Annual Report

2015
Year ended December 31, 2015

Small Motors Powering
Further Growth

Light electric vehicle motor
IS-92BZA

Profile

Small Direct-Current
Electric Motors
Small Motors Powering Further GrowthEver since its founding, Mabuchi Motor Co., Ltd. has been a specialist manufacturer of small
motors that deliver consistently high quality and efficiency at low prices in line with our basic

policy “Bringing better and more reasonably priced goods to the market.” Our small motors finddiverse applications in automotive products and consumer and industrial products, including home
appliances, power tools, precision and office equipment, audio and visual equipment, and toys. In
this way, we contribute to convenient, comfortable living for people the world over.

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

production volume of approximately 1,475 million units (2015 results) is testimony

to the excellent reputation and trust we have built with our customers and a source ofgreat pride for us.

In the coming years, we will continue to aspire to create new value

through product development adaptable to market needs, and a flexible
supply system.

Market Research
We engage in market research to rapidly, sufficiently
and appropriately ascertain market and technology
trends around the world and the motor functions
that customers require. We provide our customers
with low-cost, high-quality products and excellent
delivery response times, while analyzing information
we collect on diverse customer needs to discovercommonalities that permit standardization.

1

MABUCHI MOTOR CO., LTD.

Research and Development
Continuing to respond to a variety of needs withregard to motors, primarily the ability to be highly
efficient and low in noise, Mabuchi Motor has
always been leading the market in small motors.
From basic research, product development,
design, and production to motor-applied technology
in these small machine components, we havecollected a wide range of technical capabilities overmany years.

Quality Assurance
Production
Mabuchi has established production bases acrossAsia with the aims of developing a competitive
motor production system and providing employment
opportunities in host countries. And in 2014, weestablished a new production base in Mexico.
Furthermore, we strive to combine high quality andlow cost in our production processes by seeking an
optimal balance between people and machines.

Small motors from Mabuchi play an importantrole in many different settings in everyday life,
mainly in the automotive products industry. To
enable people to use our motors with confidence
even in demanding environments, we conduct
rigorous quality testing of every aspect of productperformance, including the material quality andprocessing accuracy of parts, noise, change intemperature and humidity, and vibration.

Annual Report 20152

Table ofContents

ProfileTo Our Shareholders
4

Message from the President

Financial Highlights
9
11
13
15
16

Financial Summary
Segment Information by Motor Application
Management’s Discussion and Analysis
Research and Development Activities
Business and Other Risks

Activities for Sustainable Management
18 Mabuchi’s Management Vision
19 Corporate Governance21	Board of Directors, Audit & Supervisory Board Members,
and Executive Officers
22 Corporate Social Responsibility

Financial Data
23
25
25
26
27
28
44

Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s ReportCompany Information
45 Investor Information
46 Corporate Data

3

MABUCHI MOTOR CO., LTD.

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

To Our Shareholders
With our newly formulated medium-term management plan, we will launch the Mabuchi
Group into an era of steady and sustainable growth.

Hiroo Okoshi
Representative Director and President,
President & CEO

Business Development and Results

In the markets in which the Mabuchi Group operates,
demand in the Automotive Products Market was healthy as

During the fiscal year ended December 31, 2015 (fiscal

economic expansion in the U.S. and economic recovery in2015), economic slowdown in China and other countries

Europe offset sluggish demand growth in emerging coun-

beginning in the second half of the fiscal year resulted intries. In the Consumer and Industrial Products Market,

sluggish growth in the world economy as a whole. The U.S.

demand remained stable in developed countries.

economy continued to expand due to improvement in
employment and income conditions, while the gradual

Under these business conditions, the Group addressed

recovery trend continued in Europe. In Japan, moderate

several issues: continued strengthening and expansion of

economic recovery continued as a result of an improvement

the automotive products business, realization of new activi-

in corporate earnings. On the other hand, growth slowed inties in the consumer and industrial products business,

emerging market economies because of factors such as thepromotion of manufacturing innovation, and establishment

economic slowdown in China and a decline in resourceof new production bases.

prices.

Annual Report 20154

In fiscal 2015, the Mabuchi Group achieved record-highconsolidated net sales. From fiscal 2016 onwards, we will target
further improvements in corporate value.

Specifically, the Group actively introduced and implemented

Operating income for fiscal 2015 was 22,961 million yen (ameasures to achieve further progress with sales and market

36.1% increase on a year-on-year basis) as a result of an

share expansion, and high quality and high efficiency, andimprovement in the product mix and a decline in raw mate-achieved results that will lead to future business growth.

rial costs, coupled with a weaker yen compared with the

These measures included: 1) commencement of sales ofprevious fiscal year.

new motors for power window lifters to new customers;2) strengthening of sales of medium-sized automotive
motors by introducing application-specific standard products for each application; 3) full-scale entry into the lightelectric vehicle (LEV), commercial office equipment, andwelfare/nursing care equipment sectors; 4) laborsaving in

Financial Highlights

production processes and man-hour reduction throughexpanded introduction of facilities to rationalize production;

Millions of yen

and 5) completion of the construction of a new production
plant in Mexico.
As a result, consolidated net sales for fiscal 2015 were143,143 million yen (a 16.8% increase on a year-on-yearbasis). Motor sales, which account for the majority of consolidated net sales, were 143,134 million yen (a 16.8%
increase on a year-on-year basis).

