2004 ANNUAL REPORT20
04

ANNUAL REPORTCONTENTS

1 Financial Highlights
2 Letter to Shareholders
4 About Mabuchi Motor
6 Financial Review
9 Five-Year Financial Summary
10 Consolidated Balance Sheets
12 Consolidated Statements of Income
13 Consolidated Statements of Shareholders’ Equity
14 Consolidated Statements of Cash Flows
15 Notes to Consolidated Financial Statements
23 Independent Auditors’ Report
24 Board of Directors / Corporate Directory
25 Investor Information

20 Financial Highlights
04

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • YEARS ENDED DECEMBER 31

NET
SALES
(¥ in millions)

NET INCOME
PER
SHARE
(¥)

NET
INCOME(¥ in millions)2004

99,347

2004

13,2792004

316.14

2003

105,743

2003

16,731

2003

375.41

2002

116,356

2002

18,025

2002

392.13

2001

105,129

2001

16,281

2001

345.85

2000

116,233

2000

23,472

2000

498.61Yen

U.S. Dollars(millions)(thousands)

2002

2003

2004

¥ 116,356¥ 105,743¥ 99,347

Operating income

29,122

24,576

17,312

166,461

Income before income taxes and minority interests

27,96824,741

19,676

189,192

Net income

18,025

16,731

13,279127,682

Shareholders' equity

224,315

212,803

201,543

1,937,913

Total assets

244,987

229,674

216,489

2,081,625

Net sales

Yen

Per share of common stock:
Net income$

955,259

U.S. Dollars¥ 392.13¥ 375.41¥ 316.14

70.00

128.00115.00Cash dividends

2004

$

3.03
1.10

Notes
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥104=U.S.$1, the approximate exchange rateon December 31, 2004.
2. Until the year ended December, 2002, net income per share was computed based on the net income reported in the consolidated
statements of income and the weighted average number of shares of common stock outstanding during each year.
In accordance with a new accounting standard for earnings per share which became effective April 1, 2002, basic net income per sharesince 2003 was computed based on the net income available for distribution to shareholders of common stock and the weighted average
number of shares of common stock outstanding during each year.

120 Letter to Shareholders
04
MABUCHI MOTOR CO., LTD.

M
Takaichi Mabuchi, Chairman

Shinji Kamei, President

abuchi is pleased to report a new all-timehigh in unit sales of 1.95 billion motors in2004 and an increase in market share of

our DC brush motors to 62%. With the appreciationof the yen against the US dollar, however, and stiff

but decelerating price competition, net sales dipped below 2003. Global trends

Mabuchi management issued Challenge 550 to help
the company prosper in this shifting environment. Growth in
our Power Unit Motor business, key to this strategy, exceeded
projections for the term with the sale of 6.4 million units. Net
sales for the division climbed 30% to 4.6 billion yen this pastterm alone. While production in the automobile industry hasrisen only slightly in recent years, the number of motors has
risen appreciably for reasons of comfort, safety, and added
high-tech features. Moreover, we anticipate soaring demand in
China, now in the midst of full-scale motorization.
This represents an excellent opportunity for Mabuchi, which
unlike most Chinese manufacturers already has theorganizational capability needed to service the auto industry.
Finally, brush motors remain an essential product for thismarket and no other manufacturer can rival Mabuchi in thisarea for quality and service at competitive pricing. We therefore
enjoy a strong upper hand going forward in developing
superior module products for the automotive industry.

Also critical to Mabuchi’s growth strategy is our
Brushless Motor business, launched in 2003 with a unit developed for the portable CD player. Mabuchi could not be better
poised for success in the market for this and other devices using
brushless motors, thanks to our expertise in standardization

2

CHALLENGE 550
rotoplace affecting businesses worldwide.

and mass production, and an established manufacturing base in
China. Parts and production requirements shared by brush andbrushless motors give Mabuchi an edge in material procurement, tooling depreciation, and labor costs. As a major motor
supplier with longstanding relationships with audio makers, wehave insight into technological trends driving productadvances. We are now preparing mass production of a very
intricate brushless motor with a sensor that will be used for
DVD recorders, and AV and navigation systems for cars.
A leading PC manufacturer has given us the basic design for a
PC spindle motor, which we have also taken steps to develop
for mass production. Already part way through a successful
launch phase, we expect our motor for the optical disk to reachfull-scale production after this year. For fiscal year 2005, weplan to produce 1.3 million pieces monthly, and increase
gradually to 3 million.

abuchi mrm

contributed to changes in the market-

chi motorubmmation societies, and improved environmental compliance have allmalike the advent of digital products, the development of advanced infor-

Another pillar of Challenge 550 is a comprehensive costreduction strategy to meet our goal of cutting costs by 15
billion yen. We have devoted much energy thus far to reducing
costs in our manufacturing processes. This year we plan tofocus on reviewing our raw material procurement strategies,
placement of functions for improved cost structure, speed ofbusiness, and adoption of new materials at the product design

stage. To this end we have developed alternative models using
less expensive materials. We have designed more efficient diesand tools that can fashion more parts from raw materials. We
have also increased our recycling rate of materials. Without
sacrificing quality or performance, we have devised aframework in which we can respond more effectively than everto customer demands for cost-effective products. Regrettably,
overall cost reductions achieved this term have been offset by a
sharp rise in the cost of particular metal materials including oilrelated materials affected by the skyrocketing price of crude oil.

To augment cost reductions made to date, we plan tobuchi moma

introduce Value-Added Manufacturing by increasing our inhouse manufacturing of production equipment and parts.
While we could opt to acquire cheap Chinese parts, no single
maker could supply enough parts for our considerable needs as
a producer of nearly 2 billion motors annually, and grooming
Chinese suppliers to meet our production quota would expose
our production expertise to competitors. We therefore intend
to achieve cost reduction by mass production and vertical
integration among processes, and take the additional value into
the company itself. By creating new cost-down policies now, we
can over time realize significant cost-reductions in this area.

Yet another priority of Challenge 550 has been to reallocate and consolidate our management infrastructure to takefullest advantage of burgeoning markets, particularly China. To
meet the needs of the rising number of product makers
scrambling to serve more than 1.3 billion consumers, Mabuchi
is developing a standard motor specifically geared for thismarket and training staff to handle design, production, sales,
and technical service at our office in Dongguan Mabuchi Motor(DGM), Guangdong. Several re-engineering functions previously handled in Japan have already moved to DGM, as have partsand equipment functions once handled throughout Guangdong
province. Our aim is to transfer the majority of engineering andTakaichi Mabuchi, Chairman
March 30, 2005

3

other functions for existing motors there by 2008. A part of our
Mabuchi Hong Kong business function is also moving to DGM
in order to stay in close touch with important customers
including domestic and foreign product makers in China, andto create a well-balanced sales network. We are developing an
integrated IT system so that every office can share with
headquarters all development-related information.

