Mabuchi Group
Annual Report 2019

Motor for Automotive ProductSF-266XA

Profile

Mabuchi Group
Annual Report 2019
Table of Contents
11	Management’s Discussion andAnalysis

1 Profile
3 To Our Shareholders

13 ESG Activities

7	Segment Information by Motor
Application

15 Investor Information

9	Research and Development Activities

16	Corporate Data

10 Five-year Summary

Management
Principle“Contributing to International Society and
Continuously Increasing Our Contribution.”Management Guidelines

Way of thinking that never changes
Management
Principle

Way of thinking that does not change
in the short termManagement
Guidelines

Our
Missions

Management Policies

Way of thinking that changes
with the times

Management Scheme
Mabuchi’s Management Vision

1. B
 y bringing better and more reasonably priced
goods to the market, we contribute to thecreation of a more affluent society and more
comfortable lives for everyone.
2. C ontribute to the leveling of international
economic disparities and to economic
development in other countries through thecreation of employment opportunities andtechnology transfers.
3. P eople are the most important managerial
resource. Realize human potential throughwork and teach people to become productive
members of society.
4. C onduct corporate activity which preserves
the earth’s environment and protects humanhealth.

Forward-looking Statements
Statements concerning the business forecast are based on information available at the time of preparation. Actual results may differ from the forecast due to various factors.
Factors that may affect the operating results include but are not limited to:• Fluctuations in exchange rates• Changes in economic conditions, demand trends, and other factors surrounding Mabuchi’s businesses• Rapid technological innovations such as new techniques and new products• Fluctuations in market prices of copper, steel, rare earths, and other materials
It is extremely difficult to make an accurate and rational results forecast because there are many uncertainties that affect business performance, such as
the spread of the new coronavirus (COVID-19) infectious disease in countries around the world, regulations by the government, and changes in theoperating status of customers. Therefore, the consolidated results forecasts for the fiscal year ending December 31, 2020, are undecided.
We will disclose consolidated results forecasts as soon as the status of Group companies in each country is confirmed and it becomes possible tocalculate them accurately and rationally.

1

MABUCHI MOTOR CO., LTD.

Annual Report 2019

Actuating Your Dreams
Contribute to the Creation of a Sustainable
Society through Business——— Expand Market by Developing
New Applications Centered on New Products
Mabuchi Motor has been, since the foundation, operating as a company specialized in the field of small direct current
electric motors aiming, with a management principle of “Contributing to international society and continuously increasing
our contribution,” at the realization of a fulfilling and enriching society and a society comfortable to everyone through the
supply of reasonable and high quality products.
“The Mabuchi Group is the world’s leading producer of small motors. Our annual production volume of
approximately 1,371 million units (in 2019) is testimony to the excellent reputation and trust we have built with ourcustomers and a source of great pride for us.
In the coming years, we will continue to aspire to create new value through product development adaptable tomarket needs and through a flexible supply system.”

Worldwide Network

Europe Mabuchi ●Mabuchi Motor China ●Jiangsu Mabuchi ●Poland Mabuchi

Wafangdian Mabuchi

Mabuchi Motor China
Shenzhen Branch

Dalian Mabuchi

Dongguan Mabuchi ●Headquarters ●●America Mabuchi

Korea Mabuchi

Ludong Mabuchi
Daojiao Mabuchi
Thailand Mabuchi
Jiangmen Mabuchi
Singapore Mabuchi

Jiangxi Mabuchi
Taiwan Mabuchi ●Kaohsiung Mabuchi

Mexico Mabuchi ●Hong Kong Mabuchi
Danang Mabuchi ●Vietnam Mabuchi■■ Sales
Sales offices
offices■■ Production
Production bases
bases●…Including●…Including sales
sales function
function●…Including●…Including R&D
R&D function
function(As of February 29, 2020)

For details, please refer to the worldwide network section on our corporate website:●…Including●…Including other
other functions
functions

https://www.mabuchi-motor.com/company/network/

2

To Our Shareholders

We will unite as the Mabuchi Groupto further improve corporate value steadily.

Hiroo Okoshi
Representative Director andPresident CEOBusiness Results for Fiscal 2019
We report on the consolidated performance for the fiscal
year ended December 31, 2019 (January 1 to December 31,2019).
Consolidated net sales for fiscal 2019 were 131.8 billion
yen. Operating income for fiscal 2019 was 17.5 billion yen.
Profit attributable to owners of parent was 14.2 billion yen.
Please see the table below for the rate of change.

Financial Highlights
Thousands of
U.S. dollars

Rate ofchange

2019

2019

YoY

¥131,807$1,203,058-7.9%

Millions of yen

2018
Net sales ¥143,116
Operatingincome21,243

17,544160,131-17.4%

Profit attributableto owners of parent

22,925

14,234

129,920-37.9%

Total
assets267,050

268,2442,448,375-0.0%

Net assets

244,454245,172

2,237,788

+0.3%



3

MABUCHI MOTOR CO., LTD.

Exchange rate: U.S.$1 = ¥109.56

During the fiscal year ended December 31, 2019 (fiscal
2019), the trend of a slowdown in the global economy
became stronger, amid concerns regarding trade and theeconomic environment.

Economic Environment of Major Countries/Regions
The U.S. economy saw increased consumer spending
against a backdrop of continued improvement in theenvironment for hiring, and continued to show solid
growth. The pace of growth in the European economy
remained sluggish on stagnant manufacturing in Germany,
amid signs of exports for the region as a whole bottoming
out. In Japan, the economy was showing gradual growth on
increased capital investment and growth in consumer
spending from an improving hiring environment. Growth inemerging market economies slowed overall, with adecelerating pace of growth being seen in China.
With regard to markets related to the Mabuchi Group’s
products, the automotive products market contracted on
weakness primarily in Europe and China despite a solid North
American market. The consumer and industrial products market
saw a continued contraction in markets for some applications.

Annual Report 2019

Sales by application market and rate changes from theprevious year are as follows:

Sales by Application Market
Net Sales
Application by Market

Rate ofchangeMillions of yen

Thousands of
U.S. dollars

Automotive Products
Market¥97,959$894,113-6.0%

Consumer and Industrial
Products Market

33,840308,872-12.9%



Exchange rate: U.S.$1 = ¥109.56

For more information on products by application market,
see Segment Information on pages 7–8.

Main Efforts and Results of the Current
Fiscal Year
Against this backdrop, the Mabuchi Group has been working
to address the issues of “Acceleration of growth in the power
window lifter motor business,” “Expansion of medium-sized
and small automotive motor sales and new applications,”“Development of new applications in the consumer andindustrial products sector,” “Pursuing laborsaving and nextgeneration manufacturing innovation,” and “Implementationof a global base strategy.” Specifically, we proactively
introduced and implemented various measures to increase
sales and market share, develop new markets, and further
improve efficiency and product quality, and achieved
successes that will lead to future business growth. This
included making significant progress in our efforts to obtainapproval from a third major North American automaker, using

Net Sales/Gross Profit Ratio
32.8(Millions of yen)
30.4
143,143

140,69932.2
146,925

our high market share in small automotive motors and ourexperience in brushless motors to achieve a higher rate oforder acceptance by participating in customers’ productdevelopment from the initial stages, gaining large-scale orders
in both growth markets including light electric vehicles and in
existing markets, being on track to achieve the targets of thePhase 3 Laborsaving Plan (FY2017–FY2019), and pursuing
local production for local consumption at the global level andaddressing changes in the trade and economic environment.

Future Efforts
Acceleration of Growth in the Power Window Lifter
Motor BusinessAt the power window lifter motor business, Mabuchi Motor
China has been established as a regional headquarters(management company) to respond promptly to the drasticchanges being seen in the Chinese market, and the businesshas been working to address changes in the environment
quickly, expand its marketing function, and strengthen its
sales structure. Specifically, this has included accelerating theswitch to new standard motors for power window lifters,
where we have a large market share in China, to meetcustomers’ higher level of requirements. The business has
won a new large-scale contract and is working to increase its
market share further. In Europe, as in China, the competitiveenvironment is changing significantly, and we arestrengthening the R&D function at European sales bases tobe able to respond more quickly, particularly in technologicalaspects. These efforts have led to inquiries from potential
new customers who are currently using our competitors’
products. Orders under a contract won from a high-end

Operating Income/Operating Income Ratio
31.0
143,116

31.1(Millions of yen) 16.0
22,961

17.2
24,225

16.4
24,06614.8

13.3

21,243

131,807

17,5442015
Gross profit ratio (%)

2016

2017

2018

2019

2015

2016

2017

2018

2019

Operating income ratio (%)

4European automaker in fiscal 2018 are also showing steady
growth in the models equipped with our products. In the
United States, we are aiming to win orders from a third North
American automaker, and continue to strengthen our unified
sales structure for the Americas and develop new products.

Expansion of Medium-sized and Small Automotive
Motor Sales and New Applications
Medium-sized automotive motors for applications including
power seats and electric parking brakes are an area forwhich continued market expansion can be expected going
forward in light of today’s emphasis on automobile safety,
comfort, and economy, and a variety of new applications isemerging. The Mabuchi Group will continue to develop new
products for new applications. We will work toward sales
growth through increased sales of highly competitive
application-specific standard products to new customers.
For small automotive motors, we will maintain and enhance
our superiority in existing applications where Mabuchi has
overwhelming strength, while also proactively developing
and increasing sales of competitive new products in
response to new inquiries including for new applications,based on the Company’s strengths and factors including
a product’s marketability and profitability.

Development of New Applications in the Consumer
and Industrial Products Sector
In the consumer and industrial products sector, in addition
to business activities based on existing small brush motors,
we are stepping up development and pursuing increased
sales of brushless motors to cultivate new applications andPower Window Lifter Motor Sales Results(Billions of yen)

35

150

30

Under both the Phase 1 (fiscal 2011 to fiscal 2013) andPhase 2 (fiscal 2014 to fiscal 2016) Laborsaving Plans toachieve laborsaving exceeding 30% during the three-year
period, we achieved laborsaving exceeding 30% as plannedand production process innovation progressed significantly.
Under the Phase 3 Laborsaving Plan, which covered thethree years from fiscal 2017 to fiscal 2019, we also achieved
our challenging target of 30% laborsaving compared withfiscal 2016. In addition to laborsaving, these activities have
led to a major strengthening of our equipment development
capabilities. We are further refining our Next-generation
Manufacturing Innovation, which achieves both high(Billions of yen)

60

(%)

Sales amount
Sales quantity (2016 = 100%)

150

50

25

100

20

40

100

30

15
50

10

20

50

10

5
0

Pursuing Laborsaving and Next-generation
Manufacturing Innovation

Small Automotive Motor Sales Results(%)

Sales amount
Sales quantity (2016 = 100%)

create new demand. With regard to brushless motors forlight electric vehicles, we have a steady pace of shipments
to customers for both new applications and existing
applications. We continue to receive many customer inquiries
regarding brushless motors for light electric vehicles, and areworking to develop new additional applications in addition
to light electric vehicles and strengthen our sales activities to
win orders for a greater variety of applications. We continue
to strengthen our sales of motors for personal care products
by developing motors for new high-end products being
launched by customers. The consumer and industrial
products sector has a short cycle from development to sales,
and we are seeking to develop motors simultaneously withcustomers’ product development. We will strive to meetcustomers’ expectations by building further on thetechnologies we have developed to date.

2016

2017

2018

2019

0

0

2016

2017

2018

2019

0

* P W: Power window lifters
PS: Power seats
EPB: Electric parking brakes

5

MABUCHI MOTOR CO., LTD.

Annual Report 2019

product quality and productivity using our expertise inautomation and efficiency enhancement acquired throughthe combination of laborsaving and activities including thedevelopment of innovative core production lines. The twomain specific activities we are pursuing are to minimize thecost of manufacturing and to establish an international
specialization system for manufacturing technologies, andwe are steadily pursuing these initiatives along with humanresource development and organization-building.

Implementation of a Global Base Strategy
To respond to changes in the manufacturing environment
and address customers’ increasing needs for motor
production located close to their own factories, Mexico
Mabuchi was established in Mexico in August 2014 as our
first production base in the Americas, and Poland Mabuchi
was established in Poland in January 2017 as our first
production base in Europe. Our implementation of a global
base strategy, including the establishment of theseproduction bases, is contributing to our ability to respond to
the drastic changes in external environment seen in recent
years. In China, the establishment of a regional
headquarters is strengthening our ability to address local
needs. Initiatives in the Americas include increasing our
production line capacity and raising productivity at Mexico
Mabuchi. In particular, we have achieved stable supplies tocounter the effects of the respective country’s trade policies
through cooperation between America Mabuchi and
Mexico Mabuchi. In Europe, Poland Mabuchi is working tocommence mass production and raise productivity, to beable to provide a high level of customer service based on
local production for local consumption.