2014
Net sales ¥122,544
Operating
16,875incomeNet
18,090incomeTotal
256,368
assetsNet assets 233,312

Thousands of
U.S. dollars

Rate ofchange

2015

2015

YoY

¥143,143$1,192,863+16.8%

22,961

191,348+36.1%

18,546

154,552+2.5%

256,196

2,134,966-0.1%

233,245

1,943,709-0.0%SHANGHAI MABUCHIJIANGSU MABUCHI *1

EUROPE MABUCHISHENZHEN MABUCHIDONGGUAN MABUCHI *2

DALIAN MABUCHIWAFANGDIAN MABUCHI
KOREA MABUCHI

Corporate Headquarters
LUDONG MABUCHI
HONG KONG MABUCHIDANANG MABUCHI *1
VIETNAM MABUCHI
SINGAPORE MABUCHI

5MABUCHI MOTOR CO., LTD.

AMERICA MABUCHIMEXICO MABUCHIJIANGXI MABUCHITAIWAN MABUCHI *1
KAOHSIUNG MABUCHIDAOJIAO MABUCHI

Sales offices
Production bases*1 Includes sales functions*2 Includes R&D functions

Striving for global growth by developing new applications andembarking on next-generation manufacturing.

 edium- to Long-term Management
M
Strategy and Issues to Be Addressed

applications constitute a market sector for which continued
market expansion can be expected in light of today’s emphasis on automobile safety, comfort, and economy, and(1) Acceleration of Growth of the Power Window Lifter
Motor Businessthe Mabuchi Group will work to increase sales to new

The Mabuchi Group began sales of new medium-torquehighly competitive application-specific standard products.

customers and develop new applications by leveraging

power window lifter motors to a third Japanese automakerin fiscal 2015 and will aim to use this mass production track

Sales of power seat motors surpassed the 10.0 billion yen

record as a springboard to increase the number of equipped

milestone in fiscal 2015, and we will aim for further growth

car models. In addition, we will undertake expansion of thein fiscal 2016 by continuing to seek global sales expansion

product lineup by accelerating development of new, next-

and winning new orders in Japan and overseas. Electric

generation products that take advantage of size and weightparking brake motors are an application for which Mabuchi

reduction technologies, a Mabuchi strength.

has maintained the top global market share. We intend toretain share leadership by undertaking production capacity

We started mass production of a new high-torque productexpansion to meet a demand increase accompanying thefor a major North American automaker in fiscal 2015 andspread of electric parking brakes and aiming to win orders

will strengthen the supply structure by commencing massfrom a major customer in Korea in addition to our current

production of power window lifter motors at MEXICO

customers in Japan and Europe. In fiscal 2015, we began

MABUCHI this year. We will step up sales activities to ensure

mass production of engine air intake and exhaust motors, a

adoption by additional North American automakers bytype of motor engine peripheral equipment, for a majoremphasizing this initiative to strengthen the supply struc-

Japanese customer. We will take advantage of this opportu-

ture, our mass production track record, and the competitive-

nity by working to develop new applications for otherness of our products.

engine peripheral equipment in addition to engine air intake
and exhaust.

(2) Expansion of Medium-sized Automotive Motor Sales
and New Applications
Motors for power seats, electric parking brakes, engine
peripheral equipment, and other medium-sized motor

Power Window Lifter Motor Sales Results and Forecast(Millions of yen)

40,000

Sales amount
Sales quantity (2012=100%)

Medium-sized Automotive Motor Sales Results and Forecast(%)(Millions of yen)200

25,000150

30,000

Sales amount
Of which, power seat motor sales amount
Sales quantity (2012=100%)

100

10,00050

200

10,000

0

2012

2013

2014

2015

2016
Plan

0

300

20,00015,00020,000

(%)

100

5,000
0
2016
Plan
Note: Medium-sized automotive motor applications: power seats, electric parking brakes, steeringcolumn adjusters, engine peripheral equipment, and seatbelt pretensioners
0

2012

2013

2014

2015

Annual Report 20156

(3) Development of New Applications in the Consumer
and Industrial Products Businessonce again work to achieve the laborsaving plan target by

In the consumer and industrial products business, in addi-

duction lines that have achieved substantial laborsavingtion to business activities centered on existing small brushfrom conventional production lines.

means including the horizontal deployment of model pro-motors, we are reinforcing initiatives to develop and increase sales of brushless motors to focus on new applica-

In addition to these initiatives to improve productivity, intions and create new demand.

fiscal 2016, we will move into high gear with activities toestablish next-generation production processes, continu-With regard to brushless motors for LEVs, we are continuing

ously improve productivity, and realize highly competitive

to sell motors for electrically assisted bicycles and are rein-

production processes into the future.

forcing sales activities to win orders from new Japanese andEuropean customers. We also began mass production and

Furthermore, the Group has opened its Manufacturing

shipment of motors for assistive equipment for walking inTraining Hall within its corporate headquarters for the

fiscal 2015, and will continue to develop new applications

purpose of establishing next-generation manufacturing andand realize further deployment across multiple applications

raising the level of its production-related technologies,

on the basis of application-specific standard products for

quality, and personnel. We are building production facilities

LEVs.