Mabuchi has always chosen new business ventures
mindful of the needs of our customers and the market, carefully
identifying, evaluating and selecting the most promising
opportunities. Since launching Challenge 550 early in 2004, theroad ahead has not been without obstacles, but the direction forgrowth remains clear. In fiscal year 2005, we expect to contend
with a global slowdown in the aftermath of U.S. tax cuts andefforts to rein in China’s booming economy. Our forecast takesthese factors into consideration:

MABUCHI FORECAST FOR FISCAL YEAR 2005:• SALES96.0 Billion Yen(down 3.4% from the preceding year)

13.0 Billion Yen• OPERATING INCOME(down
24.9% from the preceding year)
14.6 Billion Yen• ORDINARY INCOME (down
26.3% from the preceding year)• NET INCOME

10.4 Billion Yen(down 21.7% from the preceding year)

We fully anticipate ongoing sensitivity in the small-motor
market to evolving conditions, and will continually review ourbusiness objectives and refine our management strategies tomaximize our potential for long-term growth and profitability.

Shinji Kamei, President20 About Mabuchi Motor
04
MABUCHI MOTOR CO., LTD.

In fifty years of producing small motors, Mabuchi has grown to dominate
the industry. No one today is more relied upon by diverse product makers
to deliver a consistently high-quality, cost-effective motor. No one is moretrusted to meet rapidly evolving technological requirements and daunting
service demands than Mabuchi.

Mabuchi faces the challenges ahead armed with peerlessexpertise in product development and standardization, andunrivaled capability in manufacturing and cost-controlled
mass production. Strong and longstanding relationships
with product makers in multiple industries give Mabuchi
Motor unusual sensitivity to market needs and trends.
This combination of expertise and experience makes

Mabuchi uniquely equipped to handle everything fromprecision requirements necessitated by product advances toenormous demand and exacting delivery schedules. As weat once fortify our position in established markets andprepare to conquer new frontiers, the same qualities thathave made us a global leader light the way for sustained
growth and profitability.

MEETING THE NEED

4

Production of our new brushless motors
for optical disks is r ising steeply inresponse to product advances in thismarket.

AUDIO & VISUAL

Mabuchi is helping to advance ourinformation society by motorizing the
new generation of compact multifunctional devices like Web-readycamera cell phones and computer
printers that fax, scan and copy, among
other lifestyle-improving products.

AUTOMOTIVE

Analog or digital, today’s cutting-edge
devices require the superior performanceand reliability that sets Mabuchi apart.

INFORMATION& COMMUNICATION

Mabuchi is attuned to the precise
requirements of diverse industries.

LEADING THE WAY

Mabuchi motors power windows,
locks, mirrors, antennas and myriad
other equipment that contributes toyour safety and comfort on the road.
No one better meets the stringent
performance requirements and delivery schedules of the auto industry.

HOME & INDUSTRIAL

There’s a tiny and trustworthy Mabuchi
motor in countless household appliances used around the world on a daily
basis, from hair dryers and shavers toclocks and coffee makers.
Product makers routinely turn to us tohelp bring you so many of life’s modern
conveniences.

R&

We design every Mabuchi motor to excel at the job
it was created to do. By developing each motor foras many applications as possible and producing it
on a very large scale, we can realize remarkableeconomies without ever sacrificing quality. That’s
how Mabuchi time after time delivers a superior

exact performance specifications.

New Motors.
New Markets.

Research &Development

for a broader range of products than ever before.
And new customers are beginning to discover thequality and service only Mabuchi can provide. It’s
all part of the energetic and forward-thinking
strategy developed by Mabuchi management towiden and deepen market share in a competitiveand rapidly evolving business environment.
Innovations in both the manufacture andmarketing of Mabuchi motors will keep thecompany vital for generations to come.

product at low cost to every customer while meetingDW

hile small direct-current Brush Motors
remain our flagship business, Mabuchi has
recently expanded into other areas. Our new
Brushless Motor and Power Unit Motor businesses
are already making inroads into markets, industries
and applications with enormous growth potential.
Now established Mabuchi customers can rely on us

Mabuchi’s Global

Strategy

5

Reconfiguring operations
to pursue international market
opportunities and meetglobal strategic objectives.

M A B U C H I WO R L D W I D E L I N K AG E
Mabuchi’s management strategy is geared to promote
growth internationally by expanding markets and controlling
production costs.
With product development and re-engineering functions
partially relocated from headquarters to DGM, Dongguan in
China and ongoing upgrades of our facilities in othercountries, Mabuchi can remain cost-competitive in a global
marketplace.

HEADQUARTERS

PRODUCTION

Chiba, Japan

Bienhoa, Vietnam
Dalian, China

SALES OFFICES

Dongguan, China

Frankfurt, Germany

Hong Kong, China

Hong Kong, China

Kaohsing, Taiwan

Shanghai, China

Chemor, Malaysia

Singapore

Wafangdian, China

Taipei, Taiwan

Our aggressive pursuit of burgeoning markets andpromising new industry niches and applications means that
Mabuchi is poised to seize every opportunity for growth,prosperity and continued dominance.

Troy, the United States

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MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • YEARS ENDED DECEMBER 31

Net Sales
In fiscal 2004, demand for motors grew and the number ofmotors sold increased by 7.3% compared with the last year,
making an all-time high for the third consecutive year.
Nonetheless, adverse effects of appreciation of the yen, fallof sales price due to fiercer competition and change inmodel-mix due to the demand shift to lower priced motors
resulted in a decrease of net sales. After all, consolidated net
sales for this fiscal year decreased 6.0% year on year to¥99,347 million.

kept upwardly. Especially, the use in the power-window
lifters, air-conditioning damper actuators, retractablerearview mirrors, and door locks are showing the significant
growth.

Audio and Visual Equipment
Net sales decreased 19.3% to ¥30,567 million due to unit
price decline, model mix shift to low-end motors as well as
the appreciation of the yen which negated the demand
expansion of motors for digital appliances as represented by
DVD players.

Home Appliances and Power Tools and others
Net sales increased 1.6% to ¥23,806 million. Demands formotors for tools, hair dryers, shavers and rotating
toothbrushes were favorable. In addition, sales for motors
for fragrance generators and micro-pulse wet shavers whichwere big hits, made a contribution to net sales.

Information and Communication Equipment
Net sales increased 1.6% to ¥14,499 million. The demand
for motors in printers and digital cameras is continuously
growing as well as the motors in personal computer drives.