Shareholder Returns
Mabuchi maintains a basic policy of actively returning profits
to shareholders in accordance with its business results. We
do this while also providing funds from internal reserves forcapital expenditure, research and development which arenecessary for the growth of the Company, and while
maintaining our financial soundness.
Under this policy, apart from when business results are
remarkably sluggish due to a sudden deterioration in thebusiness environment, we consistently distribute an annual
ordinary dividend of 30 yen per share as payment of along-term stable dividend, plus an additional special

dividend equal to 30% of the consolidated net income
divided by the number of outstanding shares, depending on
the performance of the Company.
We will continue to consider repurchasing more treasury
stocks as necessary, as a way of flexibly responding tochanges in the share price and the business environment,
and as a means of fulfilling our capital policy and returning
profits to shareholders.
It is our policy to appropriate internal reserves to further
strengthen and deepen our existing businesses and to invest
in areas of growth, with a view to increasing corporate value.

Cash Dividend
In consideration of short-term uncertainties in the businessenvironment, we paid a dividend of 135 yen per year for the
two-year period from fiscal 2018 through fiscal 2019 only,
without consideration of consolidated net income. For fiscal
2020, we plan to extend the special measure by one year tomaintain the same full-year dividend amount of 135 yen per
share despite the uncertain operating environment due tothe global spread of the new coronavirus. However, in theevent of significant changes in business operation forecast,the dividend forecast will be reevaluated as appropriate. The
basic dividend policy does not change the basic calculation
criteria, and this special measure is for a limited period.

Fiscal 2019
Full-year: 135 yen per share (ordinary: 30 yen/special: 105 yen)Interim: 67 yen per share (ordinary: 15 yen/special: 52 yen)
Year-end: 68 yen per share (ordinary: 15 yen/special: 53 yen)

Fiscal 2020 (plan)
Full-year: 135 yen per share (ordinary: 30 yen/special: 105 yen)

Acquisition of Treasury Stock
The Company decided to purchase treasury stock to return
profits to shareholders and improve capital efficiency. The
repurchase of treasury stock is planned to take place during
the period from February to December 2020, with amaximum of 3 billion yen and 1.2 million shares.
The repurchase of our treasury shares will take place forthe sixth consecutive year since 2015. We determined therepurchase by taking into account comprehensively future
growth investments including M&As and alliances, mediumterm business plans, and the market environment. The
treasury stock to be acquired this time will not be cancelledin consideration of the effective use for future funds.

6

Segment Information
by Motor Application
Below is a description of conditions in the markets formotors, the Mabuchi Group’s main business,
and a report on the Group’s sales situation.
In fiscal 2019, consolidated net sales
generated by motor sales amounted to131,799 million yen, down 7.9% from theprevious fiscal year.

Automotive
Products

74.3%

Automotive Products Market
Net sales in this market were 97.9 billion yen(a 6.0% decrease on a year-on-year basis).

Medium-sized Motors•	Sales of PW motors declined mainly due to a slowdown
in auto production in China despite increased sales ofhigh-torque standard products for major North American
automakers•	PS motors declined on end of production of equippedmodels and weak market•	Sales of EPB motors grew, reflecting increased use by major
Japanese automakers•	In Others, increases in sales of motors for engine peripheral
equipment, etc.

Small Motors•	Motors for door lock actuators, motors for mirrors, andmotors for air conditioning damper actuators maintained
market share, but sales declined due to weak market•	In Others, growth in motors for steering locks, grille shutter
actuators, and shift-by-wire systems

Sales by Main Application(Billions of yen)

(Year-on-year change)

60.0
50.0

7.9

40.0

8.6

30.0

10.0

8.6
9.3

Electric Parking Brakes
108.3%

8.0

Power Seats
79.9%

20.0
10.0
0

26.6

24.0

2018

2019

(Billions of yen)

50.0
40.0
30.0

10.0
0

MABUCHI MOTOR CO., LTD.

Power Window Lifters
89.9%

Sales by Main Application(Year-on-year change)

4.1
3.3
6.8

18.0

4.9
2.6
6.2

Others119.3%
Headlight Level Adjusters
81.3%

16.6

Air Conditioning Damper
Actuators
90.7%

20.0

7

Others
107.6%

Door Lock Actuators
92.3%
18.4

17.4

2018

2019

Mirrors (including folding)
94.5%

Annual Report 2019

Consumer andIndustrial Products

Consumer and Industrial Products Market

25.7%

Net sales in this market were 33.8 billion yen(a 12.9% decrease on a year-on-year basis).
•	Although midrange and high-end toothbrush segments remain strong,overall decline for motors for personal care products due to policy ofemphasizing profitability in certain applications (following a high-margin,
low-volume approach)•	Lower sales of motors for inkjet printers due to market contraction•	Sales in the Others category declined despite increases in sales of motors
for vacuum cleaners and housing equipment
Sales by Main Application(Billions of yen)

(Year-on-year change)

40.0

Others
94.9%

30.0

12.3
2.4
2.8

20.0

5.3
7.1

10.0

0

11.7
1.9
1.7
4.4
6.2

8.7

7.6

2018

2019

Thousands of
U.S. dollars

Millions of yen

Automotive
Products
Consumer andIndustrial Products
Total Sales

2016

2017

2018

2019

¥ 96,369 ¥100,132 ¥105,793 ¥104,196 ¥ 97,959
46,76440,541

Personal Care Products
87.2%(Millions of yen)

Net Sales by Application
2015

Multifunction Printers (MFP)and Laser Printers (LP)81.8%
Car CD Players
63.2%
Power Tools
83.8%
Inkjet Printers87.2%

41,122

38,86046,76440,541

96,369100,132

2015

2016

41,122

38,8602019

33,840$  894,113

33,840308,872¥143,134 ¥140,674 ¥146,915 ¥143,057 ¥131,799$1,202,985
U.S.$1 = ¥109.56

105,793

104,196

2017

2018

Consumer and Industrial Products

97,9592019

Automotive Products

Net Sales by Region
Thousands of
U.S. dollars

Millions of yen

2015
Japan

2016

2017

2018

2019

¥ 11,615 ¥ 12,010 ¥ 12,533 ¥ 13,590 ¥ 14,4242019$  131,654

North & Latin
America

17,204

17,36018,376

20,49923,013210,049

Europe29,262

30,11734,76633,99630,274

276,323

China

49,493

46,79048,74847,64040,665371,166

Asia PacificTotal Sales

35,55734,39632,492

27,330(Millions of yen)

23,421

213,773¥143,134 ¥140,674 ¥146,915 ¥143,057 ¥131,799$1,202,985

32,49235,55734,39649,493

46,79029,262

30,11734,766

17,204

17,36011,61512,0102015

2016

Asia Pacific

27,33023,421

48,74840,66533,99630,274

18,376

20,49923,013

12,533

13,59014,424

2017

2018

2019

China

North & Latin America

47,640EuropeJapan

U.S.$1 = ¥109.56* PW: Power window lifters PS: Power seats EPB: Electric parking brakes

8Research andDevelopment Activities
The Mabuchi Motor Group’s R&D activities are led by Mabuchi MotorCo., Ltd., the parent company, and MABUCHI MOTOR (DONGGUAN)
CO., LTD. in the Asia segment. Those activities are outlined below.
The organizational structure for the Company’s R&D activities was
restructured as of the end of March 2019, with the strategic eliminationof the Development Headquarters, and the respective spinning off ofProduct Development Department 1, Product Development Department
2, and Product Development Department 3 to the Consumer andIndustrial Product Business Unit, Automotive Product Business Unit 1,
and Automotive Product Business Unit 2. This is designed to increase
further the Group’s competitive superiority in an operating environmentthat has recently been experiencing drastic changes. By aligning thesedevelopment departments with their respective sales departments, weare bolstering the development of the business units’ activities with swift
decision making and timely responses to market changes, enhancing ourability to develop new models for specific applications, and introducing a
global approach to customer support and customer service activities.
The Manufacturing Headquarters consists of three departments—
Production Engineering Department 1, Production Engineering
Department 2, and the Mabuchi Production System Management
Department. Production Engineering Department 1 is responsible fordesigning mass production facilities, supporting manufacturing, anddesigning molds, while Production Engineering Department 2 is
responsible for research on process designs and methods, as well as
production technology.
The Technical Research Institute and the Engineering Management
Department report directly to the Chief Technology Officer. The
Technical Research Institute is responsible for new product development
and other high-value-added operations, focusing primarily on thedevelopment of elemental technologies and strategic applications, andthe Engineering Management Department manages blueprints formass-produced products and intellectual property rights.
By strengthening technological cooperation across the board, we are
restructuring to realign business units and integrating functional units
into business units, with the goal of promoting cooperation acrossdivisions to achieve greater operational efficiency and increase added
value.
At the same time, the R&D center at MABUCHI MOTOR(DONGGUAN) CO., LTD. is primarily responsible for processing various
types of testing requests, component and material evaluations, blueprint
preparation operations, and design improvement. The center also
supports operations for improving existing products for swift
introduction to the local Chinese market and developing new products
commissioned by the Company.
We have also identified the following items as matters for urgent
consideration and policy development, with the aim of introducing ourcompetitive manufacturing from the perspective of introducing our
motors into new fields, strengthening our ability to respond to
appropriate applications, and local production for local consumption.

Mobile Applications (AGVs, robots, etc.)

In 2019, we began selling options for drive circuits, gears, and drive units
for brushless motors, and expanded our sales and sales promotion
activities for AGVs (automated guided vehicles) and personal mobility. In
2020, we are accelerating our product development in applications forservice robots, and will continue to expand our lineup in a broad range
of applications that assist with human operations.

Power Window Applications

In 2019, we completed preparations for the mass production of models
that will lead to higher sales in China by enabling Chinese automobile
manufacturers to develop smaller, lighter vehicles, and are also carryingout and offering additional sales promotion activities and engineering
services. We have also received orders from Chinese automakers forlineup models currently being developed to increase sales in China.

Power Seat Applications

Sales and market share are growing as the introduction of small,distinctive, high-torque motors for power seats has led to increased
adoption by major automobile manufacturers. Seeking to increase
market share further, we are reinforcing our products and carrying out
activities to increase sales. In 2019, we prepared to commence the mass
production of a derivative motor model for lumbar support. We are also
continuing to develop a new type of geared motor for recliners and havebegun developing applicable motors for various automobile seatfunctions.

Engine Peripheral Equipment Application

This application can contribute to energy savings by precisely controllingengines. At the same time, tolerance for higher temperatures andresistance to vibration are required for this application, compared withother applications. In addition to the RS-4F5 and RS-4G5, which are
already in mass production, we continue to work to increase sales byadding optional specifications for these models.

Other Small Electrical Equipment Applications

We are developing motors in response to inquiries for new applications
to achieve lower fuel consumption and increased convenience, and are
moving forward with preparations for mass production.

New Flagship Products
DS-34EC1 brushless motor drive circuit; MS-94BZ# geared
motorThis series of drive circuits and geared motors is for autonomous
traveling robots and personal mobility, primarily in light electricvehicles and AGVs. We also offer a lineup of drive units equippedwith wheels, brackets, and electromagnetic brakes.

(1) D evelopment of brushless motors and gear units for mobile
applications and technological enhancement of drive circuits(2) In addition to conventional labor savings, study manufacturing lines
with additional labor savings and enhance manufacturing
competitiveness(3) Reduce development lead times and reduce and eliminate
development man-hours

Research and development expenses in fiscal 2019 totaled 4,958 million
yen. As of the fiscal year-end, the Company owned a total of 812
industrial property rights (171 in Japan and 641 overseas), and we madea total of 31 new applications (Japan and overseas; patents, utility
models, designs, and trademarks) during the year.
To increase product sales and new applications, we are working tomaintain our superior competitive position by comprehensively andproactively acquiring and protecting intellectual property rights. In
addition to the protection of intellectual property rights, we are
implementing a range of measures including training to raise awarenessin all Group employees of the risks of divulging or infringing on
intellectual property rights.

Next, the following presents the application status of our products.
For applications in the core automotive products business and applications
to be emphasized going forward, the engineering departments and sales
departments will work together within the business division organization.

R&D Expenses/R&D Expenses Ratio(Millions of yen)

R&D Personnel

Number of Intellectual Properties(Employees)(Intellectual properties)
876

3.6
5,164

2015

3.6
5,024

2016

3.6
5,233

2017

3.5

437
4,939

2018

R&D expenses ratio (%)

9

MABUCHI MOTOR CO., LTD.