and developing personnel for a trial production line formotors for power window lifters set up at the Manufactur-

In fiscal 2015, we won orders for brushless motors foring Training Hall, and are preparing mass production lines atmultifunction printers (MFPs) from a third major Japanese

Mabuchi Mexico by deploying facilities and personnel

customer. Manufacturers are mounting a full-scale effort toupgraded at the hall. In fiscal 2016, a foundation will be laid

reduce power consumption, and we will continue sales

for the evolution of a series of processes extending from

activities to win orders from a fourth Japanese manufac-

parts to finished products into next-generation facilities,

turer.

methods, and processes through expansion of the scope ofthe hall’s activities beyond assembly processes to include

With regard to new applications, we newly developed aparts processes. We intend to further strengthen our manu-

small gear unit motor to increase ease of use for customers.

facturing capabilities by laying a technology foundation at

We will make this the first step toward full-scale entry into

the corporate headquarters and deploying it globally.

medical equipment applications by means of products thatoffer new added value.

(4) Implementation of Laborsaving Measures andEstablishment of Next-generation Manufacturing
The Mabuchi Group is working to mechanize productionlines and undertaking laborsaving by introducing facilities in
response to a major change in the business environment:
namely, sharp increases in labor costs accompanying economic development in countries and regions where production bases are located. Laborsaving progressed steadily
again in fiscal 2015, the second year of a phase-two laborsaving plan to achieve laborsaving through a decrease indirect workers exceeding 30% from the fiscal 2013 level
during the three-year period from fiscal 2014 to fiscal 2016.
In fiscal 2016, the final year of the three-year plan, we will
7

MABUCHI MOTOR CO., LTD.

MEXICO MABUCHIWe will proactively return profits to all shareholders.

 asic Policy on Profit Sharing, and Dividend
B
Payments for the Current and Next Periods
Mabuchi maintains a basic policy of actively returning

long-term stable dividend, plus an additional special dividend equal to 30% of the consolidated net income divided
by the number of outstanding shares, depending on theperformance of the Company.

profits to shareholders in accordance with its businessresults. We do this while also providing funds from internal

We will continue to consider repurchasing more treasury

reserves for capital expenditures, research and develop-

stock as necessary, as a way of flexibly responding toment which are necessary for the growth and developmentchanges in the share price and the business environment,of the Company, and while maintaining our financial

and as a means of fulfilling our capital policy and returningsoundness.

profits to shareholders.

Under this policy, apart from when business results are

It is our policy to appropriate internal reserves to further

remarkably sluggish due to a sudden deterioration in thestrengthen and deepen our existing businesses and tobusiness environment, we consistently distribute an annual

invest in areas of growth, with a view to increasing corpo-

ordinary dividend of 30 yen per share as payment of arate value.

Medium-term Management Plan (FY2016-FY2018)
Seeking to achieve steady, sustainable growth into the future, the Mabuchi Group has formulated a new Medium-termManagement Plan covering the three-year period from January 2016 to December 2018. Our numerical targets under theplan are set out below.

Numerical Management Targets
Sales Growth
Earnings Power
Capital Efficiency

Net Sales
Operating Income to Net Sales
Return on Equity (ROE)FY2018 Targets¥170.0 billion (Up 19% from FY2015)
15% or more
8% or more

Exchange rate assumption: 1 USD = 118.00 JPY

Key strategies for achieving the plan’s various targets are summarized below.
Keys to Achieve the Plan
Sales Growth— Aim to achieve an average annual increase in sales amount exceeding 10% for motors for power
window lifters, mainly through higher sales of the new high-torque product— Reinforce sales expansion of medium-sized automotive motors, with motors for power seats,
electric parking brakes and engine peripheral equipment as growth drivers— For the consumer and industrial products business, reinforce initiatives for motors for new applications such as LEVs, commercial office equipment and medical equipment

Earnings Power— Reduce costs through laborsaving and by improving production indicators— Expand Manufacturing Training Hall activities to parts processes and establish next-generation
production processes ranging from parts to assembly

Capital Efficiency — Aim to increase ROE through sales growth and strengthening of earnings power
Global Structure— Further restructuring of global management, R&D, procurement, production and sales functions

Annual Report 20158

Financial Summary
Net Sales

Operating Income

Net Income¥143,143
million¥22,961
million¥18,546
millionConsolidated net sales in fiscal 2015rose 16.8% from the previous fiscal
year, to ¥143,143 million(US$1,192,858 thousand).

Operating income in fiscal 2015 rose
36.1% from the previous fiscal year,to ¥22,961 million(US$191,341 thousand).

Net income in fiscal 2015 rose 2.5%
from the previous fiscal year, to¥18,546 million(US$154,550 thousand).