Automotive Products
Net sales increased 0.8% to ¥30,376 million. As the demandfor electrical parts for automobiles is rising, seeking forsafety, convenience, comfort and economy, the number ofmotors used per automobile is increasing and its growth is

M A B UCHIM O TO R

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20 Financial Review
04

6

Net Sales by Application
Years ended December 31

Yen

U.S. Dollars(millions)(thousands)

2000

2001

2002

2003

2004

2004

Audio & Visual Equipment
Automotive Products
Information &Communication Equipment
Home Appliances,Power Tools & Others
Other*¥ 45,068
26,758
17,830¥ 38,663
25,907
14,051¥ 44,800
29,603
16,240¥ 37,866
30,127
14,273¥ 30,567
30,376
14,499$ 293,913
292,076
139,413

26,52926,451

25,68823,43523,806228,903

48

57

25

39

97

932

Total

¥ 116,233¥ 105,129¥ 116,356¥ 105,743¥ 99,347$ 955,259*Other includes parts and equipment sales.

(Yen in millions)

31% Audio& Visual Equipment
30% Automotive Products&
ommunication Equipment
15% ICnformation
ome Appliances,
Tools& Others
24% HPower

120,000
100,000
80,00060,00040,00020,000000 01 02 03 04

SECTIONFINANCIAL

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • YEARS ENDED DECEMBER 31

Net Sales by Geographic Area of Destination
Years ended December 31

M A B UCHIM O TO R

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20 Financial Review
04

7

Yen

U.S. Dollars(millions)(thousands)

2000

2001

2002

2003

2004

2004

Japan
North and Latin America
EuropeChina and Hong Kong
Asia Pacific
Other*¥ 16,429
13,945
13,95145,262
26,59848¥ 12,534
12,83014,76741,641
23,30057¥ 11,942
12,624
15,18750,73625,84225¥ 11,611
10,183
14,78145,797
23,33139¥ 11,536
9,091
13,84844,855
19,91797$ 110,923
87,413
133,153431,298
191,509932

Total¥ 116,233¥ 105,129¥ 116,356¥ 105,743¥ 99,347$ 955,259*Other includes parts and equipment sales.

(Yen in millions)

120,000
100,000
80,00060,00040,00020,000012% Japan
9% North & Latin America
14% Europe
45% China & Hong Kong
20% Asia Pacific00 01 02 03 04

Costs, Expenses and Net Income
While net sales in 2004 decreased compared with the prioryear as mentioned above, cost of sales in 2004 was ¥63,329
million ($608 million) which was almost the same as in 2003.
As a result, gross profit ratio decreased to 36.3% in 2004
from 40.1% in 2003.
The cost of sales ratio rose in 2004 due mainly to start up
costs of new products and skyrocketing price of raw
materials such as copper and steel.
Selling, general and administrative expenses increased by
4.9% over the previous year due primarily to an increase of
R&D expenditures and various expenses related to thecompletion of construction of the new head office building.

Consequently, operating income decreased 29.6%, to¥17,312 million ($166 million) over the previous year.
Other income, net of expenses was ¥2,364 million ($22
million) in 2004 versus net other income of ¥165 million in
2003. The improvement in 2004 was principally due tooccurrence of exchange gains in 2004 while exchange losses
were incurred in 2003.
Net income decreased 20.6%, to ¥13,279 million ($127
million) with an effective income tax rate of 32.0% in 2004
which remained the same as in 2003.

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MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • YEARS ENDED DECEMBER 31

Foreign Currency
As indicated in Note 11 “Segment Information” to consolidated financial statements, overseas sales accounted forapproximately 88% of consolidated net sales in 2004, of which 90% was transacted by the U.S. dollar and U.S. dollar linked
currencies.
In 2004, the average rate of the yen appreciated approximately 6.7% against the U.S. dollar, compared with 2003. The
appreciation of the yen against the foreign currencies resulted in decreases of net sales of approximately ¥5,600 million ($53
million) and operating income of ¥1,700 million ($16 million), respectively.
The Company in principle uses foreign exchange forward contracts to hedge foreign exchange risks associated withaccounts receivable and payables denominated in U.S. dollar. (see Note 9 “Derivative Financial Instruments”).

Financial Position
Net working capital at December 31, 2003 and 2004 is summarized as follows (millions of yen):

2003

2004

Increase(Decrease)

Current assets
Current liabilities¥ 124,731
10,725¥ 99,713
11,021¥ (25,018)
295

Net working capital¥ 114,006¥ 88,692¥ (25,313)

11.6

9.0

Current ratio

The decrease in current assets at December 31, 2004 consisted mainly of a decrease of cash and bank deposits by ¥20,796
million, a decrease of trade notes and accounts receivable by ¥893 million, and a decrease of short-term investments by¥5,238 million. The decrease of cash and cash equivalents was due to the purchase of treasury stock of ¥18,042 million inJune 2004 by tender offer.
Long-term liabilities decreased by ¥728 million due mainly to a decrease of deferred tax liability on undistributed earnings
of foreign subsidiaries, and a decrease of accrued retirement benefits for employees.
Shareholder’s equity decreased by ¥11,260 million due primarily to the purchase of treasury stock mentioned above anda decrease of foreign currency translation adjustments by ¥1,563 million over the previous year. As a result, the shareholder’sequity ratio increased 0.4 percentage points, to 93.1% from 92.7% at the previous year-end.

Cash Flow
The major items of cash flows for the years ended December 31, 2003 and 2004 are summarized below:

Yen

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U.S. Dollars(millions)(thousands)

2003

2004

2004

Income before income taxes and minority interests¥ 24,741
Depreciation and amortization
5,578
Increase in property, plant and equipment(5,869)Change in short-term investments and purchase investment securities
9,083
Cash dividends paid
(4,493)Purchase of treasury stock(16,182)
Effect of exchange rate changes on cash and cash equivalent(5,721)Other, net(9,961)¥ 19,676
5,241(12,030)(462)(5,220)(18,062)(931)(7,701)$ 189,192
50,394(115,673)(4,442)(50,192)(173,673)(8,951)(74,048)

Net decrease in cash and cash equivalents¥ (19,491)$ (187,413)¥ (2,824)

Net cash provided by operating activities decreased ¥4,031 million from 2003, to ¥16,475 million ($158 million) due
mainly to a decrease of income before tax.
Net cash used in investing activities increased ¥14,818 million from 2003, to ¥11,752 million ($113 million) as a resultof mainly capital expenditures such as the construction of the new head office building and machinery and equipment.
Net cash used in financing activities increased ¥2,606 million from 2003, to ¥23,282 million ($223 million) due to thedividend payment and the purchase of treasury stock as aforementioned.