3.8
436

432

459

479

4,958

2019

682

2016

2017

2018

2019

783

157

168

562

591

615

2015

2016

2017

120

2015

748

Overseas

191

812
171

685

641

2018

2019

Domestic

Annual Report 2019

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

Millions of yen

Thousands of
U.S. dollars

2015

2016

2017

2018

2019

2019

¥ 143,143¥ 140,699¥ 146,925¥ 143,116¥ 131,807$1,203,058

Cost of sales

99,673

94,51099,61998,78890,776

828,551

Selling, general and administrative expenses

20,50821,96323,23923,08423,486214,367

22,961

24,22524,066

21,243

17,544160,131

26,593

26,53927,48529,323

20,179184,182

18,546

20,59820,30322,925

14,234

129,920

Capital expenditures

16,187

11,236

12,844

16,332

17,915

163,518

Depreciation and amortization

6,386

6,016

7,143

7,652

8,264

75,429R&D expenses

5,164

5,024

5,233

4,939

4,958

45,254

Exchange gain, net

2,329

493

220

(7,517)(2,703)(24,671)

Net cash provided by operating activities

20,11527,95822,585

20,97925,830235,761

Net cash provided by (used in) investing
activities(1,178)(3,440)(14,027)(12,735)(15,246)(139,157)

Net cash used in financing activities(13,312)(11,860)(13,844)(11,069)(12,132)(110,734)

Total assets

256,196258,387

269,318

267,050

268,2442,448,375

Net assets

233,245

232,917242,179

244,454245,172

2,237,788

For the year:
Net sales

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

Cash flows:At year-end:

Per share data:

Yen

U.S. dollars

266.98300.70299.74341.19214.001.95

3,363.01

3,405.14

3,579.98

3,640.08

3,690.86

33.69

110.00120.00120.00135.00135.001.23

Operating income ratio (%)

16.0

17.2

16.4

14.8

13.3

–

ROE (%)

8.0

8.8

8.6

9.4

5.8

–

ROA (%)

10.6

10.2

9.8

9.2

7.8

–

Shareholders’ equity ratio (%)

91.0

90.1

89.9

91.1

91.4

–

Number of shares outstanding(Thousands of shares)

69,46868,587

67,792

67,23866,735–

Number of employees (Persons)

24,41923,76823,93623,47622,061–

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

Notes:1. U
 .S. dollar amounts have been translated from yen, for convenience only, at the rate of U.S.$1 = ¥109.56.
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 the period
by total assets as of the end of the period.
4. T he “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) have been applied from the beginningof the consolidated first quarter of the fiscal year ended December 31, 2019, but have not been applied retroactively to the financial position (consolidated) of the
fiscal year ended December 31, 2017, and before.

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

Operating Results
income of 17,544 million yen (a 17.4% decrease year on year).
Profit before income taxes declined 31.2% year on year, to20,179 million yen, in the absence of the one-time gain on salesof fixed assets related to real estate sales at the Company’s wholly
owned subsidiary Mabuchi Industry Co., Ltd. (Hong Kong
Mabuchi) recorded in the previous year. Profit attributable toowners of parent was 14,234 million yen (a 37.9% decrease year
on year).

Given the global economic slowdown, consolidated net sales forfiscal 2019 were 131,807 million yen (a 7.9% decrease from theprevious year), while motor sales, which constitute the majority of
net sales, were 131,799 million yen (a 7.9% decrease year on year).
Although operating income was boosted by improvements in sales
prices and the product mix and movements in market prices forcommodities including copper and steel materials, the yen’s
appreciation, lower sales volume, and higher costs resulted in operating

Overview of Financial Position
Assets, Liabilities and Net Assets

Total net assets increased 718 million yen from the end of theprevious fiscal year, to 245,172 million yen. Retained earnings
increased 4,380 million yen, net unrealized holding gains or losses
on securities increased 1,436 million yen, foreign currency translation
adjustments decreased 2,703 million yen, and treasury stock, which
is deducted from net assets, increased 2,614 million yen.

Total assets as of December 31, 2019, were 268,244 million yen,a 1,194 million yen increase from December 31, 2018. Majorchanges included a 6,478 million yen increase in property, plantand equipment associated with capital investment including forthe establishment of a new production base, a 1,772 million yen
increase in investment securities, a 2,697 million yen decrease in
cash and bank deposits, a 1,996 million yen decrease in tradenotes and accounts receivable, and a 1,828 million yen decrease
in inventories.
Total liabilities stood at 23,071 million yen, for a 476 million
yen increase from the previous fiscal year-end. Major changes
included a 1,322 million yen increase in deferred tax liabilitiesnon-current and a 1,102 million yen decrease in other current
liabilities.

Total Assets

Net cash provided by operating activities amounted to 25,830
million yen, an increase of 4,850 million yen from the previous
fiscal year. Although profit before income taxes decreased 9,143
million yen, gain on disposal of fixed assets decreased 5,377
million yen, increases and decreases in inventories resulted in aturnaround from the previous year’s 4,710 million yen net increase(cash outflow) to a 1,033 million yen net decrease (cash inflow) in

Liabilities(Millions of yen)

256,196

Cash Flows

Net Assets(Millions of yen)

258,387

269,318

267,050

268,244(Millions of yen)

25,47027,13822,950

2015

11

2016

2017

MABUCHI MOTOR CO., LTD.

2018

2019

2015

2016

2017

22,59523,071

233,245

232,917242,179

244,454245,172

2018

2019

2015

2016

2017

2018

2019

Annual Report 2019fiscal 2019, and income taxes paid decreased 2,178 million yen.
Net cash used in investing activities amounted to 15,246
million yen, an increase in cash used of 2,510 million yen fromthe previous fiscal year. This was mainly because proceeds fromsales of fixed assets decreased 5,951 million yen.
Net cash used in financing activities amounted to 12,132

million yen, an increase in cash used of 1,062 million yen fromthe previous fiscal year. The main item was a 1,660 million yen
increase in cash dividends paid.
As a result, the balance of cash and cash equivalents
amounted to 110,863 million yen, a decrease of 2,697 million
yen from the end of the previous fiscal year.

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

Outlook for Fiscal 2020degree to which markets will contract and how much time they
will need to recover.
Due to this situation it is extremely difficult to make anaccurate and rational results forecast because of the many
uncertainties that may affect business performance. Therefore,
the consolidated results forecast for the fiscal year ending
December 31, 2020, is undecided.
The impact of this virus infection on the Group's businessperformance is currently being estimated. We will disclose
consolidated results forecast as soon as the status of Group
companies in each country is confirmed and it becomes possible
to calculate them accurately and rationally. In the event of
extremely large changes in results forecast, the dividend forecast
will be reevaluated as appropriate, and the result promptly
announced.

The consolidated results forecast for the fiscal year ending
December 31, 2020 is undecided at the time of this writing.
The global economy is expected to undergo a major
contraction in all regions from a significant stagnation of
economic activity due to the global spread of the newcoronavirus. At this time, there are almost no regions where thetiming of infections being brought under control can be forecast.
Estimating the extent of the slowdown in economic activity or
how much time will be required for a recovery is also extremely
difficult.
With regard to markets related to the Mabuchi Group’s
products, we are forecasting large declines for both theautomotive products market and the consumer and industrial
products market on continued weakness in markets around theworld. It is also extremely difficult at this time to estimate the

Net Sales/Gross Profit Ratio(Millions of yen)

32.8

30.4
143,143

140,69932.2
146,925

Profit attributable to owners of parent/ROE(Millions of yen)

31.0
143,116

31.1

8.8

8.0

8.6

9.4

(Millions of yen)
17,91522,925
131,807

Capital Expenditures/Depreciation and Amortization

20,5985.8

20,303

18,546

12,844
11,236

14,234

2015

2016

2017

Gross profit ratio (%)

2018

2019

16,332

16,187

2015

2016

2017

ROE (%)For details, please refer to the business & other risks section on our corporate website:

2018

2019

6,386

6,016

2015

2016

Capital Expenditures

7,143

7,652

2017

2018

8,264

2019

Depreciation and Amortization

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

ESG Activities
Mabuchi Motor’s management philosophy, “Contributing to International Society and Continuously Increasing
Our Contribution,” embodies the wish to raise the extent of the Company’s contribution to society, and tocontinue being an indispensable company to the world, alongside the hopes that everyone who belongs to the
Mabuchi Group will “actively contribute to society through their work as a member of the Company,” “cherish notjust people but also nature and the environment, as well as the millions of other beings on the earth, and achieve
personal growth by coming to gain a sense of fulfillment not solely through material wealth.”
Following this philosophy, we are actively tackling the three perspectives that ESG presents.

SocialS

Environment•	Environmental Measures
Required for Motors•	Contribution to Society
through Corporate Activities

Social•	Educational Support•	Manufacture of Environmentally
Conscious Products•	Regional Support•	Production in Consideration of
the Environment•	CSR Procurement•	Prevention of Global WarmingE

Environment

G

Governance

Governance•	Basic Approach to Corporate Governance•	Contamination Prevention and Remediation•	Management Monitoring System•	Reduction and Recycling of Wastes•	Risk Management•	Thorough Compliance

Efforts to Achieve Sustainable
Development Goals (SDGs)
The Mabuchi Group regards the SDGs as goals that the Group can achieve
along with economic growth that respects people. We will continue toactively engage in social and environmental activities to achieve these goals.

Sustainable Development Goals (SDGs)
These are international goals for a better world, adopted at the “United
Nations Sustainable Development Summit” in September 2015, specifically,
17 goals and 169 targets to achieve for each goal. To reach the target by2030, action must be taken by all countries and people, as well as bycompanies.

The Mabuchi Group supports SDGs.

Various CSR activities

13

MABUCHI MOTOR CO., LTD.

For details, please refer to the ESG information section on our corporate website:

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

Annual Report 2019

Corporate Governance
Basic Approach to Corporate Governancemanner and to ensure accountability through the Board of
Directors and the Audit & Supervisory Committee.

The Management Principle of MABUCHI MOTOR CO., LTD.
(the “Company”) is “Contributing to International Society
and Continuously Increasing Our Contribution” throughthe Company’s small motors business. The Company
understands that realizing this principle is the reason for its
existence. Corporate governance of the Company comprises
the organizational structure and managerial systems that
support the realization of its Management Principle andvarious management measures that maintain these systems.
Accordingly, the fundamental objective in establishing andimplementing an appropriate corporate governanceframework is to further the interests of shareholders andother stakeholders on an ongoing basis through the creationof fair profits and the enhancement of corporate value.
Constructing and maintaining a corporate governance systemalong the lines given below are indispensable for theCompany as a listed company:•	To clearly separate management decision making andefficient business execution, and to clarify the scope ofaccountability;•	To build and operate a sound internal control system;•	To appoint a suitable number of independent officers
whose interests do not conflict with those of shareholders
to ensure the objectivity and neutrality of management’s
supervision functions;•	To foster a corporate culture in which all 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 thetrust and expectations of all stakeholders; and•	To disclose corporate information to shareholders andother stakeholders in an appropriate, fair, timely, and clear

Outline of Corporate Governance System andReasons for Its Adoption
On March 28, 2019, Mabuchi Motor adopted the structure of acompany with an audit and supervisory committee, with theaim of strengthening the supervision functions of the Board of
Directors and speeding up management decision making by
delegating part of the executive decision-making authority todirectors. We also established the Nominating Committee andthe Remuneration Committee as discretionary advisory bodies
to the Board of Directors. As a pioneer in small, direct-current
electric motors, Mabuchi is constantly emphasizing thedevelopment of unique products and services and its
management organization and administrative structure, whileachieving growth through differentiation. In addition, we arestrengthening and enhancing corporate governance on an
ongoing basis, and have achieved efficient Group management
by establishing a structure for managerial and operational
execution and a practical system of internal controls.
Specifically, we have appointed Outside Directors withhigh levels of independence and managerial experience,
while also establishing and operating multifaceted
management oversight systems that include audits by the
Audit & Supervisory Committee, whose members include
directors with high levels of independence and expertise,management (internal) audits, and quality control audits. We
are also audited by an independent accounting auditor.
Through these systems, we maintain a disciplined
management organization and carry out appropriate risk
management and compliance throughout the Mabuchi
Motor Group.

General Meeting of Shareholders
Appoint/Dismiss

Independent
Auditors

LiaiseAppoint/Dismiss
Audit & Supervisory Committee

Appoint/Dismiss
Audit/
Supervise

Board of Directors

Director who is an Audit & Supervisory Committee member

Auxiliary

Command/Order
LiaiseAudit & Supervisory
Committee Department

LiaiseSupervise
DirectInternal Audit Department

Internal Reporting System

ReportAccounting Audit

ReportConsult/Report
Nominating
Committee
Remuneration
Committee

Representative Directors

LiaiseDiscussions

Executive Committee(Executive Managing Officers)

Executive
Company Departments(Responsible for Compliance)

Internal Audit
Subsidiaries(One Director in Charge of Compliance)

For details, please refer to the corporate governance section on our corporate website:

https://www.mabuchi-motor.com/investor/management/governance.html 14

Investor Information(As of December 31, 2019)

Stock Data

Composition of Shareholders

Number of Shares Authorized...................... 200,000,000
Number of Shares Issued..................................68,562,462
Number of Shareholders......................................... 21,795

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

Major Shareholders
Takaichi Mabuchi
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Mabuchi International ScholarshipFoundation
Japan Trustee Services Bank, Ltd.
(Trust Account)Premiere Corporation
Tamotsu Mabuchi
Takashi Mabuchi
Ray Corporation
MISAKI ENGAGEMENT MASTER FUND
Japan Trustee Services Bank, Ltd.
(Trust Account 5)

5,000

7.5

3,460

5.2

3,000

4.5

2,659

4.0

2,068
2,050
2,010
1,746
1,202

3.1
3.1
3.0
2.6
1.8

1,120

1.7

Treasury Stock

Financial Institutions
22.8%

2.7%
Individuals andOthers26.9%

Financial Instruments
Firms
2.6%

By type ofshareholder

Other Companies
16.3%

Foreign Companies
28.8%

100–499 4.2%

Less than 100 0.0%

500–999 1.4%
1,000–9,999 5.3%
10,000–99,999 7.7%
More than 1,000,000
33.9%

By number ofshares held

Notes: 1. In addition to the above, Mabuchi Motor Co., Ltd. retains
1,826,900 shares of treasury stock.
2. R atio of shareholders excludes the number of treasury stock.

