
Under the Japanese Corporate Law("the Law"), the entire amount paid for new shares is required to be designatedas common stock. However, a company may, by a resolution of the Board of Directors, designate an amount notexceeding one half of the price of the 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, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings
reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included inretained earnings in the accompanying consolidated balance sheets.
As of December 31, 2009, the total amount of additional paid-in capital and legal earnings reserve exceeded
25% of the common stock, therefore, no additional transfer is required.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, by the
resolution of shareholders' meeting, additional paid-in capital and legal earnings reserve may be transferred to otherretained earnings and capital 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 statements of 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 19, 2009, semi-annual interim dividends (¥50 or $0.54 per share) of ¥1,751 million ($19,032
thousand)were paid to shareholders of record at June 30, 2009. On March 30, 2010, the shareholders approved thedeclaration of dividends (¥50 or $0.54 per share) totaling ¥1,751 million ($19,032 thousand).

33

MABUCHI MOTOR CO., LTD. Annual Report 2009

8. Per Share Data
Net income per share was computed based on the net income reported in the consolidated statements of income
and the weighted average number of shares of common stock outstanding during each year. In accordance with theaccounting standard for earnings per share, basic net income per share was computed based on the net income
available for distribution to shareholders of common stock and the weighted average number of shares of common
stock outstanding during the year.
9. Derivative Financial Instruments
The Company enters into forward exchange contracts and forward precious metal contracts as a normal part of risk
management efforts and also utilizes compound financial instruments for the purpose of efficient management of
surplus funds. The Company utilizes only principal guaranteed instruments, and does not utilize derivatives for
speculative trading purposes. As a result, the Company is exposed to risk of currency rate fluctuation and interest
volatility in compound instruments embedded derivatives. The Company is also exposed to credit related losses inthe event of the nonperformance of the counterparties to foreign exchange contracts, precious metal contracts andcompound instruments embedded derivatives. Management believes such credit risks are minor because of the highcredit worthiness of the counterparties and as such financial instruments are not held for trading purposes. The
following is a summary of derivative financial instruments which are currently held by the Company.
The Company uses foreign exchange forward contracts to hedge the risk of changes in foreign exchange rates
substantially associated with accounts receivable and payable denominated in foreign currencies. Gains and losses
deferred, arising from contracts related to future trade transactions, are insignificant, at December 31, 2008 and2009. There were no outstanding currency option contracts at December 31, 2008 and 2009.
Forward precious metal contracts are used by the Company to hedge the risk of changes in market prices
resulting from purchase of precious metals as raw materials for motor products. The contracted amounts outstanding at December 31, 2008 and 2009 were ¥231 million and 1,045 million ($11,358 thousand), respectively.
The estimated fair value at December 31, 2008 and 2009 were ¥163 million ($1,791 thousand) and 1,827
million ($19,858 thousand), respectively.
10. Contingent Liabilities
As of December 31, 2009, the Company was contingently liable principally for forward precious metal contracts inthe amount of ¥1,045 million ($11,358 thousand).
11. Research and Development Expenses
Expenditures relating to research and development activities are charged to income as incurred and amounted to¥3,892 million and ¥3,298 million ($35,847 thousand) for the years ended December 31, 2008 and 2009, respectively.
12. Impairment of Fixed Assets
The Company adopted the Accounting Standard for Impairment of Fixed Assets and the Guidance on Accounting for
Impairment of Fixed Assets from 2006. Impairment losses relating to fixed assets ¥171 million in 2008 and ¥27
million ($293 thousand) in 2009 were incurred, respectively. Accumulated losses on impairments are directly deducted from the related assets.
13. Segment Information
The Company and consolidated subsidiaries manufacture and sell small electric motors, parts and equipment used for
production purposes. Substantially all of the consolidated net sales and operating income are generated from a
broad range of motor products. Information on net sales, operating income and assets by geographic area, andoverseas sales is summarized as follows:
Segment Information by Geographic Area
Thousands of
U.S. Dollars