Net Sales by Application
2014

Net Sales by Region

78,7482015

96,369030,0002014 11,307 12,850 23,624

43,7532015 11,615 17,204

46,76460,00090,000120,000

150,000

044,77929,26230,00029,94049,49360,00090,00035,557
120,000(Millions of yen)

150,000(Millions of yen)

Automotive Products
Consumer and Industrial Products

Japan
North & Latin America
EuropeChina & Hong Kong
Asia Pacific

Factors Affecting FY2011–FY2015 Consolidated Operating Income
Selling, General and Administrative Expenses(Millions of yen)

SG&A

21,000
20.3%

SG&A ratio

18.8%

16.2%

15.3%

Exchange Gain/Loss
14.3%

14,0007,000

15,981

15,987

17,51918,73920,508(%)(Millions of yen)

25

6,000

20

4,500

15

3,000

10

1,500

5

0

0

-1,500

5,624

5,124

3,647
2,329

-272
0

2011

2012

2013

2014

2015

Capital Expenditures

2013

2014

2015

(Millions of yen)

18,00016,187

12,000
6,825

6,000

2011

2012

MABUCHI MOTOR CO., LTD.

7,500

6,386

5,000

9,597
6,524

9

2012

Depreciation and Amortization(Millions of yen)

0

2011

4,301
3,176

5,755

2013

4,771

3,410

2,500

2014

2015

0

2011

2012

2013

2014

2015

Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries (Years Ended December 31)
Millions of yen

Thousands of
U.S. dollars

2015

2015

2011

2012

2013

2014

¥   78,886¥   85,254¥ 108,401¥ 122,544¥ 143,143$1,192,858

Cost of sales

59,83864,21481,54686,92999,673

830,608

Selling, general and administrative expenses

15,981

15,987

17,51918,73920,508

170,900

3,066

5,052

9,335

16,87522,961

191,341

Income before income taxes

3,248

8,426

15,01523,595

26,593

221,608

Operating income ratio (%)

3.9

5.9

8.6

13.8

16.0

(466)

6,385

10,51918,09018,546

154,550

Capital expenditures

6,524

6,825

5,755

9,597

16,187

134,891

Depreciation and amortization

3,176

3,410

4,301

4,771

6,386

53,216R&D expenses

3,493

3,794

3,763

4,503

5,164

43,033

Exchange gain (loss)

(272)

3,647

5,624

5,124

2,329

19,408Net cash provided by operating activities

696

9,091

11,75018,118

20,115

167,625

Net cash (used in) provided by investing
activities(2,874)

8,230

4,264

(11,977)(1,178)(9,816)

Net cash used in financing activities(3,507)(3,509)(3,031)(6,014)(13,312)(110,933)

Total assets

181,351

196,702227,253

256,368

256,196

2,134,966

Net assets

168,538

181,372

208,791

233,312233,245

1,943,708

For the year:
Net sales

Operating income

Net income (loss)

Cash flows:At year-end:

Per share data:

Yen

U.S. dollars(6.65)

91.12

150.10258.02266.982.22

2,405.18

2,588.38

2,978.02

3,325.99

3,363.01

28.02

50.00

50.00

70.00

107.00110.000.91

Operating income margin (%)

3.9

5.9

8.6

13.8

16.0

–

ROE (%)

(0.3)

3.6

5.4

8.2

8.0

–

ROA (%)

2.7

5.6

7.9

9.9

10.6

–

Shareholders’ equity ratio (%)

92.9

92.2

91.9

91.0

91.0

–

Number of shares outstanding(Thousands of shares)

35,03635,03535,14535,14470,927–

Number of employees (Persons)

33,91829,05828,18825,354

24,419–Net income (loss)
Net assets
Dividends payable
Other data:

Notes:
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥120=U.S.$1.
2. ROE is calculated by dividing net income by the average of total shareholders’ equity plus the revaluation/translation adjustment during the period.
3. The shareholders’ equity ratio is calculated by dividing the sum of total shareholders’ equity and the revaluation/translation adjustment as of the end of theperiod by total assets as of the end of the period.
4. Per share data: The Company conducted a stock split on January 1, 2015, in which each share of the Company’s common stock was split into two shares. Per
share data has been calculated based on the number of shares issued after the stock split (excluding treasury stock).

Annual Report 201510

Segment Information by
Motor Application

Consumer andIndustrial Products

32.7%

Below is a description of conditions in the markets formotors, the Mabuchi Group’s main business, and a reporton the Group’s sales situation.
In fiscal 2015, consolidated net sales amounted to43,134 million yen, up 16.8% from the previous fiscal year.

Consumer and Industrial Products Market•	Increase in sales of motors for multifunction printers (MFPs) as a result of adoption ofa new product by a major Japanese customer•	Strong sales of high-end motors for power tools and motors for power tools for the
North American market•	No change in sales of motors for inkjet printers due to stagnation in the
personal-use products market•	Decrease in sales of motors for car CD players due to contraction of theaftermarket
Net Sales by Principal Item•	Regarding motors(100 millions of yen)
(Year-on-year change)for other products,
Othersan increase in500
104.9%
sales of motors forMultifunction printers (MFPs)
400
125
and laser printers
new applications,
119
113.4%
24
including light
Power tools
21
300
55
132.8%
41
electric vehicles
Car CD players
61
67
200
90.6%
(LEVs) and housing
89
Beauty-related equipment
76
equipment
118.3%
100
0

111

111

2014

2015

Inkjet printers
100.0%Net Sales by Application(Millions of yen)Thousands of
U.S. dollars