100,000–999,999 47.6%

Cash Dividends per Share/Payout Ratio
63.1
41.2

39.9

40.0

(%)

110.0

120.0

120.0

135.0

135.0

58.0

76.0

66.0

80.0

68.0

52.0

44.0

54.0

55.0

67.0

2015

2016

2017

2018

2019

Year-end

Payout RatioChanges in Standards for Calculating Dividends
YearOrdinary Dividendper Share

Standard Value for Calculating
Special Dividend

2015

30 yen *1

30% of consolidated net income

2014

60 yen30% of consolidated net income

2007 *2

60 yen20% of consolidated net income

2005

60 yen20% of consolidated net income

2003

50 yen20% of consolidated net income

1999

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

15

MABUCHI MOTOR CO., LTD.

Transaction period

Number of shares
repurchased

Amount(Millions of yen)Mar. 1, 2019 – Mar. 19, 2019505,500

1,949

Feb. 18, 2019 – Feb. 28, 2019

272,000

1,050

Mar. 1, 2018 – Mar. 20, 2018357,100

1,888

Feb. 16, 2018 – Feb. 28, 2018

206,400

1,111

Mar. 1, 2017 – Mar. 24, 2017

474,800

2,978

Feb. 16, 2017 – Feb. 28, 2017

326,800

2,021

Feb. 16, 2016 – Feb. 25, 2016

1,000,000

4,771

Mar. 13, 2015 – Mar. 23, 2015

219,200

1,393

Feb. 17, 2015 – Mar. 12, 2015

605,000

3,605

39.6

(Yen)

Interim

Purchase History of Treasury Stock

Trend of Stock Price and Related Indicators
2015

2016

2017

2018

2019

High (Yen)

8,230

6,740

6,740

6,750

4,670

Low (Yen)

4,385

3,810

5,020

3,130

3,130

At year-end (Yen)

6,640

6,100

6,110

3,370

4,150

PER

24.9

20.3

20.4

9.9

19.4

PBR

2.0

1.8

1.7

0.9

1.1

For details, please refer to the stock information section on our corporate website:

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

Annual Report 2019

Corporate Data
(As of December 31, 2019)▪Company Name

MABUCHI MOTOR CO., LTD.

▪Corporate Headquarters

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

January 18, 1954

▪Paid-in Capital¥20,704 million

For details, please refer to the corporate outline section on our corporate website:▪Number of Subsidiaries

Consolidated Subsidiaries
Non-consolidated Subsidiaries

https://www.mabuchi-motor.com/company/profile.html▪Independent Accountants

22
1

Ernst & Young ShinNihon LLC
Tokyo, Japan▪Number of Employees▪Shareholders’ Register Custodian

849 (Non-consolidated)
22,061 (Consolidated)▪Ordinary General Meeting of
Shareholders
The Ordinary General Meeting of Shareholders
will be held every March at Corporate
Headquarters.

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▪Stock Listing

Japanese Stock Exchange Listing
Tokyo Stock Exchange

Board of Directors, Audit & Supervisory Board Members, and Executive Officers(As of March 31, 2020)▪Board of Directors(excluding Audit & Supervisory
Committee Members)
Hiroo Okoshi
Representative Director andPresident CEO
Masato Itokawa
Representative Director COO,
Senior Managing Executive
Officer, In Charge of Internal
Controls and Chief Quality andEnvironmental Officer
Hirotaro Katayama
Director, Managing Executive
Officer, Assistant President andChief Officer of Subsidiaries
Shinichi Taniguchi
Director, Managing Executive
Officer, Chief Technology
Officer and Senior General
Manager of Manufacturing
Headquarters
Tadahito Iyoda
Director, Executive Officer andGeneral Manager of Corporate
Planning Department

For details, please refer to the executives section on our corporate website:

Eiji Uenishi
Director, Executive Officer,
Senior General Manager of
Product Development, In
Charge of Customer Solutions
and Senior General Manager
of Automotive ProductBusiness Unit 1
Naoki Mitarai
Outside Director
Kazuhiko Tsutsumi
Outside Director
Jody L. Ono
Outside Director▪Directors and Audit &Supervisory Committee
Members
Kazuyuki Someya
Director and Full-time Audit& Supervisory Committee
MemberToru Masuda
Outside Director and Audit& Supervisory Committee
MemberTakashi Asai
Outside Director and Audit& Supervisory Committee
Member

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

Yukie Toge
Outside Director and Audit& Supervisory Committee
Member▪Executive Officers andTheir Responsibilities(excluding those also serving
as Directors)
Kentaro ShiraiManaging Executive Officer,
Chief Business Officer andSenior General Manager ofPurchasing Headquarters
Isao Ichikawa
Managing Executive Officer, In
Charge of Business Operations
and Senior General Manager
of Consumer and Industrial
Product Business Unit
Takayuki Kokon
Executive Officer, Chief
Administrative Officer, Senior
General Manager of Human
Resources and General Affairs
Headquarters and Senior General
Manager of Business Platform
Innovation Headquarters
Tsuyoshi Nakamura
Executive Officer and In
Charge of Customer Relations

Toru Shibasaki
Executive Officer and Deputy
Senior General Manager of
Manufacturing Headquarters
Tomofumi Imamura
Executive Officer and Senior
General Manager of Automotive
Product Business Unit 2
Takumi Tomita
Executive Officer, Senior
General Manager of Financeand Accounting Headquarters
and General Manager ofCorporate Communication
Department
Quan Da YongGroup Managing Executive
Officer and Chief Regional
Officer in China
Shu ZhengGroup Executive Officer and
Deputy Chief Regional Officer
in China
Hoang Son
Group Executive Officer,
MABUCHI MOTOR VIETNAM
LTD. Chairman / President and
MABUCHI MOTOR DANANG
LTD. Chairman

Back row, from left: Yukie Toge, Takashi Asai, Toru Masuda, Kazuyuki Someya, Shinichi Taniguchi, Tadahito Iyoda, Eiji Uenishi
Front row, from left: Kazuhiko Tsutsumi, Hirotaro Katayama, Hiroo Okoshi, Masato Itokawa, Naoki Mitarai, Jody L. Ono

16

Consolidated Balance Sheet
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2018 and 2019
U.S. Dollars(Thousands)

Yen(Millions)(Note 1)

2018

2019

¥113,066¥110,369$1,007,386

23,90921,913200,009

Less – Allowance for doubtful accounts

(104)

(53)

(491)

Short-term investments (Note 4)

2,500

2,301

21,002Merchandise and finished goods

25,01424,353

222,284

998

954

8,710

Raw materials and supplies

9,696

8,572

78,241Other current assets

4,823

5,101

46,562

179,902173,510

1,583,706

Land

6,633

6,640

60,607

Buildings and structures

48,93650,580461,671

Machinery and equipment

78,134

83,623

763,268

Construction in progress

11,09916,288

148,672

144,804

157,133

1,434,220(70,778)(76,628)(699,422)

74,02580,504

734,797

Investment securities (Note 4)

9,208

10,980100,227

Long-term loans receivable

453

－

－

Deferred tax assets – non-current (Note 8)

825

704

6,429

2,633

2,543

23,21813,121

14,229129,876¥267,050¥268,244$2,448,380

ASSETS

2019

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

Work in process

Total current assets

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

Investments and Other Assets:

Other investments and other assets
Total investments and other assets

Total Assets

U.S. Dollars(Thousands)

Yen(Millions)
LIABILITIES AND NET ASSETS

2018(Note 1)

2019

2019

Current Liabilities:
Trade notes and accounts payable (Note 4)¥6,376¥6,003$54,797

Accrued income taxes

1,812

1,966

17,947

Accrued bonuses due to employees

265

249

2,273

Accrued bonuses due to directors

161

172

1,575

Other current liabilities

9,832

8,730

79,682

18,44817,121

156,275

－

635

5,795

Accrued benefits for stock payment

117

142

1,301

Liability for retirement benefits (Note 7)

2,259

2,139

19,530

17

17

159

1,393

2,716

24,790

359

299

2,734

Total long-term liabilities

4,147

5,950

54,311

Total liabilities

22,59523,071

210,587

20,70420,704

188,981

Additional paid-in capital

20,41920,419186,380

Retained earnings

212,594

216,974

1,980,415(7,400)(10,014)(91,410)

246,318

248,084

2,264,367

2,020

3,456

31,548

(37)

(2)

(19)

(3,074)(5,777)(52,735)

(897)

(712)

(6,502)(1,988)(3,035)(27,708)

124

124

1,134

Total current liabilities
Long-term Liabilities:
Long-term loans payable

Asset retirement obligations
Deferred tax liabilities – non-current (Note 8)
Other long-term liabilities – non-current

Net Assets (Note 2):
Shareholders’ Equity
Common stock, no par value:
Authorized: 200,000,000 shares
Issued: 68,562,462 shares in 2018
68,562,462 shares in 2019

Treasury stock, at cost: 1,323,854 shares in 2018
and 1,826,945 shares in 2019
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized holding gains on securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Retirement benefits liability adjustments (Note 7)
Total accumulated other comprehensive income
Subscription rights to shares
Total net assets

244,454245,172

2,237,792

Total Liabilities and Net Assets¥267,050¥268,244$2,448,380

See notes to consolidated financial statements.

Consolidated Statement of Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019

U.S. Dollars(Thousands)

Yen(Millions)
Net Sales (Note 17)
Cost of Sales
Gross profit
Selling, General and Administrative Expenses (Notes 12, 14)
Operating income
Other Income (Expenses):
Interest and dividend income
Exchange gain, net
Gain on sale of raw material scrap
Gain (loss) on disposal of fixed assets, net (Note 15)
Soil restoration related expenses
Special severance payment
Other, net
Profit before Income Taxes
Income Taxes (Note 8):
Current
DeferredProfitProfit attributable to owners of parent(Note 1)

2018
¥143,116
98,78844,32723,084
21,243

2019¥131,807
90,77641,031
23,486
17,5442019$1,203,061
828,554374,507214,368
160,138

889
1,474
1,520
4,790
(292)
(274)
(27)
8,080
29,323

1,121
990
1,378
(586)
－
(90)
(180)
2,634
20,17910,2409,044
12,586(5,354)－(822)(1,646)24,048184,187

6,433
(35)
6,398
22,925¥22,925

5,091
853
5,944
14,234¥14,234

46,471
7,790
54,261
129,925$129,925

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

2018

2019

¥341.19341.05135.00¥214.00
213.91135.00U.S. Dollars
2019
$1.95
1.95
1.23

Consolidated Statement of Comprehensive Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019

U.S. Dollars(Thousands)

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

(Note 1)

2018
¥22,9252019¥14,234

2019$129,925(2,526)50(7,517)306(9,686)¥13,2381,436
35(2,703)
184(1,047)¥13,187

13,107319(24,675)
1,688(9,560)$120,365¥13,238¥－¥13,187¥－$120,365$－

Consolidated Statement of Changes in Net Assets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019
Number of Shares(Thousands)
2018
2019
Common Stock:
Beginning balance
69,12568,562
Treasury stock cancellation(563)－
Ending balance
68,562
68,562

U.S. Dollars(Thousands)

Yen(Millions)(Note 1)

2018

2019

2019

¥20,704－¥20,704¥20,704－¥20,704$188,981－$188,981¥20,4190(0)¥20,419¥20,419－－¥20,419$186,380－－$186,380¥200,713
22,925(8,172)(2,871)¥212,594
14,234(9,832)(137)$1,940,437
129,925(89,749)(1,258)

－

116

1,060

¥212,594¥216,974$1,980,415

Treasury Stock:
Beginning balance
Treasury stock acquisition
Treasury stock disposal
Treasury stock cancellation
Ending balance¥(7,486)(3,002)215
2,872¥(7,400)¥(7,400)(4,082)
1,468－¥(10,014)$(67,547)(37,262)
13,400－$(91,410)

Net Unrealized Holding Gains on Securities:
Beginning balance
Net change during the year
Ending balance¥4,546(2,526)¥2,020¥2,0201,436¥3,456$18,441
13,107$31,548

¥(87)
50
¥(37)

¥(37)
35
¥(2)

$(338)
319$(19)

Foreign Currency Translation Adjustments:
Beginning balance
Net change during the year
Ending balance¥4,443(7,517)¥(3,074)¥(3,074)(2,703)¥(5,777)$(28,060)(24,675)$(52,735)

Retirement Benefit Liability Adjustments:
Beginning balance
Net change during the year
Ending balance¥(1,203)306¥(897)¥(897)
184¥(712)$(8,190)
1,688$(6,502)

Total Accumulated Other Comprehensive Income:
Beginning balance
Net change during the year
Ending balance¥7,698(9,686)¥(1,988)¥(1,988)(1,047)¥(3,035)$(18,148)(9,560)$(27,708)

¥130
(5)
¥124

¥124
－
¥124

$1,134－$1,134¥242,179
22,925(8,172)(3,002)
216－(9,692)¥244,454¥244,454
14,234(9,832)(4,082)
1,330
116(1,047)¥245,172$2,231,237
129,925(89,749)(37,262)
12,141
1,060(9,560)$2,237,792

Additional Paid-in Capital:
Beginning balance
Treasury stock disposal
Treasury stock cancellation
Ending balance
Retained Earnings:
Beginning balance
Profit attributable to owners of parent
Dividends paid
Treasury stock cancellation
Increase in retained earnings due to merger of
non-consolidated subsidiaryEnding balance

Deferred Gains or Losses on Hedges:
Beginning balance
Net change during the year
Ending balance

Subscription Rights to Shares:
Beginning balance
Net change during the year
Ending balance
Total Net Assets:
Beginning balance
Profit attributable to owners of parent
Dividends paid
Treasury stock acquisition
Treasury stock disposal
Consolidation of subsidiaries
Net changes in items other than those in shareholders’ equity
Ending balanceSee notes to consolidated financial statements.