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • YEARS ENDED DECEMBER 31

SECTIONM A B UCHIM O TO R

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20 Five-Year Financial Summary
04

9

Yen

U.S. Dollars(millions)Operating Results
Net sales
Operating income
Income before income taxes
and minority interests
Net income
Per share of common stock:
Net income(Yen and U.S. Dollars)
Cash dividends per share(Yen and U.S. Dollars)
Depreciation and amortization
Capital expenditures
R&D expenses
Balance Sheet
Shareholders’ equity
Total assets(thousands)

2000

2001

2002

2003

2004

¥ 116,233
28,62433,643¥ 105,129
22,07923,495¥ 116,356
29,122
27,968¥ 105,743
24,576
24,741¥ 99,347
17,312
19,67623,472

16,281

18,025

16,731

13,279¥ 498.61¥ 345.85¥ 392.13¥ 375.41¥ 316.14

75.00

67.00

70.00

128.00115.00

¥

6,425
4,627
2,832

¥

6,599
5,132
3,421

¥

6,336
6,278
3,535

¥

5,578
5,673
3,714

¥

5,241
11,606
4,035¥ 218,471
242,626¥ 241,859
260,328¥ 224,315
244,987¥ 212,803
229,674¥ 201,543
216,489

47,07547,07545,96644,223

41,77060,51145,20350,762

51,79649,743

Other Data
Number of shares outstanding(thousands of shares)
Number of employees

2004$

955,259
166,461
189,192
127,682

$

3.03
1.10

$

50,394
111,596
38,798$ 1,937,913
2,081,625

Notes
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥104=U.S. $1, the approximate exchange rate on
December 31, 2004.
2. Until the year ended December, 2002, net income per share was computed based on the net income reported in the consolidated statements ofincome and the weighted average number of shares of common stock outstanding during each year.
In accordance with a new accounting standard for earnings per share which became effective April 1, 2002, basic net income per share since 2003
was computed based on the net income available for distribution to shareholders of common stock and the weighted average number of shares ofcommon stock outstanding during each year.
3. Number of employees includes contract manufacturing labor at plants in Guangdong, China.
4. Effective 2000, the Company adopted a new accounting standard for research and development costs.
The Company changed the previous scope of such costs to disclose only costs incurred in research and development activities for new products andprocesses. Those costs based on the previous scope in 2000 were ¥4,456.

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1020 Consolidated Balance Sheets
04

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • DECEMBER 31, 2003 AND 2004

AssetsYen

U.S. Dollars(millions)(thousands)

2003

2004

2004

¥ 77,187
16,011
14,129(298)
14,6771,575
1,449¥ 56,390
10,772
13,235(267)
16,4301,593
1,557$ 542,211
103,576
127,259(2,567)
157,980
15,317
14,971

Total current assets

124,731

99,713

958,778

Property, Plant and Equipment, at cost:
Land
Buildings
Machinery and equipment
Construction in progress

6,130
34,22255,4393,157

6,173
41,41956,763
1,673

59,355398,259545,798
16,086Less-Accumulated depreciation

98,950(65,374)

106,030(66,324)

1,019,519(637,730)

Property, plant and equipment, net

33,57539,705

381,778

Investments and Other assets:
Investment securities
Long-term loans receivable
Deferred tax assets
Other investments and other assets

68,416
479
138
2,331

74,130
338
157
2,444

712,788
3,250
1,509
23,500Total investments and other assets

71,367

77,070741,057¥ 229,674¥ 216,489$ 2,081,625

Current Assets:
Cash and bank deposits
Short-term investments
Trade notes and accounts receivable
Less-Allowance for doubtful receivables
Inventories
Deferred tax assets
Other current assets

Total assets

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

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11

Liabilities and Shareholders’ Equity

Yen

U.S. Dollars(millions)(thousands)

2003
Current Liabilities:
Trade notes and accounts payable
Accrued income taxes
Deferred tax liabilities
Accrued bonus to employees
Other current liabilities

¥

2,944
2,618
16
328
4,817

2004
¥

3,094
2,562
396
4,968

2004
$

29,75024,634
3,807
47,769Total current liabilities

10,725

11,021

105,971

Long-term Liabilities:
Accrued retirement benefits for employees
Accrued retirement benefits for directors and statutory auditors
Deferred tax liabilities
Other long-term liabilities

925
435
3,261
31

379
446
3,017
81

3,644
4,288
29,009778

Total long-term liabilities

4,653

3,924

37,730Minority Interests

1,492

-

-

20,704
20,419216,890
171(5,299)(40,083)

20,704
20,419224,816611(6,863)(58,145)

199,076
196,336
2,161,692
5,875(65,990)(559,086)

212,803

201,543

1,937,913¥ 229,674¥ 216,489$ 2,081,625

Contingent Liabilities
Shareholders’ Equity:
Common stock, without par value:
Authorized:
2003 and 2004 - 100,000,000 shares
Issued:2003 - 47,075,881 shares
2004 - 47,075,881 shares
Additional paid-in capital
Retained earnings
Unrealized holding gains on securities
Foreign currency translation adjustments
Treasury stock, at cost; 3,975,389 shares in 2003 and
6,511,971 shares in 2004
Total shareholders’ equity
Total liabilities and shareholders’ equity

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2004

U.S. Dollars(thousands)

SECTION

2004

2004

¥ 105,743¥ 99,347$ 955,259

Cost of Sales

63,334

63,329608,932

Gross profit

42,40936,018346,326

Selling, General and Administrative Expenses

17,83318,705

179,855

Operating income

24,576

17,312

166,461

Other Income (Expenses):
Interest and dividend income
Exchange (losses) gains on foreign currency transactions
Other, net

2,068(1,369)
(533)

1,736
414
213

16,692
3,980
2,048

165

2,364

22,730

Income before Income Taxes and Minority Interests

24,741

19,676

189,192

Income Taxes:
Current
Deferred

10,036(2,125)

6,889
(585)

66,240(5,625)

7,911

6,304

60,615

(99)

(93)

(894)

¥ 16,731¥ 13,279$ 127,682

M A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONC O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

2003

M O TO R

Yen(millions)

M A B UCHIC O ., L T D .