Millions of yen

2011

2012

2013

2014

2015

46,76443,753

2015
42,119Automotive
Products¥40,651 ¥49,055 ¥ 66,220 ¥ 78,748 ¥ 96,369

Consumer andIndustrial Products

38,10846,764

389,700

Total Sales¥78,760 ¥85,131 ¥108,340 ¥122,502 ¥143,134$1,192,783$  803,075
38,10836,076

42,11943,753

Consumer andIndustrial Products

36,076

Automotive Products
96,36940,65149,05566,22078,748$1=¥1202011

Net Sales by Region
Thousands of
U.S. dollars

Millions of yen

2011
Japan
North & Latin
America

11

2012

2013

2014

2015

¥ 8,773 ¥ 9,664 ¥ 10,109 ¥ 11,307 ¥ 11,615
7,461

8,714

11,475

12,85017,2042015

2012

14,211

19,71323,62429,262

243,850

China & HongKong

32,13532,27041,52844,77949,493

412,441

35,55718,02732,135

41,52844,77932,27018,02735,557296,308¥78,760 ¥85,131 ¥108,340 ¥122,502 ¥143,134$1,192,783

12,362
7,461
8,773

14,2118,714
9,664$1=¥120

2011

2012

MABUCHI MOTOR CO., LTD.

China & Hong Kong
49,493

20,270Total Sales

29,940Asia Pacific

25,513

Asia Pacific

25,5132015

29,940143,366

12,362

2014(Millions of yen)$   96,791

Europe20,2702013

19,71323,624

EuropeNorth & Latin
America

29,262

11,475
10,10912,85017,204

11,307

11,615

2013

2014

2015

Japan

Automotive Products

67.3%

Automotive Products Market
Net sales in this market rose sharply, to 96,369 million yen (a 122.4% increaseon a year-on-year basis).

Medium-sized Automotive Motors•	Increase in sales of motors for power window lifters for the North American,
European, and Chinese markets due to an increase in new product adoptions•	Increase in adoptions of a new motor for power seats, mainly by European andNorth American customers•	Increase in sales of
Net Sales by Principal Item
motors for electric(100 millions of yen)
(Year-on-year change)
parking brakes
500
due to a higher
Others50
113.1%
installation rate
51
Electric parking brakes
400
and a rise in the145.7%
44
109
Power seats
35
number of models
300
136.0%
80
equipped with a200
new product
1000Small Automotive Motors

212

2014

274

Power window lifters
128.9%

2015

Net Sales by Principal Item•	Maintenance of a high market shareof motors for door lock actuatorsand mirrors•	Increase in sales of motors for air
conditioning damper actuators due
to a higher market share•	Rise in sales of headlight leveladjusters due to market expansion
and a higher installation rate

(100 millions of yen)

(Year-on-year change)

500
400

23
23
56

300
143

27
25
65
166

0

Air conditioning damper
actuators
115.8%
Mirrors (including fonding)116.1%

200
100

Others117.8%
Headlight level adjusters
108.5%

167

192

2014

2015

Door lock actuators
115.2%

Sales Forecast by Market
Automotive Products Market
Medium-sized Automotive Motors: 58.0 billion yen(a 19.7% increase on a year-on-year basis)•	The outlook is for further progress with adoptions of a
new motor for power window lifters and an increase in thenumber of models equipped with Mabuchi products•	There is likely to be a continued increase in adoptions of a
new motor for power seats•	An increase in the installation rate and new product adoptionsof motors for electric parking brakes is anticipated to continue
Small Automotive Motors: 47.1 billion yen(a 1.3% decrease on a year-on-year basis)•	Although a high market share of motors for door lockactuators, mirrors and air conditioning damper actuators is
likely to be maintained, slight decreases in sales are expected
due to sluggish growth in automobile production volume andthe impact of foreign exchange rates•	Sales of headlight level adjusters due to market expansions arelikely to increase

Consumer and Industrial Products Market
44.7 billion yen (a 4.4% decrease on a year-on-year basis)•	A decrease in sales of motors for inkjet printers is anticipated
due to sluggish growth in the personal-use products market•	The market for motors for car CD players is likely to continue
contracting•	An increase in sales of motors is expected for MFPs and laser
printers due to the acquisition of new customers•	Despite an expected overall decrease in sales of motors forother products due to a policy of maximizing profitability,
increases in sales of motors for new applications such as LEVs
and medical equipment are likely

Annual Report 201512

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.

Consolidated Performance>>> Overview>>> Operating Income

During the fiscal year ended December 31, 2015 (fiscal 2015), economic
slowdown in China and other countries beginning in the second half ofthe fiscal year resulted in sluggish growth in the world economy as awhole. The U.S. economy continued to expand due to improvement in
employment and income conditions, while the gradual recovery trend
continued in Europe.
In Japan, moderate economic recovery continued as a result of an
improvement in corporate earnings. On the other hand, growth slowedin emerging market economies because of factors such as the economic
slowdown in China and a decline in resource prices.
In the markets in which the Mabuchi Group operates, demand in the
Automotive Products Market was healthy as economic expansion in the
U.S. and economic recovery in Europe offset sluggish demand growth inemerging countries. In the Consumer and Industrial Products Market,
demand remained stable in developed countries.
Under these conditions, the Group improved its product mix andreduced raw materials costs, which, together with the yen’s depreciationcompared with the previous fiscal year, led to increases in revenue andearnings on a year-on-year basis.