Consolidated Statement of Cash Flows
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019
U.S. Dollars(Thousands)

Yen(Millions)(Note 1)

2018

2019

2019

Cash Flows from Operating Activities:
Profit before income taxes
Depreciation and amortization
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Exchange (gain) loss
(Gain) loss on disposal of fixed assets
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Other, net
SubtotalInterest and dividends received
Income taxes paid
Net cash provided by operating activities¥29,323
7,994
127
(889)
(134)
(4,790)2,004(4,710)(207)(1,410)27,307857(7,185)
20,979¥20,179
8,581
70(1,121)
22
586
1,586
1,033
(1,013)(240)
29,684
1,152(5,006)25,830$184,187
78,328641(10,240)
209
5,354
14,477
9,429(9,246)(2,197)
270,942
10,522(45,700)
235,764

Cash Flows from Investing Activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchases of short-term investments
Proceeds from sales of short-term investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Other, net
Net cash used in investing activities－－(2,000)2,000(16,524)
6,033(1,162)(1,082)(12,735)(1,635)
1,635
－
1,000
(15,391)
81
(802)
(133)
(15,246)(14,928)
14,928－9,127(140,485)
746(7,324)(1,221)(139,157)

Cash Flows from Financing Activities:
Repayment of short-term loans payable
Proceeds from long-term loans payable
Cash dividends paid
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities(56)－(8,170)(3,004)
162(11,069)－635(9,830)(4,083)
1,147(12,132)－
5,795(89,729)(37,274)
10,474(110,734)(2,571)(5,396)
118,956¥113,560(1,149)(2,697)
113,560¥110,863(10,493)(24,620)
1,036,514$1,011,894

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and Cash Equivalents at the Beginning of Year
Cash and Cash Equivalents at the End of YearSee notes to consolidated financial statements.

Notes to Consolidated Financial Statements
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2018 and 2019

1. Summary of Significant Accounting Policies
a Basis of presentation
The accompanying consolidated financial statements of Mabuchi Motor Co., Ltd. (the “Company”) and consolidated subsidiaries areprepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects to the applicationand disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.
For the purpose of this report, certain reclassifications have been made to present the accompanying consolidated financial
statements in a format which is familiar to readers outside Japan.
The consolidated financial statements are expressed in Japanese yen. However, the consolidated financial statements as of, and forthe year ended December 31, 2019, have been translated into U.S. dollars at the rate of ¥109.56 = U.S.$1, the approximate exchange
rate prevailing on December 31, 2019. Those U.S. dollar amounts presented in the consolidated financial statements and related notes
are included solely for the convenience of the reader. This translation should not be construed as a representation that all the amounts
shown could be converted into U.S. dollars.
b Principles of consolidation
The consolidated financial statements include the accounts of the Company and all significant subsidiaries. All significant inter-company
balances, transactions, and profits have been eliminated on consolidation. Investments in an unconsolidated subsidiary are stated atcost.
c Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statement of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets which are translated at their historical exchange rates. Revenue andexpense accounts are translated at the average rate of exchange in effect during the year. Differences arising from the translation arepresented as foreign currency translation adjustments in the consolidated financial statements.
d Cash equivalents
For the purposes of the consolidated statement of cash flows, the Company considers all highly liquid debt instruments purchased withan original maturity of three months or less to be cash equivalents.
e Short-term investments and investment securities
The Company classifies securities as “trading securities,” when they are held for the purpose of earning capital gains in the short-term,“held-to-maturity,” where management has the positive intent and ability to hold the securities to maturity, and “other securities,” where
those securities are not classified as either trading or held-to-maturity, which represent primarily available-for-sale securities.
Held-to-maturity securities are reported at amortized cost. Available-for-sale securities are stated at fair value with changes in
unrealized holding gains or losses, net of the applicable income taxes, presented in a separate component of net assets. However,when the fair value of held-to-maturity securities and available-for-sale securities declines significantly and the decline is considered tobe irrecoverable, such unrealized holding losses are recognized as impairment losses. Available-for-sale securities for which fair value
is not readily determinable are stated at moving average cost.
Corporate bonds classified as held-to-maturity securities and debt securities (corporate bonds) classified as available-for-salesecurities include compound financial instruments.
The Company considers a decline in the value of securities to be irrecoverable where market values decline to more than 50% of
acquisition costs. Where market values decline to between 30% and 50% of acquisition costs, the Company judges the necessity ofrecognizing any impairment losses by assessing the potential of market values to recover taking into consideration declining pricetrends and other individually relevant factors.
fInventories
Finished goods, work in process and raw materials are stated at average cost, however, where net realizable value is lower th an cost,
the carrying value of the inventory is reduced.
g Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. Depreciation is computed primarily using the declining-balance method for theCompany (except for certain buildings) and for overseas subsidiaries, principally using the straight-line method over their estimateduseful lives. Buildings acquired by the Company on or after April 1, 1998 and facilities attached to buildings and structures acquired on
or after April 1, 2016 are depreciated using the straight-line method. Maintenance and repairs, including minor repairs and improvements,
are charged to income as incurred.
h Leased assets
Assets under finance leases, except for those under lease agreements which stipulate the transfer of ownership of the leased assets
to the lessee, are depreciated using the straight-line method over the lease period with the assumption that there is no residual value.
i
Allowance for doubtful accounts
The allowance to provide for potential loss on receivables is provided at the estimated amount of irrecoverable receivables. Allowancefor ordinary debt is computed based on the historical rate of default. For certain debts, such as those where recovery is dou btful, thelikelihood of recovery is considered on an individual basis.
The allowance for doubtful accounts is adjusted after offsetting receivables and payables between consolidated subsidiaries.
j
Accrued bonuses due to employees
Accrued bonuses due to employees are provided at the estimated amount to be paid to employees for the services rendered by thebalance sheet date.
k Accrued bonuses due to directors
Accrued bonuses due to directors and executive officers are provided at the estimated amount to be paid to directors and executive
officers for the services rendered by the balance sheet date.
l
Accrued benefits for stock payment
Accrued benefits for stock payment are provided at the amount of stocks to be paid to directors through the trust by the balance
sheet date based on the performance-linked stock compensation plan.
m Retirement benefits

(a) Allocation of projected retirement benefit obligation
In calculating the retirement benefit obligation, the benefit formula basis is used to allocate the projected retirement benefit obligation
to the estimated years of service of eligible employees.
(b) Method for amortizing actuarial gain or loss and prior service cost
Actuarial gains and losses are amortized commencing from the year following the year in which the gains or losses arose, primarily
using the straight-line method within the average remaining years of service of the employees, which is mainly 10 years.
Prior service costs are amortized using the straight-line method mainly over 10 years.
(c) Application of simplified method at smaller-sized companies, etc.
Certain subsidiaries have pension plans similar to the Company or unfunded retirement and termination allowance plans for
qualifying employees. Any amounts required under the rules of the plans have been fully accrued.
n Income taxes
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax basesof assets and liabilities and their reported amounts using current enacted tax rates.
o Derivative and hedging activities
If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, the Company
defers recognition of gains or losses on revaluation of the forward foreign exchange contract until the related losses or gains on thehedged items are recognized.
p Accounting standards issued but not yet effective
Revenue Recognition(a) “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29 issued March
30, 2018)(b) “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued March 30, 2018)
1） Overview
The Accounting Standard and the Implementation Guidance provide comprehensive principles for revenue recognition. An entity
applies the following five steps to recognize revenue.
① Identify the contracts with a customer② Identify the separate performance obligations in the contract③ Determine the transaction price④ Allocate the transaction price to the performance obligations⑤ Recognize revenue when or as the performance obligation is satisfied
2） Scheduled date of adoption
The Company expects to adopt the Accounting Standard and the Implementation Guidance from the fiscal year beginning January
1, 2022.
3） Impact of adopting the accounting standards
The Company is currently evaluating the impact of adopting the Accounting Standard and the Implementation Guidance on its
consolidated financial statements.
q Changes in presentation(Changes in line with the application of the “Partial Amendments to Accounting Standard for Tax Effect Accounting”)
The Company applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February
16, 2018) from the beginning of the fiscal year ended December 31,2019. Therefore, deferred tax assets were presented in Investments
and Other Assets, deferred tax liabilities were presented in Long-term Liabilities, and notes regarding tax effect accounting were
updated.
As a result, in the consolidated balance sheet for the previous fiscal year, “Deferred tax assets” in the amount of ¥374 million, which
had been included in “Current Assets” of ¥1,570 million were included in “Deferred tax assets” of ¥825 million in “Investments andOther Assets” and “Deferred tax assets” of ¥1,196 million and “Deferred tax liabilities” of ¥69 million, which had been included in“Current Assets” and “Current Liabilities”, respectively, were included in “Deferred tax liabilities” of ¥1,393 million in “Long-term
Liabilities”.
Note 8, excluding total amount of valuation allowance, and Note 9 of “Accounting Standard for Tax Effect Accounting” prescribed in
Paragraphs 3 to 5 of Partial Amendments to Accounting Standard for Tax Effect Accounting were reflected in the notes regarding tax
effect accounting.
However, comparative information for the fiscal year ended December 31, 2018 was not disclosed in accordance with the transitional
measures prescribed by Paragraphs 7 of Partial Amendments to Accounting Standard for Tax Effect Accounting.
r Additional information(Accounting Treatment for Transactions of Delivering the Company’s Own Stock to Employees, etc., through Trusts)
1. Outline of transactions
The Company implemented an E-Ship® Trust-Type Employee Stock Ownership Incentive Plan (hereinafter, “the Incentive Plan) . The
purpose of the Incentive Plan is to promote the constant development of the Company by motivating and encouraging enthusiasm
among employees. This will be accomplished by providing incentives to raise the medium- to long-term corporate value of the Company,
enhancing the employee welfare program, and facilitating capital participation as shareholders of the Company.
The Incentive Plan is available to all employees who belong to the Mabuchi Motor Employee Shareholders Association (hereinafter,“the Employee Shareholders Association”). Under the Incentive Plan, the Company will establish a trust—the Mabuchi Motor Employee
Shareholders Association Exclusive Trust (hereinafter, “the Employee Shareholders Association Exclusive Trust”)—through a trust bank.
The Employee Shareholders Association Exclusive Trust will estimate the number of shares that the Employee Shareholders
Association is likely to acquire over the next three years and will purchase this amount in advance using bank loans. Subsequently, theEmployee Shareholders Association Exclusive Trust will continuously sell Company shares to the Employee Shareholders Association
and, if an amount equivalent to net gains on Company shares has accumulated in the Employee Shareholders Association Exclusive
Trust when the trust period comes to an end, such money will be distributed as residual assets to members of the Employee
Shareholders Association who meet the beneficiary eligibility criteria. Please note that the Company will guarantee loans taken out topurchase Company shares and will repay any outstanding portion of the loans if, due to a drop in the market price of Company shares,
an amount equivalent to the loss on sale of shares has accumulated in the Employee Shareholders Association Exclusive Trust when
the trust period comes to an end.
The Company applied the “Revised Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc.
through Trusts” (ASBJ PITF No.30 revised on March 26, 2015).
2. Treasury shares remaining in the trust
Shares of the Company remaining in the trust are recorded as treasury stock under net assets based on the carrying value (net of
associated costs) in the trust. The carrying value was ¥634 million ($5,795 thousand) at December 31, 2019.
Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the Employee

Shareholders Association Exclusive Trust account. The number at year-end and the weighted average number of such treasury shareswere 139,100 and 7,241 shares, respectively, during the fiscal year ended December 31, 2019.
3. Carrying value of loans recorded based on the gross method
As of December 31, 2019: ¥635 million ($5,795 thousand)(Accounting Treatment for Performance-based Stock Compensation Plan for Directors and Executive Officers)
1. Outline of transactions
The Company has introduced the Executive Compensation BIP (Board Incentive Plan) Trust Plan, the executive remuneration systemclosely linked to the achievement of performance targets as set out in the medium-term management plan, with the purpose ofenhancing the motivation of Directors to contribute to improved business performance and increased corporate value over the medium
term.
Under the Plan, the Company’s shares acquired through the BIP Trust and money equivalent to the amount obtained by converting
the Company’s shares into cash (collectively, the “Company Shares, etc.”) will be delivered and paid (the “Delivery, etc.” or “delivered,etc.”) to those serving as Directors, etc., during the target period based on factors such as the status and level of attainment of
performance targets throughout the trust term. Directors, etc., will receive the Delivery, etc., of Company Shares, etc., during a certain
timeframe following the end of the target period. Originally, the target period was over the three-year period from the fiscal year ended
December 31, 2016, to the fiscal year ended December 31, 2018. However, the plan was extended and the target period is over thethree-year period from the fiscal year ending December 31, 2019, to the fiscal year ending December 31, 2021.
The Company applied the “Revised Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc.,
through Trusts” (ASBJ PITF No. 30 revised on March 26, 2015).
2. Treasury shares remaining in the trust
Shares of the Company remaining in the trust are recorded as treasury stock under net assets through the carrying value (net of
associated costs) in the trust. The carrying value was ¥651 million at December 31, 2018 and ¥904 million ($8,259 thousand) at
December 31, 2019.
Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the BIP Trustaccount. The number of such treasury shares at December 31, 2018 was 116,386 shares, and at December 31, 2019 was 203,226
shares, and the number of such treasury shares during the fiscal year ended December 31, 2018 was 116,386 shares and during the
fiscal year ended December 31, 2019 was 133,971 shares.