FINANCIAL

20 Consolidated Statements of Income
04

12

Net Sales

Minority Interests
Net Income

Per Share of Common Stock:
Net income
Cash dividends applicable to earnings of the year

Yen

U.S. Dollars(millions)(thousands)

2003

2004

¥ 375.41
128.00¥ 316.14
115.00

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

2004
$

3.03
1.10

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2004

SECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIAL

20 Consolidated Statements of Shareholders’ Equity
04

13

Number of Shares

Yen

U.S. Dollars(thousands)(millions)(thousands)

2003

2004

2003

2004

2004

Common Stock:
Beginning balance

47,07547,075¥ 20,704¥ 20,704$ 199,076

Ending balance

47,07547,075¥ 20,704¥ 20,704$ 199,076

Additional Paid-in Capital:
Beginning balance¥ 20,419¥ 20,419$ 196,336

Ending balance¥ 20,419¥ 20,419$ 196,336

Retained Earnings:
Beginning balance
Net income
Cash dividends
Bonuses to directors and statutory auditors¥ 204,805
16,731(4,495)(150)¥ 216,890
13,279(5,225)(127)$2,085,480
127,682(50,240)(1,221)Ending balance¥ 216,890¥ 224,816$2,161,692

Unrealized (Losses) Gains on Investments:
Beginning balance
Net change during the year

¥

(769)
941

¥

171
439

$

1,644
4,221

Ending balance

¥

171

¥

611

$

5,875

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

¥

3,055
(8,355)¥ (5,299)(1,563)$ (50,951)(15,028)

Ending balance¥ (5,299)¥ (6,863)$ (65,990)

Treasury Stock:
Beginning balance
Net change during the year

¥ (23,900)(16,182)¥ (40,083)(18,062)$ (385,413)(173,673)

Ending balance¥ (40,083)¥ (58,145)$ (559,086)

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

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES • FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2004

SECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIAL

20 Consolidated Statements of Cash Flows
04

14

Yen

U.S. Dollars(millions)(thousands)

2003

2004

2004

¥ 24,741
5,578
(817)
(2,068)
1,941
(11)
183
0
(1,217)
1,440
1,014
(229)

¥ 19,676
5,241
(532)
(1,736)387
73
801(1,968)217(216)$ 189,192
50,394(5,115)(16,692)
3,721
701
7,701
(18,923)
2,086(2,076)

Sub totalInterest and dividends received
Interest paid
Income taxes paid

30,5552,055(0)(12,104)

21,9451,737(0)(7,206)211,00916,701(0)(69,288)

Net cash provided by operating activities

20,506

16,475

158,413

Cash Flows from Investing Activities:
Purchase of short-term investments
Proceeds from sales of short-term investments
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Acquisition of minority interests
Proceeds from sales of investment securities
Other, net(3,376)
12,348(6,029)160(20,212)
20,323(147)(5,849)13,677(12,175)
144(14,017)(1,710)7,437
741(56,240)
131,509(117,067)
1,384(134,778)(16,442)
71,5097,125

Net cash provided by (used in) investing activities

3,066(11,752)(113,000)

Cash Flows from Financing Activities:
Cash dividends paid
Purchase of treasury stock(4,493)(16,182)(5,220)(18,062)(50,192)(173,673)

Net cash used in financing activities(20,676)(23,282)(223,865)

Effect of Exchange Rate Changes on Cash and Cash Equivalents(5,721)(931)(8,951)Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of YearNet Increase resulting from changes in scope of consolidation(2,824)80,857
55(19,491)
78,089-(187,413)
750,855-¥ 78,089¥ 58,598$ 563,442

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Provision for retirement benefits, net payments
Interest and dividend income
Foreign exchange loss
Gain on sales of short-term investments
Loss on sales and disposal of fixed assets
Loss on valuation of investment securities(Increase) Decrease in trade notes and accounts receivables
Decrease (Increase) in inventories
Increase in trade notes and accounts payable
Other, net

Cash and Cash Equivalents at End of Year

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

SECTIONFINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHI

15

20 Notes to Consolidated Financial Statements
04
MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES

1. Summary of Significant Accounting and Reporting Policies(a) Basis of presenting financial statements
The accompanying consolidated financial statements of Mabuchi Motor Co., Ltd. (the “Company”) and consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled
from the consolidated financial statements prepared by the Company as required by the Securities and Exchange Law ofJapan.
In addition, the notes to the consolidated financial statements include information which is not required under accounting
principles generally accepted in Japan but is presented herein as additional information. For the purpose of this report,
certain reclassifications have been made to present the accompanying consolidated financial statements in a format which isfamiliar to readers outside Japan.
For the convenience of the reader, the accompanying consolidated financial statements have also been presented in U.S.
dollars by translating yen amounts at the rate of ¥104 to U.S.$1, which was the approximate exchange rate prevailing on
December 31, 2004.
Certain reclassifications have been made to the accompanying consolidated financial statements for 2003 to conform to
the 2004 presentations.
(b) Principles of consolidation
The consolidated financial statements include the accounts of the Company and all significant subsidiaries. All significant
inter-company balances, transactions, and profits have been eliminated in consolidation. Investments in unconsolidated
subsidiaries are stated at cost.
(c) Translation of foreign currencies
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rate of exchange in effect atthe balance sheet date. Exchange differences resulting from these translations are included in income. Foreign subsidiaries’
assets and liabilities are translated into yen at the rates of exchange in effect at the balance sheet date. The accounts ofshareholders’ equity are translated at historical rates. Revenues and expenses are translated at the average rates of exchange forthe year. The resulting foreign currency translation adjustments are shown as a separate component of shareholders’ equity.
(d) Cash equivalents
For purposes of the statements of cash flows, the Company considers all highly-liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
(e) Short-term investments and investment securities
The Company classifies securities as “held-to-maturity” for which management has the positive intent and ability to hold tomaturity, and “available-for-sale” which represent securities not classified as either trading or held-to-maturity.
Held-to-maturity securities are reported at amortized or accumulated cost. Available-for-sale securities are stated at fairvalue with changes in unrealized holding gains or losses, net of the applicable income taxes, and are reported in a separate
component of shareholders’ equity. However, when the fair value of available-for-sale securities declines significantly and isconsidered to be irrecoverable to the book value, such unrealized holding losses are charged to income.
Available-for-sale securities for which fair value is not readily determinable are stated at moving average cost.
(f ) Inventories
Finished goods, work in process and raw materials are principally stated at average cost. Marketable raw materials such ascopper, gold, silver and palladium are stated at the lower of average cost or market.
(g) Property, Plant and Equipment and Depreciation
Property, plant and equipment is stated at cost. Depreciation is computed primarily by the declining-balance method for theCompany (except for certain buildings) and principally by the straight-line method for overseas subsidiaries over theirestimated useful lives. Buildings acquired by the Company on and after April 1, 1998 are depreciated by the straight-line
method. Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.
(h) Leases
Finance leases, except for those leases of which lease agreements stipulate the transfer of ownership of the leased assets to thelessee, are accounted for as operating leases.

SECTIONFINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIAL

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES(i) Research and development expenses
Expenditures relating to research and development activities are charged to income as incurred and amounted to ¥3,714
million and ¥4,035 million ($38,798 thousand) for the years ended December 31, 2003 and 2004, respectively.
(j) Income taxes
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax
bases of assets and liabilities and their reported amounts using presently enacted tax rates. Provision for Japanese income taxes
on undistributed earnings of foreign subsidiaries is made only on those amounts in excess of the funds considered to bepermanently reinvested.
(k) Retirement benefits
The Company has a trusteed noncontributory pension plan covering substantially all qualified full-time employees. Under
the plan, eligible employees are entitled to a 10-year annuity or lump-sum payments based on the rate of pay at the time ofretirement or termination, length of service and certain other factors. Annual payments to the trustees for the pension plan,
which are deductible for tax purposes, are based on actuarially determined costs of the plan.
Accrued retirement benefits are provided based on the amount of retirement benefit obligation reduced by the fair valueof pension plan assets at the end of the annual period.
Actuarial gain and loss are amortized in the year following the year in which the gain or loss recognized primarily by thestraight-line method over the period of mainly 10 years which are shorter than the average remaining years of service of theemployees.
Certain subsidiaries have pension plans similar to the Company or unfunded retirement and termination allowance plansfor qualified employees. The amounts required under the plans have been fully accrued.
The Company also has an unfunded retirement benefits plan for directors and statutory auditors and has fully accrued theamount required under the plan.
(l) Derivative and hedging activities
If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, theCompany defers recognition of gains or losses on evaluation of derivative financial instruments until the related losses orgains on the hedged items are recognized.

2. Cash and Cash Equivalents
Reconciliation of cash and cash equivalents for the accounts on statement of cash flows for the years ended December 31,
2003 and 2004 were as follows:

M A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

20 Notes to Consolidated Financial Statements
04

16

Yen

U.S. Dollars(millions)(thousands)

2003

2004

2004

Cash and bank deposits on the consolidated balance sheet
Time deposits with original maturities over three months
at the time of purchase
Short-term investments
Securities under the risk of value fluctuation¥ 77,187(3,865)¥ 56,390(3,243)$ 542,211(31,182)

16,011(11,243)

10,772(5,321)

103,576(51,163)

Cash and cash equivalents¥ 78,089¥ 58,598$ 563,442

3. Inventories
Inventories as of December 31, 2003 and 2004 were as follows:

Yen

U.S. Dollars(millions)(thousands)

2003
Finished goods
Work in process
Raw materials

¥

8,289
1,510
4,876

¥ 14,677

2004
¥

9,327
1,433
5,668

¥ 16,430

2004$

89,682
13,77854,500$ 157,980

SECTIONFINANCIALC O ., L T D .

The cost, net of unrealized gains and losses, and fair value for securities classified as available-for-sale and held-to-maturity
as of December 31, 2003 and 2004 were as follows:Yen(millions)

2003

Available-for-sale:
Debt securities
Equity securities
Other

Held-to-maturity:
Debt securities

M A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

4. Short-term investments and investment securities

17

Available-for-sale:
Debt securities
Equity securities
Other

Held-to-maturity:
Debt securities

Cost

Fair Value¥ 17,824
3,056
20,758¥ 16,951
4,372
20,605

¥

(872)
1,316
(153)

¥ 41,639¥ 41,929¥

290¥ 34,315¥ 31,976¥ (2,339)

Yen

U.S. Dollars(millions)(thousands)

2004

2004

Gains
(losses)

Cost

Fair Value

Gains(losses)

Cost

Fair Value

Gains(losses)¥ 19,152
3,056
18,246¥ 17,992
4,861
18,625¥ (1,159)
1,805
378

$ 184,153
29,384
175,442$ 173,000
46,740179,086$ (11,144)
17,355
3,634¥ 40,455¥ 41,479¥

1,024$ 388,990$ 398,836$¥ 34,709¥ 31,789¥ (2,920)$ 333,740$ 305,663$(28,076)

9,846

The securities for which fair values were not available as of December 31, 2003 and 2004 were as follows:

Yen

U.S. Dollars(millions)(thousands)

2003
Commercial paper
Money Management Funds
Equity securities of non-consolidated subsidiaries
Other equity securities

2004

2004

¥

3,745
4,257
70
109

¥

4,274
4,259
70
109

$

41,096
40,951
673
1,048

¥

8,182

¥

8,713

$

83,778SECTIONFINANCIAL

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIESThe contractual maturities for securities classified as available-for-sale and held-to-maturity at December 31, 2003 and 2004
were as follows:Yen

M O TO R

C O ., L T D .

20 Notes to Consolidated Financial Statements
04(millions)

Corporate bonds
Commercial paper
Other

Withinone year
Corporate bonds
Commercial paper
Other

Over one year Over five years Over ten years
throughthroughfive years
ten years

¥

6,988
3,745
949

¥ 14,447
5,706

¥

7,370
2,971

¥ 22,461-¥ 51,267
3,745
9,627

¥ 11,683¥ 20,153¥ 10,341¥ 22,461¥ 64,639

Yen

U.S. Dollars(millions)(thousands)

2004

2004

Over one year Over five years Over ten years
throughthroughfive years
ten years
¥

8,414
1,652

¥ 23,397-¥ 52,702
4,274
8,935

$ 506,750
41,09685,913¥

6,444¥ 26,003¥ 10,067¥ 23,397¥ 65,912$ 633,769

5. Retirement plans

C O ., L T D .
M O TO R

The table below sets forth the plan’s funded status and amounts recognized in the balance sheets at December 31, 2003 and 2004.

Accrued retirement benefits

Yen

U.S. Dollars(millions)(thousands)

2003

2004

¥ (7,173)
6,001¥ (7,108)
6,597(1,171)
246

(510)
131

¥

925

¥

379

2004
$

(68,346)
63,432(4,903)
1,259

$

3,644

The components of net periodic pension cost for the years ended December 31, 2003 and 2004 were as follows:

SECTION
FINANCIALC O ., L T D .
M O TO R

Total¥ 18,720
7,282

Unfunded retirement benefit obligation
Unrecognized actuarial gain or loss

M A B UCHI

Total

2,169
4,274
-

Retirement benefit obligation
Plan assets at fair value

18

Total

¥

M A B UCHIFINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHI

2003
Withinone year

Yen

U.S. Dollars(millions)(thousands)

2003

2004

2004

Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial gain or loss

¥

575
121
(45)
26

¥

507
123
(51)
27

$

4,875
1,182
(490)
259

Net periodic pension cost

¥

678

¥

607

$

5,836

The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on plan assets

2003

2004

2.0%
1.0%

2.0%
1.0%

SECTIONFINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHI

19

6. Income Taxes
The Company and domestic consolidated subsidiaries are subject to a number of taxes based on income with a normal tax
rate aggregating approximately 41.7% for the years ended December 31, 2003 and 2004. Foreign subsidiaries are subject toincome taxes in the countries where they operate.
The following table summarizes the significant differences between the Japanese statutory income tax rate and the effective
income tax rate on pre-tax income for the years ended December 31, 2003 and 2004:

2003

2004

Statutory income tax rate
International income taxed at varying rates
Effect on elimination of dividend income fromforeign subsidiaries for consolidation purposes
Foreign and R&D tax credit utilization
Undistributed earnings in foreign subsidiaries
Other, net

41.7%(18.3)

41.7%(16.3)