Operating income amounted to 22,961 million yen, up 36.1%, or 6,086
million yen, from the previous fiscal year. Main factors in this increase(and their specific contribution in parentheses) were as follows: Improvements in product mix (2.6 billion yen); declines in market prices for corematerials, such as copper and steel (0.8 billion yen); and depreciation of
the yen (3.3 billion yen). Negative factors (and their downward impact)
were: Decline in unit sales (0.1 billion yen) and increase in costs, mainly
selling, general and administrative expenses (0.5 billion yen).

>>> Net Sales>>> Income Taxes (Current and Deferred)

Consolidated net sales for fiscal 2015 were 143,143 yen million (a 16.8%
increase on a year-on-year basis). Motor sales, which account for the
majority of consolidated net sales, were 143,134 million yen (a 16.8%
increase on a year-on-year basis). During the year, the Group introduced
new products and began sales to new customers in the Automotive
Products Market. With the contribution of increased market share,significantly improved results were posted. Higher sales were also
reported in the Consumer and Industrial Products Market, buoyed byhealthy demand for mainstay application products and the yen’s depreciation. For the year, 1,458 million motors were sold, down 0.5% fromthe previous fiscal year. In value terms, however, motor sales increased
on a year-on-year basis, thanks to improvements in market composition
by application, the yen’s depreciation and increased unit prices.

The ratio of income taxes (current and deferred) to income before
income taxes (effective income tax rates) rose from 23.3% in fiscal 2014
to 30.3% in fiscal 2015. The consolidated effective tax rate was pushed
up due to the Company’s more conservative estimate of deferred tax
liabilities, which are reported as the equivalent of withholding taxes
incurred when recovering surpluses from overseas subsidiaries.

>>> Other Income (Expenses)
Other income (net of other expenses) totaled 4.1 billion yen, down from
7.0 billion yen in the previous fiscal year. This represented a 2,795 million
yen decline on a year-on-year basis in exchange gain, net.

>>> Extraordinary Income (Loss)
Extraordinary loss (net of extraordinary income) increased from 664
million yen in the previous fiscal year, to 519 million yen. In fiscal 2015,
the Group reported an impairment loss of 0.9 billion yen on fixed assetsof some consolidated subsidiaries.

>>> Net Income
As a result, net income amounted to 18,546 million yen, up 2.5%, or
456 million yen, on a year-on-year basis. Net income per share rose from258.02 yen to 266.98 yen. The Company carried out a 2-for-1 stock split,
effective January 1, 2015. The figure for net income per share in theprevious fiscal year has been recalculated based on the assumption thatthe stock split was carried out at the beginning of that year.

Net Sales/Gross Profit Margin

Operating Income/Operating Income Margin

Net Income (Loss)/ROE(Millions of yen)

(Millions of yen)

(Millions of yen)

29.1
24.1

24.7

30.4
143,143

24.8

5.4

3.9

8.0

18,09018,546

2014

2015

3.6

16,8755.9

8.2

22,961

8.6

122,544
108,401

78,88616.0
13.8

85,254

10,519

-0.3
9,335

6,385

5,052
3,066
- 466

2011

2012

2013

Gross profit margin (%)

13

MABUCHI MOTOR CO., LTD.

2014

2015

2011

2012

2013

Operating income margin (%)

2014

2015

2011

2012

ROE (%)

2013

Financial Positionchanges were an increase in deferred tax liabilities (non-current) of 1,386
million yen, a decrease in trade notes and accounts payable of 601
million yen, and a decrease in accrued income taxes of 960 million yen.
Total net assets decreased slightly from the previous fiscal year-end,
to 233,245 million yen. Treasury stock, shown as a negative item in net
assets, decreased 13,964 million yen due to the cancellation of treasury
stock (including this, retained earnings decreased 8,752 million yen), andforeign currency translation adjustments decreased 5,536 million yen.
The shareholders’ equity ratio remained mostly unchanged from theprevious fiscal year, at 91.0%.

Total assets as of December 31, 2015 stood at 256,196 million yen,decreasing ¥172 million from the previous fiscal year-end. The mostnoticeable changes were an increase in trade notes and accounts
receivable of 2,193 million yen, an increase in inventories of 1,957 million
yen, an increase in property, plant and equipment of 4,755 million yen
accompanying capital expenditures, a decrease in cash and bank deposits of 4,503 million yen due to dividends and purchase of treasury stock,a decrease in short-term investments of 1,399 million yen, and a decrease in investment securities of 2,883 million yen.
Total liabilities stood at 22,950 million yen, a decrease of 104 million
yen compared with the previous fiscal year-end. The most noticeable

Total Assets

Liabilities

Net Assets(Millions of yen)

(Millions of yen)

(Millions of yen)