2.

Changes in Net Assets
Information regarding changes in net assets for the years ended December 31, 2018 and 2019, is as follows:a Shares issued and outstanding / Treasury stock2018
Shares Issued (Thousands)
Treasury Stock (Thousands)
Type of shares
Common stock
Common stock
Number of shares as of December 31, 201769,125
1,513
Increase in number of shares
563
Decrease in number of shares
563
637
Number of shares as of December 31, 2018
68,562
1,440
Note: 1. The decrease in the number of shares issued and the number of shares of treasury stock was due to the cancellation of 563
thousand shares.
2. The increase in the number of shares of treasury stock was due to the purchase of 563 thousand shares of treasury stock andthe purchase of 0 thousand shares of less than one unit.
3. The decrease in the number of shares of treasury stock was, other than Note 1, due to sales of 51 thousand shares to themarket accompanied by the expiration of the ESOP Trust period, sales of 12 thousand shares to Our Shareholding Associationby the ESOP Trust, disposition of 9 thousand treasury shares as restricted stock compensation, and the exercise of 1 thousandstock options.
4. There were 63 thousand shares and - thousand shares of treasury stock held by the ESOP Trust included in the number ofshares of treasury stock as of January 1, 2018 and December 31, 2018, respectively and there were 116 thousand shares and
116 thousand shares of treasury stock held by the BIP Trust included in the number of shares of treasury stock as of January
1, 2018 and December 31, 2018, respectively.

2019
Shares Issued (Thousands)
Treasury Stock (Thousands)
Type of shares
Common s toc kCommon s toc k
Number of shares as of December 31, 2018
68,562
1,440
Increase in number of shares
1,038
Decrease in number of shares
309
Number of shares as of December 31, 2019
68,562
2,169
Note: 1. The increase in the number of shares of treasury stock was due to the purchase of treasury stock, the BIP Trust, the Employee
Shareholders Association Exclusive Trust, and the purchase of shares of less than one unit( 777 thousand, 121 thousand, 139
thousand, and 0 thousand shares, respectively).
2. The decrease in the number of shares of treasury stock was due to disposition of 14 thousand treasury shares as restricted
stock compensation, allocation of 121 thousand shares and 139 shares to the third party representing the BIP Trust and the
Employee Shareholders Association Exclusive Trust, respectively, sales of 17 thousand and distribution of 16 thousand sharesof treasury stock held by the BIP Trust.
3. There were - thousand shares and 139 thousand shares of treasury stock held by the Employee Shareholders Association
Exclusive Trust included in the number of shares of treasury stock as of January 1, 2019 and December 31, 2019, respectively
and there were 116 thousand shares and 203 thousand shares of treasury stock held by the BIP Trust included in the numberof shares of treasury stock as of January 1, 2019 and December 31, 2019, respectively.

b

Share subscription rights

2018

Number of shares issued

Company

Description

Type of sharesissuedNumber ofshares at
January 1,
2018

Increase

Decrease

Number ofshares at
December 31,
2018

Balance at
December 31,
2018
Yen (Millions)

―

―

―

―

―

¥124

―

―

―

―

―

¥124

Subscription rights
as stock options
Total

Parent Company

2019

Number of shares issued

Company

Description
Subscription rights
as stock options
Total

Parent Company

Type of sharesissuedNumber ofshares at
January 1,
2019

Increase

Decrease

Number ofshares at
December 31,
2019

Balance at
December 31,
2019
Yen (Millions)

U.S. Dollars(Thousands)

―

―

―

―

―

¥124

$1,134

―

―

―

―

―

¥124

$1,134c Dividends
Dividends paid during the fiscal year ended December 31, 20182018
Shareholders’ Meeting
Board of Directors’ Meeting
Resolution by
March 29, 2018
August 10, 2018
Total amount of dividends¥4,474 million¥3,698 million
Dividends per share¥66¥55
Record date
December 31, 2017
June 30, 2018
Effective date
March 30, 2018
September 14, 2018
Note: Dividends approved at the shareholders’ meeting on March 29, 2018 paid to the ESOP Trust and the BIP Trust in the amount of¥11 million have been included in the total amount of dividends. Dividends approved at the Board of Directors’ meeting on August
10, 2018 paid to the ESOP Trust and the BIP Trust in the amount of ¥9 million have been included in the total amount of dividends.

Dividends whose record date was in the fiscal year ended December 31, 2018, but whose effective date was in the following fiscal year
2018
Shareholders’ Meeting
Resolution by
March 28, 2019
Total amount of dividends¥5,379 million
Dividends per share¥80
Record date
December 31, 2018
Effective date
March 29, 2019
Note: Dividends paid to the BIP Trust in the amount of ¥9 million have been included in the total amount of dividends.

Dividends paid during the fiscal year ended December 31, 20192019
Shareholders’ Meeting
Board of Directors’ Meeting
Mar c h 28, 2019
Augus t 9, 2019
¥5,379 million¥4,453 million
Total amount of dividends( $49,097 thous and)( $40,652 thous and)
¥80
¥67
Dividends per share( $0.73)( $0.61)
Record date
Dec ember 31, 2018
J une 30, 2019
Effective dateMar c h 29, 2019
September 17, 2019
Note: Dividends approved at the shareholders’ meeting on March 28, 2019 paid to the BIP Trust in the amount of ¥9 million ($84
thousand) have been included in the total amount of dividends. Dividends approved at the Board of Directors’ meeting on Augus t
9, 2019 paid to the BIP Trust in the amount of ¥5 million ($50 thousand) have been included in the total amount of dividends.
Resolution by

Dividends whose record date was in the fiscal year ended December 31, 2019, but whose effective date was in the following fiscal year
2019
Shareholders’ Meeting
Mar c h 27, 2020
¥4,538 million
Total amount of dividends( $41,420 thous and)
¥68
Dividends per share( $0.62)
Record date
Dec ember 31, 2019
Effective dateMar c h 30, 2020
Note: Dividends paid to the Employee Shareholders Association Exclusive Trust and the BIP Trust in the amount of ¥23 million ($212
thousand) have been included in the total amount of dividends.
Resolution byd Stock options
The Company issued the following share subscription rights for the purchase of new shares of common stock in accordance with the
Corporation Law of Japan.
For the years ended December 31, 2018 and 2019, the Company didn’t recognize nor allocate share-based compensation costs.
A description of the 2013, 2014, 2015, 2016 and 2017 Stock Option Plans as of December 31, 2019, respectively, are summarized asfollows:

Grantee categories andnumber of grantees
Number of shares
Grant date
Vesting conditions
Service period
Exercisable period

2013 Stock
Option Plan

2014 Stock
Option Plan

2015 Stock
Option Plan

2016 Stock
Option Plan

2017 Stoc kO ption Plan
6 dir ec tor s of the

6 directors of theCompany

6 directors of theCompany

6 directors of theCompany

11,940 shares of

7,980 shares of

4,650 shares of

10,360 shares of

the Company
8,180 s har es ofcommon stock
May 20, 2013
None
None
May 21, 2013 tocommon stock
April 21, 2014
None
None
April 22, 2014 tocommon stock
April 20, 2015
None
None
April 21, 2015 tocommon stock
April 20, 2016
None
None
April 21, 2016 toc ommon s toc k
Apr il 20, 2017
None
None
Apr il 21, 2017 to

May 20, 2033

April 21, 2034

April 20, 2035

April 20, 2036

Apr il 20, 2037

6 directors of the Company

Company

5 executive officers of

4 ex ec utiv e offic er s of

the Company

Note: The Company conducted a 2-for-1 stock split of its common stock on January 1, 2015. The number of shares for fiscal 2013 and2014 reflect the stock split.
The following table summarizes the option activity under the stock option plans referred to above.
2013 Stock
Option Plan

2014 Stock
Option Plan

Number of shares2016 Stock
Option Plan

2015 Stock
Option Plan

2017 Stoc kO ption Plan

Non-vested:
Outstanding as of December 31, 2018
GrantedForfeited
VestedOutstanding as of December 31, 2019

-

-

-

-

-

Vested:Outstanding as of December 31, 2018
VestedExercised
Forfeited
Outstanding as of December 31, 2019

5,800
5,800

3,880
3,880

3,810
3,810

7,800
7,800

7,630
7,630

-

Note: Number of stock options are listed after conversion to share numbers.
Price information of stock options for the 2013, 2014, 2015, 2016 and 2017 Stock Option Plans are summarized as follows:2013 Stock
Option Plan
Yen
Exercise price
Average price on exercise
Fair value on grant date

¥1
4,967

2014 Stock
Option Plan
Yen
¥1
6,158

2015 Stock
Option Plan
Yen
¥1
5,465

2016 Stock
Option Plan
Yen
¥1
4,699

2017 Stoc kO ption Plan
Yen
¥1
5,304

Since it is fundamentally difficult to reasonably estimate the forfeited number of stock options for future periods, an estim ation of thevested number is based upon actual forfeitures in prior periods.

3.

Cash and Cash Equivalents

Cash and cash equivalents at the end of the year in the accompanying consolidated statement of cash flows are reconciled to c ash andbank deposits reported in the accompanying consolidated balance sheet as of December 31, 2018 and 2019, as follows:

Cash and bank deposits
Time deposits with maturities over three months at the time of purchase
Short-term investments
Securities exposed to price risk
Cash and cash equivalents

4.

Yen (Millions)
2018
2019
¥113,066¥110,369
(6)
( 6)
2,500
2,301
(2,000)( 1,801)¥113,560¥110,863

U.S. Dollars (Thousands)
2019$1,007,386( 55)
21,002( 16,438)$1,011,894

Financial Instruments(1) Financial instrumentsa. Policies for financial instruments
The Company funds R&D expenditure and equipment investment through retained earnings to maintain a sound financial position.
According to this policy, the Company limits the management of surplus funds to short-term deposits and other highly secure financial
assets. The Company uses derivatives to mitigate risks as described below and does not engage in speculative transactions.
b. Financial instruments description and risks
Trade notes and accounts receivable are exposed to customer credit risk and some are also exposed to foreign currency risk.
Short-term investments and investment securities, primarily securities and investments in stocks of trading partners, are exposed t o
the risk of fluctuations in market prices.
Trade notes and accounts payable are due within one year, and some are exposed to foreign currency risk.
The Company uses forward foreign exchange contracts to hedge the risk of foreign exchange fluctuations associated with receivables
and payables and forecasted transactions denominated in foreign currencies.
c. Risk management of financial instruments
1. Management of credit risk (risks associated with the default of counterparties)
The Company and its consolidated subsidiaries manage credit risk in compliance with internal control rules and procedures. Th e due
dates and the balances of trade notes and accounts receivable from major counterparties are monitored and managed regularly to ensur eearly detection and to mitigate the risk of doubtful receivables.
2. Management of market risk (risks associated with fluctuations in foreign exchange rates and interest rates)
The Company and some of its consolidated subsidiaries hedge the risk of foreign exchange rate fluctuations on foreign currenc y
denominated receivables and payables and forecasted transactions, using foreign exchange forward contracts on a monthly andindividual currency basis. The Company enters into exchange contracts based on the decision of the Board of Directors and these aremonitored regularly by the head office accounting and finance department.
The Company monitors the fair value and the financial position of the respective issuers of short-term investments and investment
securities regularly in the head office accounting and finance department, and continually reviews the condition of stocks held. The
Company reports the condition of stocks held and their fair value to the Board of Directors, and monitors the rating and financial conditionsof issuers.
3. Management of liquidity risk related to financing activities (risk of non-payment on due date)
The Company manages liquidity risk centrally through the accounting and finance department, which ensures a certain amount of liquidity
through the preparation and update of cash forecasts based on reports from each department and the finance plans prepared by theaccounting departments of each subsidiary.
d. Supplemental information on the fair value of financial instruments
The Company calculates the fair value of financial instruments based on market prices, or by using reasonable estimates when market
prices are not available.
These estimates include variable factors, and therefore may change depending on changes in the underlying assumptions. The
contract amounts of the derivatives described in Note 6. Derivative Financial Instruments are not indicative of the market risk associatedwith derivatives transactions.
(2) Fair value of financial instruments
The carrying value, fair value and variance for financial instruments as of December 31, 2018 and 2019, were as follows. Fair values
that are not readily determinable are not included in the following table.