Millions of Yen

Net sales:Japan
External customers
Intersegment
Total
Asia
External customers
Intersegment
Total

2008

2009

2009

¥21,327
43,62664,953¥12,125
31,97044,096$131,793
347,500
479,304

50,53049,161
99,692

42,12933,24275,372457,923
361,326
819,260

MABUCHI MOTOR CO., LTD. Annual Report 2009

34

2009
Annual ReportThousands of
U.S. Dollars

Millions of Yen

U.S.A.
External customers
Intersegment
Total
EuropeExternal customers
Intersegment
Total
Corporate and elimination
Consolidated
Operating Income:
Japan
Asia
U.S.A.
EuropeCorporate and elimination
Consolidated
Assets:Japan
Asia
U.S.A.
EuropeCorporate and elimination
Consolidated

2008

2009

2009

6,875
49
6,925

5,681
12
5,694

61,75013061,891

13,868—13,868(92,837)¥ 92,602

10,432—
10,432(65,225)¥ 70,369

113,391—
113,391(708,967)$ 764,880

¥

¥

$

¥

1,765
2,170
220
249
1,246
5,652

¥ 66,010
78,515
3,490
4,762
35,912¥188,691

¥

(994)
2,960
145
378
530
3,019

¥ 66,650
93,567
4,174
5,345
22,623¥192,362(10,804)
32,173
1,576
4,108
5,760
32,815$$ 724,456
1,017,032
45,36958,097245,902$2,090,891

The amount of corporate assets included in "Corporate and elimination" is ¥89,294 million in 2008 and¥87,612 million ($952,304 thousand) in 2009, which comprises principally cash, short-term investments and investment securities.
As explained in Note 1 (n). In effective for the year ended December 31, 2009, the Company adopted "Accounting Standard for Measurement of Inventories". The effect of this change was to increase operating loss by ¥14
million in Japan and to decrease operating profit by ¥18 million in Asia.

Overseas Sales
Thousands of
U.S. Dollars

Millions of Yen

Overseas Sales
U.S.A.
EuropeAsia and Other
Total
Net Sales% of Overseas Sales to Net Sales

2008

2009

2009

¥ 8,487
13,91459,535¥81,936
92,60288.5%¥ 6,004
10,47645,812¥62,293
70,36988.5%$ 65,260
113,869
497,956$677,097
764,880
88.5%

Overseas sales are the total of exports by the Company and sales by consolidated overseas subsidiaries.

14. Subsequent Event
On February 23, 2010, the Board of Directors resolved to cancel certain treasury shares to further improve capitalefficiency and shareholders' return on investment. Accordingly, on March 12, 2010, 2 million ordinary shares werecancelled. The number of issued ordinary shares outstanding after the cancellation was 41,875,881.

35

MABUCHI MOTOR CO., LTD. Annual Report 2009

Independent Auditor’s Report

MABUCHI MOTOR CO., LTD. Annual Report 2009

36

2009
Annual Report

Investor Information(As of December 31, 2009)

Stock Data

Composition of Shareholders

Number of Shares Authorized ..................... 100,000,000 shares
Number of Shares Issued .............................. 43,875,881 shares

Treasury Share
20.2%

Financial Institutions
19.9%

Number of Shareholders ............................. 11,881 shareholders

Financial Instruments Firms
0.6%

Major Shareholders
Major Shareholders

Takaichi Mabuchi
Takashi Mabuchi
Tamotsu Mabuchi
Northern Trust Company (AVFC)
Sub-account American Client
Mabuchi International
Scholarship Foundation
Japan Trustee Services Bank, Ltd.
(Trust Account)
The Master Trust Bank of Japan, Ltd.
(Trust Account)Premiere Corporation
State Street Bank and Trust Company
The Nomura Trust and Banking Co., Ltd.
(Trust Account)

Number of
Shares Held(Thousands)

Ratio of
Shareholders
(%)

2,500
2,000
2,000

7.1
5.7
5.7

1,767

5.0

1,500

4.3

1,306

3.7

1,096

3.1

1,034
997

3.0
2.8

956

2.7

Other Corporations
8.8%

By type ofshareholders
Individuals and Others
25.7%

Foreign Corporations
24.8%

Less than 100 0.1%
100-499 3.2%

More than 1,000,000 50.2%

500-999 1.3%
1,000-9,999 4.6%
10,000-99,999 10.7%

By number ofshares held

Note: In addition to the above, Mabuchi Motor Co., Ltd. retains 8,837 thousand
shares as treasury shares.