256,368

256,196
23,055

227,253
181,351

196,702

22,95018,461

168,538

15,330233,312233,245

2014

2015

208,791
181,372

12,813

2011

2012

2013

2014

2015

2011

2012

2013

2014

2015

2011

2012

2013

Analysis of Capital Resources and Liquidity>>> Cash FlowsNet cash provided by operating activities amounted to 20,115 million
yen, an increase of 1,996 million yen from the previous fiscal year. Cashflows from operating activities increased as a result of factors including
an increase in income before income taxes of 2,998 million yen.
Net cash used in investing activities amounted to 1,178 million yen, adecrease in cash used of 10,798 million yen from the previous fiscal year.
Cash flows from investing activities increased as a result of factors
including a decrease in purchases of short-term investments and investment securities of 4,556 million yen and an increase in proceeds fromsales of short-term investments and investment securities of 1,792

million yen. In addition, purchases of property, plant and equipment
increased 5,753 million yen due to the establishment of a new subsidiaryand new capital expenditures.
Net cash used in financing activities amounted to 13,312 million yen,
an increase in cash used of 7,297 million yen from the previous fiscal
year. Cash flows from financing activities decreased as a result of factors
including an increase in cash dividends paid of 2,239 million yen and anincrease in purchase of treasury stock of 5,036 million yen.
As a result, the balance of cash and cash equivalents amounted to112,956 million yen, an increase of 3,736 million yen from the previous
fiscal year-end.

Capital Requirements
Among the Mabuchi Group’s working capital requirements, the main
components are costs related to product manufacturing—purchasing
costs of materials and components, as well as production costs—andoperating costs, such as selling, general and administrative expenses.

The Group’s main equipment capital requirements are also costs related
to product manufacturing, and include production equipment purchases
and plant construction costs.

Financial Strategies
The Group meets its working capital and equipment capital requirements through internal reserves and does not raise funds externally.
However, the balance of loans payable of our ESOP (Employee Stock
Ownership) Trust was 2.0 billion yen as of December 31, 2015.
As for share buybacks, between fiscal 2002 and fiscal 2008 theCompany bought back 12.01 million shares (valued at 87.2 billion yen)through public and market purchases. In fiscal 2015, we bought back
820,000 shares (4.9 billion yen) through market purchases. Between theend of the year under review and the submission date for the Securities
Report, one million shares (4.7 billion yen) were bought back throughmarket purchases.
Among shares bought back, 14.02 million shares were cancelled
prior to the fiscal year under review, and a further one million shares are
due to be cancelled in April 2016.
The Company carried out a 2-for-1 stock split for ordinary shares,
effective January 1, 2015. For the time being, the Company will holdremaining bought-back shares as treasury stock. Going forward, theCompany will consider implementing share buybacks in a timely, flexible
manner as a means of fulfilling its capital policy and returning profits toshareholders while responding to share prices and business conditions.
With respect to profit distribution, the Company’s basic policy is toactively return profits to shareholders according to its business results
while retaining sufficient internal reserves to conduct sound businessactivities and maintain a healthy financial position.
Under this policy, apart from when business results are remarkably
sluggish due to a sudden deterioration in the business environment, theGroup consistently pay an annual dividend of 30.00 yen per ordinary
share as a stable long-term dividend, plus an additional special dividend
equal to 30% of consolidated net income divided by the number ofoutstanding shares, depending on business performance.
The Group will continue targeting business growth and increases inoperating cash flows with the aims of returning profits to shareholders ina timely and appropriate manner and maintaining a healthy financial
position.

Annual Report 201514

Research andDevelopment Activities
fiscal 2015, making this a core business for the Group. In the first half of2015, we commenced mass production of the GD-558LE/RE, a mediumtorque model aimed at large North American automakers, and we are
currently working to further expand sales and provide technical support.

The Mabuchi Motor Group’s R&D activities are spearheaded by Mabuchi
Motor Co., Ltd. (the parent company) and MABUCHI MOTOR (DONGGUAN) CO., LTD. (in the Asia segment). In this section, we provide an
overview of the Group’s R&D activities.
The R&D organization consists of the Research and Development
Headquarters and its subordinate organizations: the Research andDevelopment Dept. 1, the Research and Development Dept. 2, and theProduction Engineering Dept. In addition, the Research and Development Headquarters directly controls groups that engage in activities
pertaining to new technology development, intellectual property, test
evaluation, technology research, and engineering management. The
organization engages mainly in high-value-added work, including thedevelopment of elemental technologies based on the Group’s technology roadmap, described below, as well as new product development
centered on strategically important applications. From its inception, theResearch and Development Center of MABUCHI MOTOR (DONGGUAN)
CO., LTD. (the “R&D Center”) has mainly engaged in design improvement work. The R&D Center also handles new product development
aimed at rapidly launching products in the Chinese local market, as well
as new product development tasks entrusted by the Company.
To materialize timely new product development and new productintroductions, Mabuchi has prepared the technology roadmap based on
information obtained from market research and benchmarking-based
technical investigation, and is steadily developing elemental technologies
in accordance with the roadmap. In fiscal 2014, we further strengthened
our R&D system, having established a Cross-Functional Team (CFT) in
the previous fiscal year to spearhead initiatives across departmental lines.
These activities have enabled us to clearly identify technologies thatshould be acquired and strengthened, as well as product fields thatshould be targeted. In fiscal 2015, the second year of the CFT, weestablished a new Technical Research Group and implemented activities
specific to that entity.
Mabuchi is focusing particular attention on the strategies described
below for examination and implementation of urgent measures, with theaims of strengthening its responsiveness to new motor-related fields andapplications and addressing the steep rise in labor costs in overseas
countries where it operates plants.