Yen (Millions)
2018
Fair value

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

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

Variance¥113,066
23,90911,433¥148,409¥113,066
23,90911,433¥148,409¥¥-¥6,376¥6,376¥6,376¥6,376¥¥-

Carrying value

Yen (Millions)
2019
Fair value¥110,369
21,913
13,178¥145,461¥110,369
21,913
13,178¥145,461¥ ¥ -$1,007,386
200,009120,288$1,327,684$1,007,386
200,009120,288$1,327,684$ $ -¥6,003¥6,003¥6,003¥6,003¥ ¥ -$54,797$54,797$54,797$54,797$ $ -Variance

U.S. Dollars (Thousands)
2019
Carrying value
Fair value

Variance

1: Method for calculating the fair values of financial instruments, short-term investments and derivative transactions
Assets:(1) Cash and bank deposits, (2) Trade notes and accounts receivable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
(3) Short-term investments and investment securities
Market prices on securities exchanges are used to determine the fair value of stock. Prices quoted by exchanges or financial institutions
are used to determine the fair value of bonds.
Liabilities:
Trade notes and accounts payable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
Derivative instruments:
Please refer to Note 6. Derivative Financial Instruments.
2: Carrying value of financial instruments for which fair values were extremely difficult to determine
Yen (Millions)
2018
¥275

Unlisted stocks

2019
¥103

U.S. Dollars (Thousands)
2019
$941

These items are not included in “(3) Short-term investments and investment securities” because market prices do not exist for these
items and their fair values are not readily determinable.
3: Redemption schedule for receivables and marketable securities with maturities at December 31, 2018 and 2019

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

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

Within 1 year
¥113,066
23,909Yen (Millions)2018
1-5 years
¥-

2,000
500
¥139,475¥-

Within 1 year
¥110,369
21,913

Yen (Millions)2019
1-5 years¥ -5-10 years
¥ -

1,801
500
¥134,583¥ -¥ -5-10 years¥-¥-

U.S. Dollars (Thousands)
2019
Within 1 year
1-5 years$1,007,386$ 200,009-

16,4384,563$1,228,398$ -5-10 years
$ -

$ -

5.

Investment Securities

The carrying value, fair value and variance for held-to-maturity securities as of December 31, 2018 and 2019, were as follows:(1) Held-to-maturity securities
Not applicable for the years ended December 31, 2018 and 2019.
The acquisition cost, carrying value and variance for other securities as of December 31, 2018 and 2019, were as follows:(2) Other securities
Yen (Millions)2018
Acquisition cost

Carrying value
Securities whose carrying value exceeds their acquisition cost
Stock
Credit (Corporate bonds)
Subtotal
Securities whose acquisition cost exceeds their carrying value
Stock
Credit (Corporate bonds)
Other
Subtotal
Total

Variance¥5,1531,000
6,153¥1,942
1,000
2,942¥3,211
0
3,211

3,283
1,000
995
5,279
¥11,433

3,585
1,000
1,000
5,585
¥8,528

(301)
(4)
(305)
¥2,905

Note: Unlisted stocks of ¥41 million are not included in “Other securities” because their market prices do not exist and their fair values
are not readily determinable.

Securities w hose carry ing v alue ex ceeds their acquisition cost
Stock
Credit (Corporate bonds)
Other
Subtotal
Securities w hose acquisition cost ex ceeds their carry ing v alue
Stock
Credit (Corporate bonds)
Other
Subtotal
Total

Carrying value

Yen (Millions)2019
Acquisition cost

¥8,926
1,000
542
10,468¥4,028
1,000
500
5,528

¥4,8970
42
4,939$81,473
9,127
4,950
95,551$36,773
9,127
4,563
50,464$44,6990386
45,086

1,409
801
500
2,710
¥13,178

1,499
801
500
2,800
¥8,329

( 89)
( 0)
( 90)
¥4,84912,861
7,311
4,563
24,737$120,288

13,683
7,312
4,563
25,559$76,024( 821)( 1)( 822)$44,264

Variance

U.S. Dollars (Thousands)
2019
Carrying value
Acquisition cost

Variance

Note: Unlisted stocks of ¥33 million ($302 thousand) are not included in “Other securities” because their market prices do not exist andtheir fair values are not readily determinable.
(3) Other securities soldNot applicable for the years ended December 31, 2018 and 2019.
(4) Held-to-maturity securities soldNot applicable for the years ended December 31, 2018 and 2019.

6.

Derivative Financial Instruments

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

(1) Derivative transactions for which hedge accounting is not applied
1. Forward exchange contracts and currency option transactions
Yen (Millions)2018
Maturity over 1 year

Contract amountNon-market transactions
Forward exchange contracts
Sell US$
Total¥19,708¥19,708¥¥-¥23,083¥23,083¥ ¥ -$210,689$210,689$ $ -Revaluation gain/loss¥3¥3

Fair value

Revaluation gain/loss

¥9
¥9

¥9
¥9

U.S. Dollars (Thousands)
2019
Maturity over 1 year
Fair value

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

¥3
¥3

Yen (Millions)2019
Maturity over 1 year

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

Fair value

Revaluation gain/loss

$90
$90

$90
$90

Fair value

Revaluation gain/loss¥9,918¥9,918¥532¥532

Fair value

Revaluation gain/loss¥8,294¥8,294¥1,183¥1,183

2. Forward precious metal contracts
Yen (Millions)2018
Maturity over 1 year

Contract amountNon-market transactions
Buy
Total

¥9,385¥9,385¥5,654¥5,654
Yen (Millions)2019
Maturity over 1 year

Contract amountNon-market transactions
Buy
Total

¥7,110¥7,110¥3,108¥3,108

U.S. Dollars (Thousands)
2019
Maturity over 1 year
Fair value

Contract amountNon-market transactions
Buy
Total

$64,901$64,901$28,376$28,376$75,707$75,707

Revaluation gain/loss$10,805$10,805(2) Derivative transactions for which hedge accounting is applied
Dividends receivable from foreign subsidiaries
Yen (Millions)2018
Hedge accounting method
Principle-based accounting

Hedging instrument
Forward exchange contracts
Sell US$

Hedged item
Dividends

Total

Contract amount

Maturity over 1 year

Fair value¥4,314¥4,314

¥¥-

¥(53)
¥(53)

Contract amount

Maturity over 1 year

Fair value

¥539
¥539

¥ ¥ -

¥( 3)
¥( 3)

Maturity over 1 year

Fair value$ $ -$( 27)$( 27)Yen (Millions)
2019
Hedge accounting method
Principle-based accounting

Hedging instrument
Forward exchange contracts
Sell US$

Total

Hedge accounting method
Principle-based accounting
Total

Hedging instrument
Forward exchange contracts
Sell US$

Hedged item
Dividends

U.S. Dollars (Thousands)
2019
Hedged item
Contract amount
Dividends$4,919$4,919

7.

Retirement Benefit Plans

The table below sets forth the plans’ status and amounts recognized in the consolidated balance sheets at December 31, 2018 and 2019.
1. Movement in retirement benefit obligations

Beginning balance
Service cost
Interest cost
Actuarial loss (gain)
Benefit paid
Other
Ending balance

Yen (Millions)
2018
2019
¥12,130¥11,455
479
479
73
55
(157)
77
(909)
( 595)(161)
26¥11,455¥11,499

U.S. Dollars (Thousands)
2019$104,557
4,377
510
710
( 5,436)
241$104,960

Yen (Millions)2018¥10,013
100
89
451
(661)
(119)
¥9,873

2019¥9,87395
170
462( 567)( 241)¥9,794

U.S. Dollars (Thousands)
2019$90,122
876
1,559
4,221
( 5,177)( 2,205)$89,396

2019
¥415
59
( 35)
( 5)
¥434

U.S. Dollars (Thousands)
2019$3,795544( 321)( 51)$3,966

2. Movement in plan assets

Beginning balance
Expected return on plan assets
Actuarial gain (loss)
Contributions paid by the employer
Benefit paid
Other
Ending balance

3. Movement in retirement benefit obligations calculated using the simplified method

Beginning balance
Retirement benefit cost
Benefit paid
Other
Ending balance

Yen (Millions)
2018
¥415
61
(44)
(16)
¥415

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

Unfunded retirement benefit obligations
Total net liability for retirement benefits at December 31

Yen (Millions)
2018
2019
¥11,455¥11,499(9,873)( 9,794)
1,581
1,705
415
434
¥1,997¥2,139U.S. Dollars (Thousands)
2019$104,960( 89,396)
15,563
3,966$19,530

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

Yen (Millions)2018¥1,997¥1,9972019¥2,139¥2,139U.S. Dollars (Thousands)
2019$19,530$19,530

Yen (Millions)
2018
¥479
73
(100)
180
0
61
288
¥984

2019
¥479
55
( 95)
159
0
59
96
¥756

U.S. Dollars (Thousands)
2019$4,377510( 876)
1,455
6
544
883
$6,901

Funded retirement benefit obligations
Plan assets

5. Retirement benefit costs

Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial gain
Amortization of prior service cost
Retirement benefit costs applying a simplified method
Other
Total retirement benefit costs for the fiscal y ear ended December 31

6. Retirement benefits liability adjustments before tax effect in other comprehensive income
Yen (Millions)2018
Prior service cost
Actuarial loss
Total balance amount for the year

2019
¥0
252
¥253

¥0
408
¥409

U.S. Dollars (Thousands)
2019
$6
2,303
$2,310

7. Retirement benefits liability adjustments before tax effect in accumulated other comprehensive income
Yen (Millions)2018
Unrecognized prior service cost
Unrecognized actuarial loss
Total balance amount for the year

¥0
1,150
¥1,151

2019
¥0
898
¥898

U.S. Dollars (Thousands)
2019
$1
8,198
$8,2008. Plan assets
The fair values of plan assets, by major category, as a percentage of total plan assets were as follows:①

Plan assets at December 31, 2018 and 2019, comprise:

General accounts
Bonds
StocksCash and deposits
Other
Total

2018
67.6%
13.4%
5.1%
3.0%
10.9%
100.0%

2019
66.1%
12.4%
5.6%
3.5%
12.4%
100.0%② Long-term expected rates of return
The expected rates of return on plan assets have been estimated based on the anticipated allocation to each asset class and the
expected long-term returns on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
Discount rates
Expected rates of return on plan assets
Expected rates of salary increase

8.

2018
Mainly 0.3%
Mainly 1.0%
Mainly 2.8%

2019
Mainly 0.4%
Mainly 1.0%
Mainly 2.7%

Income Taxes

1. Income taxes in Japan applicable to the Company consist of corporation tax, inhabitant’s taxes and enterprise tax, which, in theaggregate, resulted in statutory rates of approximately 30.7% and 30.5% for the years ended December 31, 2018 and 2019, respectively.
Income taxes of the foreign consolidated subsidiaries are based generally on the tax rates applicable in their countries of incorporation.
The reconciliation between the effective tax rates reflected in the consolidated statement of income and the effective statut ory tax rates
for the years ended December 31, 2018 and 2019 was as follows:

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

2018
Percentage
30.7
0.9
(9.8)
(1.3)
0.9
2.0
(1.6)
21.8

2019
Percentage
30.5
1.1( 5.6)( 1.0)
1.9
1.7
0.9
29.5

2. The significant components of deferred tax assets and liabilities at December 31, 2018 and 2019, were as follows:
Yen (Millions)
2019

U.S. Dollars (Thousands)
2019

¥85
138
537
320
247
71
11
93
16
1,455
1,068
436
4,482
-

¥88
141
508
247
71
7
27
0
1,312
1,436
427
4,270
( 1,436)

$811
1,295
4,645
2,261
650
64
250
8
11,981
13,107
3,905
38,981( 13,107)-( 441)( 4,031)(1,550)¥2,931( 1,877)¥2,392( 17,139)$21,841¥(2,480)
(54)
(885)
(79)
¥(3,499)¥(567)¥( 2,853)( 52)( 1,393)( 105)¥( 4,404)¥( 2,011)$( 26,043)( 481)( 12,716)( 960)$( 40,202)$( 18,360)

2018
Deferred tax assets:
Enterprise tax payable
Depreciation
Liability for retirement benefits
Loss on retirement of fixed assets
Valuation losses on investment securities and other assets
Valuation losses on golf club membership
Impairment loss
Net unrealized holding gains on securities
Deferred gains or losses on hedges
Unrealized profits on inventories and fixed assets
Loss carried forward (Note)
Other
Subtotal
Valuation allowance for tax loss carried forward (Note)
Valuation allowance for total amount of future deductible
temporary differences, etc.
Subtotal
Total
Deferred tax liabilities:
Tax on undistributed earnings in foreign subsidiaries
Reserve for reduction entry
Unrealized holding gains on securities
Other
Total
Net deferred tax assets (liabilities)

Loss carried forward
Valuation allowance
Deferred tax assets

Loss carried forward
Valuation allowance
Deferred tax assets

Within 1 year
¥ -Within 1 year
$ -1-2 years¥ -1-2 years$ -2-3 years
¥2
( 2)
-

Yen (Millions)2019
3-4 years
¥49
( 49)
-

U.S. Dollars (Thousands)
2019
2-3 years
3-4 years
$21
$447
( 21)
( 447)-＊: Loss carried forward was calculated by multiplying the effective statutory tax rate.