20.0(5.4)(10.2)
4.2

21.6(10.1)(5.1)
0.2

Effective income tax rates

32.0%

32.0%

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets
and liabilities at December 31, 2003 and 2004 were as follows:

Yen

U.S. Dollars(millions)(thousands)

2003
Deferred tax assets:
Unrealized profits on inventories and fixed assets
Evaluation losses on assets
Depreciation
Accrued enterprise taxes
Accrued retirements benefits
Other

2004

2004

¥

1,379
2,171
162
420
510
281

¥

1,367
2,004
201
272
303
439

$

13,144
19,269
1,932
2,615
2,913
4,221

¥

4,927

¥

4,589

$

44,125

¥

5,974
118
397

¥

4,974
508
372

$

47,826
4,884
3,576

Total

¥

6,489

¥

5,855

$

56,298

As reported in the consolidated balance sheet:
Deferred tax assets
Deferred tax liabilities

¥

1,714
3,277

¥

1,751
3,017

$

16,83629,009Total
Deferred tax liabilities:
Tax on undistributed foreign earnings
Unrealized losses on investments
Other

SECTIONFINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHISECTION
FINANCIALC O ., L T D .
M O TO R
M A B UCHI

20

20 Notes to Consolidated Financial Statements
04
MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES

7. Shareholders’ Equity
The Japanese Commercial Code (the “Code”) provides that an amount equivalent to at least 10% of cash dividends paid andother cash outlays, resulting from appropriations of retained earning with respect to each annual period, be appropriated to
the legal reserve until total of such reserve and additional paid-in capital equals 25% of the stated capital. As of December
31, 2004, the total of the legal reserve of ¥3,811 million ($36,644 thousand) which is included in retained earnings at
December 31, 2004, and additional paid-in capital, already reached 25% of the stated capital. The Code also provides that
additional paid-in capital and the legal reserve up to 25% of the stated capital are not available for cash dividends but may
be used to reduce a capital deficit or may be capitalized. The paid-in capital and legal reserve exceeding 25% of the statedcapital are available for dividends or purchase of treasury stock upon approval of shareholders’ meeting.
Year-end cash dividends are approved by the shareholders after the end of each fiscal year. Semi-annual interim cash
dividends are declared by the Board of Directors after the end of each interim six-month period. Such dividends are payable
to shareholders of record at the end of each fiscal year or interim six-month period.
In accordance with the Code, these dividends and the related appropriations of retained earnings have not been reflectedin the financial statements at the end of such fiscal year. However, dividends per share shown in the accompanying
consolidated statements of income reflect dividends applicable to the respective fiscal year.
On September 24, 2004, semi-annual interim cash dividends (¥64 or $0.61 per share) of ¥2,596 million ($24,961
thousand) were paid to shareholders of record at June 30, 2004. On March 30, 2005, the shareholders approved thedeclaration of cash dividends (¥51 or $0.49 per share) totaling ¥2,068 million ($19,884 thousand) and payments of bonuses
to directors and statutory auditors totaling ¥68 million ($653 thousand).

8. Per Share Data
Until the year ended December, 2002, net income per share was computed based on the net income reported in the
consolidated statements of income and the weighted average number of shares of common stock outstanding during each year.
In accordance with a new accounting standard for earnings per share which became effective April 1, 2002, basic net income
per share was computed based on the net income available for distribution to shareholders of common stock and the weighted
average number of shares of common stock outstanding during the year ended December 31, 2004.

9. Derivative Financial Instruments
The Company enters into forward exchange contracts and forward precious metal contracts as a normal part of risk
management efforts. As a result, the Company is exposed to risk of credit-related losses in the event of nonperformance ofcounterparties to foreign exchange contracts and precious metal contracts. Management believes such risks are minor becauseof the high credit worthiness of the counterparties and such financial instruments have not been held for trading purpose.
Following is a summary of derivative financial instruments which are currently held by the Company.
The Company uses foreign exchange forward contracts to hedge the risk of changes in foreign exchange rates substantiallyassociated with accounts receivable and payable denominated in foreign currencies. Gains and losses explicitly deferred,arising from contracts related to future trade transactions, are insignificant, at December 31, 2003 and 2004. There were no
outstanding currency option contracts at December 31, 2003 and 2004.
Forward precious metal contracts are used by the Company to hedge the risk of changes in market prices resulting frompurchase of precious metals as raw materials for motor products.
There were no outstanding forward precious metal contracts at December 31, 2003 and 2004.

10. Contingent Liabilities
As of December 31, 2004, there were no significant reportable contingent liabilities.

SECTIONFINANCIALC O ., L T D .
M O TO R

The Company and consolidated subsidiaries manufacture and sell small electric motors, parts and equipment used for
production purposes. Substantially all of the consolidated net sales and operating income are generated from a broad rangeof motor products. The information on net sales, operating income and assets by geographic area, and overseas sales issummarized as follows:
Segment Information by Geographic Area

M A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHI

11. Segment Information

21

Yen

U.S. Dollars(millions)(thousands)

2003

2004

2004

¥ 20,864
46,364¥ 20,395
42,365$ 196,105
407,355

Total

67,22962,760603,461

Asia
Outside customers
Intersegment

60,66643,05356,79539,918546,105
383,826

Total

103,719

96,714929,942

U.S.A.
Outside customers
Intersegment

9,518
0

8,289
0

79,701
0

Total

9,519

8,289

79,701

EuropeOutside customers
Intersegment

14,694
7

13,8660133,326
0

Total

14,701

13,866

133,326

Corporate and elimination(89,426)(82,283)(791,182)¥ 105,743¥ 99,347$ 955,259¥¥$

Net sales:Japan
Outside customers
Intersegment

Consolidated
Operating Income:
Japan
Asia
U.S.A.
EuropeCorporate and elimination

8,858
14,524
257
(82)
1,018

7,003
10,058
137
(14)
127

67,336
96,711
1,317
(134)
1,221

Consolidated¥ 24,576¥ 17,312$ 166,461

Assets:Japan
Asia
U.S.A.
EuropeCorporate and elimination¥ 82,151
89,334
4,421
5,149
48,618¥ 63,492
86,087
4,225
5,968
56,714$ 610,500
827,759
40,62557,384545,326

Consolidated¥ 229,674¥ 216,489$ 2,081,625

The amount of corporate assets included in “Corporate and elimination” is ¥97,606 million in 2003 and ¥106,273 million($1,021,855 thousand) in 2004, which comprises principally cash, short-term investments and investment securities.