Cash Dividends per Share / Payout Ratio

100,000-999,999 29.9%

Total Dividend / Amount for Repurchase of Own
Stocks / Total Dividend Payout Ratio
(%)

(%)

516.8

129.8

34.1
128.00

(Yen)

61.00

36.4

50.9

123.00

63.00

62.00

62.00

42.00

51.00

61.00

61.00

2005

2006

2007

2008

92.00
50.0

67.00

64.00

2003

2004

Interim129.8

114.00115.00
51.00

64.3

43.8

42.5

Year-end

171.0

139.3

122.7

64.3

42.5

(Millions of yen)

123.00100.0050.00

16,166

50.00

5,547

2009

2003

Payout Ratio

18,042

Total Dividend

Changes in Standards for Calculating Dividends

8,682

13,957

4,664

6,559
3,681

4,509

4,703

4,468

3,503

2004

2005

2006

2007

2008

2009

Amount for Repurchase of Own Stocks

Total Dividend Payout Ratio

Trend of Stock Price and Related Indicators

Year

Ordinary Dividendper Share

Standard Value for Calculating
Special DividendHigh (Yen)

2005
7,490

2006
7,710

2007
7,990

2008
6,740

2009
5,010

2007(*)

60 yen20% of consolidated net income

Low (Yen)

5,510

5,710

6,610

2,845

3,230

2005

60 yen20% of consolidated net income

At Year-end (Yen)

6,550

7,080

6,740

3,690

4,580

2003

50 yen20% of consolidated net income

PER

36.2

26.4

24.0

38.9

31.2

1999

50 yen5% of consolidated net income

PBR

1.2

1.3

1.2

0.7

0.9

(* Additional policy) Actual full-year dividend amount shall be based on theabove 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.

37

MABUCHI MOTOR CO., LTD. Annual Report 2009

Corporate Data
(As of December 31, 2009)

Company Name
MABUCHI MOTOR CO., LTD.
Corporate Headquarters
430 Matsuhidai, Matsudo-City
Chiba 270-2280, Japan
Tel: 81-47-710-1111
Fax: 81-47-710-1141
Established
January 18, 1954
Paid-in Capital¥20,704,818,800

Corporate Directory
Consolidated Subsidiaries
MABUCHI INDUSTRY CO., LTD.
19 Sam Chuk Street, San Po Kong,
Kowloon, Hong Kong
Tel: 852-2328-5575
Fax: 852-2352-5266
MABUCHI MOTOR(DONGGUAN) CO., LTD.
Guancheng Science & Technology Park,
Shilong Road, Guanlong Road's Section,
Dongguan City, Guangdong Province
523119, China
Tel: 86-769-2225-6985
Fax: 86-769-2220-2117

Number of Employees
751 (Non-consolidated)
38,251 (Consolidated)

MABUCHI TAIWAN CO., LTD.
No. 18, Chunghwa Road, Hsinchu Industrial
District, Hsinchu 30352, Taiwan
Tel: 886-3-598-1111
Fax: 886-3-598-6256

Ordinary General Meeting of
Shareholders
The Ordinary General Meeting of Shareholders will be held at the end of March in
Matsudo.