4-5 years¥146( 146)-

Over 5 years¥1,238( 1,238)-

Total¥1,436( 1,436)-

4-5 years$1,333( 1,333)-

Over 5 years$11,305( 11,305)-

Total$13,107( 13,107)-

9．Consolidated Statement of Comprehensive Income
The following table presents reclassification adjustments and tax effects for each component of other comprehensive income for theyears ended December 31, 2018 and 2019.
Yen (Millions)
U.S. Dollars (Thousands)
2018
2019
2019
Net unrealized holding gains (losses) on securities:
Amount arising during the year¥(3,313)¥1,944$17,743
Reclassification adjustments for gains and losses included in net income
Amount before tax effect(3,313)
1,944
17,743Tax effect787( 508)( 4,636)
Net unrealized holding gains (losses) on securities(2,526)
1,436
13,107
Deferred gains or losses on hedges:
Amount arising during the year
73
50
459
Tax effect
(22)
( 15)
( 140)
Deferred gains or losses on hedges
50
35
319
Foreign currency translation adjustments:
Amount arising during the year
(7,517)( 2,703)( 24,675)
Retirement benefits liability adjustments:
Amount arising during the year
227
92
848
Reclassification adjustments for gains and losses included in net income
181
160
1,462
Amount before tax effect
409
253
2,310
Tax effect
(103)
( 68)
( 622)
Retirement benefits liability adjustments
306
184
1,688
Total other comprehensive income¥(9,686)¥( 1,047)$( 9,560)

10. Shareholders’ Equity
Under the Japanese Corporation Law (“the Law”), the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the newshares 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 the legal earnings reserve must be set aside as additional paidin capital or as part of the legal earnings reserve. The legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
As of December 31, 2019, the total amount of additional paid-in capital and the legal earnings reserve exceeded 25% of the common
stock; therefore, no additional transfer is required.
Additional paid-in capital and the legal earnings reserve may not be distributed as dividends. However, by a resolution at a shareholders ’meeting, additional paid-in capital and the legal earnings reserve may be transferred to other retained 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 non-consolidated financial statementsof the Company in accordance with the Law.
Year-end dividends are approved by the shareholders after the end of each fiscal year, and semiannual interim cash dividends are
declared by the Board of Directors after the end of each interim six-month period.
On September 17, 2019, interim dividends (¥67 or $0.61 per share) totaling ¥4,453 million ($40,652 thousand) were paid toshareholders based on the shareholders’ record at June 30, 2019. On March 27, 2020, the shareholders approved the declaration ofdividends (¥68 or $0.62 per share) totaling ¥4,538 million ($41,420 thousand).

11. Amounts per ShareYen
Profit attributable to owners of parent
Basic
Diluted

2018

2019

¥341.19¥341.05¥214.00¥213.91
Yen

Net assets

2018¥3,640.08

2019¥3,690.86

U.S. Dollars
2019
$1.95
$1.95
U.S. Dollars
2019$33.68Notes: 1. Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the ESOP
trust and the BIP trust during the fiscal year ended December 31, 2018. Those during the fiscal year ended December 31, 2019are computed based on the number of shares outstanding less treasury stock including shares of the Employee Shareholders
Association Exclusive Trust and the BIP trust
2. The numbers at year end of such treasury shares were 0 and 116,386 shares, respectively, during the fiscal year ended
December 31, 2018, and 139,100 and 203,226 shares, respectively, during the fiscal year ended December 31, 2019.
3. The weighted average numbers of such treasury shares were 29,988 and 116,386 shares, respectively, during the fiscal year
ended December 31, 2018, and 7,241 and 133,971 shares, respectively, during the fiscal year ended December 31, 2019.
The bases for calculation (net assets per share) are as follows:

Total net assets
Amounts deducted from total net assets:
Share subscription rights
Net assets attributable to shares of Common stock
Number of Common stock on December 31 (Shares)

Yen (Millions)
2018
2019
¥244,454¥245,172
124
124
124
124
¥244,330¥245,048
67,122,222
66,393,191

U.S. Dollars (Thousands)
2019$2,237,792
1,134
1,134
$2,236,658-

The bases for calculation (basic and diluted profit attributable to owners of parent per share) are as follows:
Yen (Millions)
2018
Profit attributable to owners of parent per share
Profit attributable to owners of parent
Amounts not attributable to ordinary shareholders
Profit attributable to owners of parent in relation to Common stock
Average number of Common stock (Shares)
Diluted profit attributable to owners of parent per share
Profit attributable to owners of parent adjustments
Increase in number of shares of Common stock (Shares)
Share subscription rights (Shares)

2019

U.S. Dollars (Thousands)
2019¥22,925
22,92567,191,599¥14,234
14,234
66,517,552$129,925
129,925-

29,24329,243

28,913
28,913-

12. Selling, General and Administrative Expenses
The main components of “Selling, General and Administrative Expenses” for the years ended December 31, 2018 and 2019, were as
follows:

Packing and freightage expenses
Salaries and wages
Provision for bonuses due to employees
Provision for bonuses due to directors
Retirement benefit expenses
Employee benefit costs
Depreciation
Provision of allowance for doubtful debts
Research expenses

Yen (Millions)2018¥1,173
9,341
262
161
596
1,927
1,565
(56)
1,159

2019
¥1,142
9,775
252
165
541
1,878
1,716
( 41)
1,075

U.S. Dollars (Thousands)
2019$10,426
89,226
2,304
1,508
4,937
17,144
15,671( 383)
9,816

13. Contingent Liabilities
As of December 31, 2018 and 2019, the Company is contingently liable principally for forward precious metal contracts in the amountsof ¥9,385 million and ¥7,155 million ($65,308 thousand), respectively.

14. Research and Development Expenses
Expenditures relating to research and development activities are charged to income as incurred and amounted to ¥4,939 million and¥4,958 million ($45,260 thousand) for the years ended December 31, 2018 and 2019, respectively.

15. Other Income (Expenses)
A gain of ¥6,023 million on the sale of buildings and structures was recognized for the years ended December 31, 2018 and included in
Gain (loss) on disposal of fixed assets, net. A loss of ¥1,050 million on the disposal of construction in progress and ¥533 million ($4,871
thousand) on the disposal of machinery and vehicles was recognized and included in Gain (loss) on disposal of fixed assets, net, for theyears ended December 31, 2018 and 2019, respectively.

16.

Impairment of Fixed Assets

There were no impairment losses relating to fixed assets to be disclosed in the notes for the fiscal years ended December 31, 2018and 2019.

17.

Segment Information

1. Overview of reporting segments
The reporting segments of the Company and its consolidated subsidiaries are regularly reviewed by the Board of Directors using thesegregated financial information available within each segment of the Company and its consolidated subsidiaries, to determine theallocation of management resources and evaluate business results.
The Company and its consolidated subsidiaries specialize in small motors manufacturing and sales as a single line of business. The
Company is in charge of the business activities in Japan. Meanwhile, subsidiaries located overseas are in charge of operations in Asia,
North and Latin America, Europe, etc. Subsidiaries located overseas are independent management units and propose comprehensive
product strategies while pursuing business expansion.
Since the Company and its consolidated subsidiaries are composed of regional segments based on a manufacturing and sellingsystem, the Company and its consolidated subsidiaries have designated “Japan,” “Asia,” “North and Latin America” and “Europe” astheir reporting segments.
2. Methods for calculating net sales, profits or losses, assets, liabilities and other items by reporting segment
The accounting policies and methods for the Group’s reporting segments are the same as described in “1. Summary of Significant
Accounting Policies.”
Intersegment net sales are based on prevailing market prices. The “Partial Amendments to Accounting Standard for Tax EffectAccounting” have been applied from the beginning of the fiscal year ended December 31 ,2019 and have also been applied retroactively
to the segment assets of the previous fiscal year.

3. Information concerning net sales, profits or losses, assets, liabilities and other items by reporting segment
Yen (Millions)
Net sales:Japan
External customers
Intersegment
Total
Asia
External customers
Intersegment
Total
North and Latin America
External customers
Intersegment
Total
EuropeExternal customers
Intersegment
Total
Corporate and elimination
Consolidated
Segment profit or loss:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Segment assets:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Others:Depreciation and amortization:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Increase in tangible and intangible fixed assets:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated

2018

2019

U.S. Dollars (Thousands)
2019¥13,032
87,898100,931¥14,091
79,477
93,568$128,617
725,419854,037

75,581
78,262
153,844

64,427
71,242
135,669

588,058
650,257
1,238,316

20,505420
20,92523,013
1,573
24,586210,055
14,357
224,41233,996
79
34,075(166,661)¥143,116

30,27482
30,356( 152,374)¥131,807

276,330748
277,079( 1,390,783)$1,203,061¥7,062
13,529(1,085)
1,325
410¥21,243¥6,37010,058( 266)
828
553¥17,544$58,147
91,805( 2,432)
7,563
5,055
$160,138¥111,909
166,481
25,03021,726(58,099)¥267,050¥115,529
167,088
30,615
21,599( 66,588)¥268,244$1,054,489
1,525,082
279,443
197,147( 607,783)$2,448,380¥1,151
6,535
628
7
(329)
¥7,994¥1,204
6,698
856
146
( 324)¥8,581$10,996
61,1387,819
1,335( 2,961)$78,328

¥129
9,626
3,410
1,966
(584)
¥14,548¥829
12,3374,669
542( 874)¥17,504$7,573112,60742,6194,950( 7,980)$159,769

Notes: 1. (1) Corporate and elimination for segment profit or loss of ¥410 million in fiscal 2018 and ¥553 million ($5,055 thousand) in
fiscal 2019 represent intersegment transaction eliminations.
(2) The segment assets eliminations include: corporate assets of ¥56,298 million in fiscal 2018 and ¥55,536 million ($506,902
thousand) in fiscal 2019, not allocated to each segment; intersegment debt and credit eliminations of ¥(114,398) million in
fiscal 2018 and ¥(122,124) million ($(1,114,685) thousand) in fiscal 2019. Corporate assets primarily include the parent
company’s surplus funds for investment (e.g., cash and bank deposits and short-term investments) and long-term
investment funds (e.g., investment securities).
(3) The depreciation and amortization eliminations of ¥(329) million in fiscal 2018 and ¥(324) million ($(2,961) thousand) in
fiscal 2019 represent intersegment transaction eliminations.
(4) Increase in tangible and intangible fixed assets eliminations of ¥(584) million in fiscal 2018 and ¥(874) million ($(7,980)
thousand) in fiscal 2019 represent intersegment transaction eliminations.
2. Segment profit or loss is adjusted for operating income reported in the consolidated statement of income.

Related information
Information on net sales, tangible fixed assets and impairment losses by geographic area is summarized as follows. For the fiscal year
ended December 31, 2018, sales to one specific major customer in the amount of ¥14,392 million accounted for 10% or more of
consolidated net sales. For the fiscal year ended December 31, 2019, sales to any specific customer didn’t account for 10% or more of
consolidated net sales.
Geographical Information
Yen (Millions)
Net sales
Japan
Asia
North and Latin America
Europe
Total

2018

2019

¥13,59775,022
20,49933,996¥143,116¥14,428
64,09023,01330,274¥131,807

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

U.S. Dollars (Thousands)
2019$131,693
584,982
210,055
276,330$1,203,061

2018

2019

U.S. Dollars (Thousands)
2019¥16,438
45,102
9,263
3,221¥74,025¥15,357
48,665
12,872
3,608¥80,504$140,173
444,188
117,497
32,938$734,797

There were no impairment losses relating to fixed assets to be disclosed for the fiscal years ended December 31, 2018 and 2019.
Notes: 1. Net sales in China in the amount of ¥35,724 million and ¥31,614 million ($288,559 thousand) for the years ended December
31, 2018 and 2019, respectively were included in Asia.
2. Tangible fixed assets in China in the amount of ¥25,684 million and ¥25,627 million ($233,908 thousand) and in Vietnam in theamount of ¥14,462 million and ¥18,984 million ($173,281 thousand) were included in Asia for the years ended December 31,
2018 and 2019, respectively. Tangible fixed assets in Mexico in the amount of ¥9,251 million and ¥12,857 million ($117,352
thousand) for the year ended December 31, 2018 and 2019, respectively were included in North and Latin America.

18.

Subsequent Events

Setting the Maximum Allowance for Acquisition of Treasury StockOn February 13, 2020, the Company resolved, at the Board of Directors’ meeting, to set the maximum allowance for acquisition oftreasury stock pursuant to the provisions of Article 156 of the Companies Act, applied by replacing terms pursuant to the provisions ofArticle 165, Paragraph 3, of said Act, as described below.
1. Reasons for the purchase of treasury stock
The Company purchases treasury stock in order to implement a flexible capital policy to respond to changes in the business environment
and to improve shareholder returns and capital efficiency.
2. Details of matters pertaining to the purchase of treasury stock(1) Class of shares to be purchased: Common stock of the Company(2) Total number of shares to be purchased: 1,200,000 shares (maximum)(1.8% of the total number of shares issued [excluding treasury stock])(3) Total amount of purchase cost: ¥3.0 billion ($27,382 thousand) (maximum)(4) Purchase period: February 14, 2020 to December 31, 2020
(5) Purchase method: Purchase in the open market through discretionary trading