SECTIONFINANCIAL

MABUCHI MOTOR CO., LTD. & CONSOLIDATED SUBSIDIARIES

Overseas Sales

M A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

20 Notes to Consolidated Financial Statements
04

22

Yen

U.S. Dollars(millions)(thousands)

2003

2004

Overseas Sales
U.S.A.
EuropeAsia and Other¥ 10,183
14,781
69,150¥Total
Net Sales% of Overseas Sales to Net Sales¥ 94,115
105,743
89.0%¥ 87,807
99,34788.4.%

9,091
13,91464,801

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

2004$

87,413
133,788
623,086$ 844,298
955,259
88.4%

MABUCHI MOTOR CO., LTD.

The Board of Directors
Mabuchi Motor Co., Ltd.

We have audited the accompanying consolidated balance sheets of Mabuchi Motor Co., Ltd. and consolidated
subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity,and cash flows for the years then ended, all expressed in yen. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Mabuchi Motor Co., Ltd. and consolidated subsidiaries at December 31, 2004 and 2003, andthe consolidated results of their operations and their cash flows for the years then ended in conformity with accounting
principles generally accepted in Japan.

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
December 31, 2004 are presented solely for convenience. Our audit also included the translation of yen amounts into
U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 (a) to theconsolidated financial statements.

SECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIALSECTIONM A B UCHIM O TO R

C O ., L T D .

FINANCIAL

20 Independent Auditors’ Report
04

23

Ernst & Young ShinNihon
March 30, 2005

C O ., L T D .
M O TO R
M A B UCHIC O ., L T D
M O TO R
M A B UCHIC O ., L T D .
M O TO R
M A B UCHIC O ., L T D
M O TO R
M A B UCHIC O ., L T D .
M O TO R
M A B UCHIC O ., L T D
M O TO R
M A B UCHIC O ., L T D .
M O TO R
M A B UCHI

24

20 Board of Directors / Corporate Directory
04
MABUCHI MOTOR CO., LTD.

BOARD OF DIRECTORSAs of March 30, 2005

ChairmanTakaichi Mabuchi

President

Shinji Kamei

Managing
Director

Nobuyo Habuchi

Directors

Sun Zuei Che
Seiya Nakanishi
Yasuo Uehara
Shunroku Nishimura
Yoshinori Sugimoto

Statutory
Auditors

Kiyoshi Iwakura
Ichiro Ando
Yuzaburo Nagase
Toyokuni Yazaki

CORPORATE DIRECTORY
As of December 31, 2004

Consolidated Subsidiaries
MABUCHI INDUSTRY CO., LTD.

19 Sam Chuk Street, San Po Kong
Kowloon, Hong Kong
Tel. 852-2328-5575
Fax. 852-2352-1008
MABUCHI TAIWAN CO., LTD.

No.18, Chung Hwa Road
Hsinchu Ind. District
Hsinchu, Taiwan
Tel. 886-3-598-1111
Fax. 886-3-598-6256
MABUCHI MOTOR TAIWAN LTD.

No.66 Kaifa Road., N. E. P. Z.
Kaohsiung, Taiwan
Tel. 886-7-362-1111
Fax. 886-7-361-9111
MABUCHI MOTOR DALIAN LTD.

No.41 Harbin Road, Dalian Economic
and Technical Development Zone
China
Tel. 86-411-8761-1111
Fax. 86-411-8761-2900
MABUCHI MOTOR WAFANGDIAN LTD.

Laohutun Town
Wafangdian City, Liaoning Province
China
Tel. 86-411-8537-0241
Fax. 86-411-8537-0291

Non-Consolidated Subsidiaries
MABUCHI REAL ESTATE CO., LTD.
TAIWAN MABUCHI(HONG KONG) CO., LTD.

MABUCHI MOTOR(JIANGSU) CO., LTD.

DONGGUAN MABUCHI MOTOR
EQUIPMENT CO., LTD.

No.1 Liuxu Road
Wujiang Economic Development Zone
Jiangsu Province, China
Tel. 86-512-6345-1111
Fax. 86-512-6345-0438

Guan Cheng Science & Technology Park
Shilong Road
Guanlong Road’s Section, Dongguan City
Guangdong Province, 523119
China
Tel. 86-769-225-6985
Fax. 86-769-225-6984

MABUCHI MOTOR(MALAYSIA) SDN. BHD.

Plot 15, Kanthan Industrial Estate
31200 Chemor, Perak, Malaysia
Tel. 60-5-201-1888
Fax. 60-5-201-2288

MABUCHI MOTOR AMERICA CORP.

3001 West Big Beaver Road, Suite 520
Troy, MI 48084 U.S.A.
Tel. 1-248-816-3100
Fax: 1-248-816-3242

MABUCHI MOTOR VIETNAM LTD.

No.28, Bienhoa Industrial Zone 2Long Binh Ward, Bienhoa City
Dongnai Province, Vietnam
Tel. 84-61-836711
Fax. 84-61-836712

MABUCHI MOTOR(SINGAPORE) PTE. LTD.

111 North Bridge Road, #12-05
Peninsula Plaza, Singapore 179098
Tel. 65-6339-9991
Fax. 65-6339-9091

MABUCHI PRECISION INDUSTRIESHONG KONG LTD.

MABUCHI MOTOR (EUROPE) GmbH

19 Sam Chuk Street, San Po Kong
Kowloon, Hong Kong
Tel. 852-2328-5575
Fax. 852-2352-1008

Hahnstrasse 38, 60528
Frankfurt am Main, Germany
Tel. 49-69-6690220-68
Fax. 49-69-669022-29
MABUCHI MOTOR(SHANGHAI) CO., LTD.

Room1409, Part C
Orient International Building
No.85 Lon Shan Guan Road, Changning Dist.
Shanghai, 200336, China
Tel. 86-21-6278-7764
Fax. 86-21-6278-7767

C O ., L T D .
M O TO R
M A B UCHI

MABUCHI MOTOR CO., LTD.

INVESTOR INFORMATION

Independent Accountants

Japanese Stock Exchange Listing

MABUCHI MOTOR CO., LTD.

ERNST & YOUNG SHINNIHONTokyo stock exchange

430 Matsuhidai, Matsudo-shi
Chiba-ken 270-2280, Japan
Tel. 81-47-710-1111
Fax. 81-47-710-1141
http://www.mabuchi-motor.co.jp

Tokyo, Japan

Ordinary General Meeting of
Shareholders

M A B UCHIM O TO R

C O ., L T D .

M A B UCHIM O TO R

C O ., L T D

M A B UCHIM O TO R

C O ., L T D .

M A B UCHIM O TO R

C O ., L T D

M A B UCHIM O TO R

M O TO R

Corporate Headquarters

M A B UCHI

As of March 31, 2005

C O ., L T D .

C O ., L T D

20 Investor Information
04

25

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

Transfer Agent of Common Shares
Handling Office
UFJ TRUST BANK LIMITED

Corporate Agency Department
10-11, Higashi-suna 7-chome, Koto-ku
Tokyo 137-8081, Japan
Tel. 81-3-5683-5111