MABUCHI MOTOR TAIWAN LTD.
No. 66 Kai-Fa Road, N.E.P.Z., Kaohsiung
81170, Taiwan
Tel: 886-7-362-1111
Fax: 886-7-361-2446

Independent Accountants
Ernst & Young Shin Nihon LLC
Tokyo, Japan

MABUCHI MOTOR DALIAN CO., LTD.
No. 41 Harbin Road, Dalian Economic andTechnical Development Zone, Dalian
116600, China
Tel: 86-411-8761-1111
Fax: 86-411-8761-2900

Shareholders’ Register Custodian
Mitsubishi UFJ Trust and Banking Corporation
Corporate Agency Department
10-11, Higashi-suna 7-chome, Koto-ku,
Tokyo 137-8081, Japan
Tel: 81-120-232-711

MABUCHI MOTORWAFANGDIAN CO., LTD.
Laohutun Town, Wafangdian City, Liaoning
Province 116322, China
Tel: 86-411-8537-0241
Fax: 86-411-8537-0291

Stock Listing
Japanese Stock Exchange Listing
Tokyo Stock Exchange

MABUCHI MOTOR (JIANGSU) CO., LTD.
No. 1 Liuxu Road, Wujiang City Economic
Development Zone, Jiangsu Province
215200, China
Tel: 86-512-6345-1111
Fax: 86-512-6345-0438
MABUCHI MOTOR (YINGTAN) CO., LTD.
Yingtan Economic and Technological
Development Zone, Yingtan City, Jiangxi
Province 335000, China
Tel: 86-701-6689168
Fax: 86-701-6689166
MABUCHI PRECISION (DONGGUAN)
CO., LTD.
Ludong Industrial Area, Humen Town,
Dongguan City, Guangdong Province
523935, China
Tel: 86-769-85564792
Fax: 86-769-85564791

MABUCHI MOTOR VIETNAM LTD.
No. 2-5A Street, Bienhoa II Industrial Zone,
Bienhoa, Dongnai, Vietnam
Tel: 84-61-3836711
Fax: 84-61-3836712
MABUCHI MOTOR DANANG LTD.
Lot A2, No. 3 Street, Hoa Khanh Industrial
Zone, Lien Chieu District, Danang City,
Vietnam
Tel: 84-511-3731931
Fax: 84-511-3731932
MABUCHI MOTOR AMERICA CORP.
3001, West Big Beaver Road, Suite 520,
Troy, MI 48084 U.S.A.
Tel: 1-248-816-3100
Fax: 1-248-816-3242
MABUCHI MOTOR(SINGAPORE) PTE. LTD.
111, North Bridge Road, #12-05 Peninsula
Plaza, Singapore 179098
Tel: 65-6339-9991
Fax: 65-6339-9091
MABUCHI MOTOR (EUROPE) GmbH
Herriotstrasse 1, 60528 Frankfurt am Main,
Germany
Tel: 49-69-6690220
Fax: 49-69-66902229
MABUCHI MOTOR(SHANGHAI) CO., LTD.
Room 1901, Kirin Plaza Building, No. 666
Gubei Road, Changning District, Shanghai
200336, China
Tel: 86-21-6208-5666
Fax: 86-21-6208-8466
MABUCHI MOTOR KOREA CO., LTD.
Room 426, Central Plaza G-five, 1685-8
Seocho-Dong, Seocho-Gu, Seoul 137-070,
Korea
Tel: 82-2-534-8131
Fax: 82-2-534-8135
MABUCHI MOTOR TRADING(SHENZHEN) CO., LTD.
Room 1704-05 Great China International
Exchange Square, Jintian Road, FutianDistrict, Shenzhen City, Guangdong
Province 518034, China
Tel: 86-755-2399-8568
Fax: 86-755-2399-8566
MABUCHI MOTOR(MALAYSIA) SDN. BHD.
This company closed during 2005.
Non-consolidated Subsidiary
MABUCHI REAL ESTATE CO., LTD.

MABUCHI MOTOR CO., LTD. Annual Report 200938

CORPORATE HEADQUARTERS
430 Matsuhidai, Matsudo-City, Chiba 270-2280, Japan
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