Motors for power seats
Mabuchi’s introduction of distinctive, small, high-torque motors for
power seats has led to increased adoption by large customers and sharp
growth in sales and market share. Seeking to further increase market
share, we are reinforcing our products and conducting sales expansion
activities.

Engine peripheral equipment
Our engine peripheral equipment offerings have high future potential
because they contribute to energy savings through precise engine
control, and are also suited to engines subject to high temperatures andvibration. We are currently working to increase sales of the RS-4F5, ahigh-durability model that went into mass production in fiscal 2014.

Motors for light electric vehicles
In addition to being a growth sector, motors for light electric vehicles(LEVs) serve as welfare equipment and thus make a huge contribution tosociety. In fiscal 2015, we continued our proactive product development
activities. During the year, we launched the IS-92B, a shortened versionof the IS-94B, which is finding applications in walking-assist equipment.
In regard to existing models for other markets, Mabuchi will continue harnessing its know-how to improve its product features while
promoting remodeling to enhance added value. At the same time, wewill deploy the aforementioned R&D Center to build a structure forpromptly meeting market and customer needs.
In fiscal 2015, R&D expenses amounted to 5,164 million yen. At
fiscal year-end, the total number of industrial property rights held by theCompany stood at 682 (120 in Japan and 562 overseas), and the total
number of domestic and overseas new industrial property applications
during the year was 54. A total of 437 employees engaged in R&D
activities (245 at our headquarters and 192 at the R&D Center of MABUCHI MOTOR (DONGGUAN) CO., LTD.).
Below are major new products launched in fiscal 2015:(1) Strengthen technologies of brushless motors(2) E xpand scope of laborsaving applications(3) Shorten product development lead-times(1) Medium-torque motor for power windows (GD-558LE/RE/LF/RF)

Meanwhile, our technology and sales teams will join forces to addressapplications in our core automotive motor business and applications that
we must concentrate on in businesses earmarked to become operationalpillars in the future.

(2) Brushless motor (IS-92B)

This is a compact, lightweight, medium-torque motor developed for
the North American market. It is a low-priced model that does notmake use of high-cost rare earth magnets.

This brushless motor is a shorter and more compact version of the
IS-94B, and finds applications in light electric vehicles (LEVs), welfare
equipment, gardening equipment, and the like. It reflects the expansion of the product lineup to increase responsiveness to customers.

Motors for power window lifters
Thanks to increasing sales to large-scale customers in Japan and overseas, sales of motors for power window lifters exceeded 25 billion yen in

R&D Expenses/R&D Expenses Ratio

R&D Personnel

Number of Intellectual Properties(Millions of yen)
4.4

(Employees)(Intellectual properties)

4.5
3.5

3.7

4,503
3,493

2011

3,794

2012

5,164

386

414

425

432

437

624

607

600

108

99

95

516

508

505

2011

2012

2013

638
109

682
120

3,763

2013

2014

R&D expenses ratio (%)

15

3.6

MABUCHI MOTOR CO., LTD.

2015

2011

2012

2013

2014

2015

Overseas

529

562

2014

2015

Domestic

Business and Other Risks
Changes in Economic Conditions
The demand for Mabuchi products, which are incorporated into our customers’ products, is influenced by the economic conditions
present in the diverse markets in which the Mabuchi Group sells. Consequently, the Group’s business results and financial position may
be adversely affected by economic recessions and the corresponding contraction in demand in its key markets, including Japan, North
America, Europe and Asia.

Fluctuations in Foreign Exchange Rates
Items denominated in local currencies on the financial statements of our overseas subsidiaries are converted into Japanese yen when
the consolidated financial statements are prepared. Consequently, amounts which are to be recorded after being converted into
Japanese yen are subject to the foreign exchange rates at the time of conversion. In particular, appreciation of the Japanese yen
against the U.S. dollar will have a negative effect on the Mabuchi Group’s consolidated business results, and conversely any
depreciation of the Japanese yen will have a positive effect.
Appreciation of local currencies in regions where the Group carries out production will push up manufacturing and procurement
costs which are denominated in those local currencies. Increased costs will lower the Group’s profit margins and price competitiveness,
and will impact negatively on its business results.

Development of New Products and New Technologies
The development and sale of new products, by their very nature, involve both complexities and uncertainties, and include a broadarray of risks.
In the event the Mabuchi Group cannot fully predict the changing needs of the market, or cannot develop appealing new products
in a timely fashion, or in the event a technological innovation emerges which causes its products to become obsolete, then the Group’sbusiness results and financial position may be subject to significant adverse effects.

Price Competition
Our customers are businesses in a diverse range of sectors that belong to the electrical and electronic equipment and machinery
manufacturing industries, and price competition in these industries is extremely severe. In these kinds of environments, prices are amajor contributing factor to competition in all sectors, and with the prominence of rival Chinese manufacturers, competition is
becoming even more intense.
If our cost-reduction activities cannot keep up with falling prices over the long-term, then the Mabuchi Group’s business results
and financial position may be subject to significant adverse effects.

Potential Risks in International Economic Transactions and in Expanding Business Overseas
The majority of the Mabuchi Group’s business activities are conducted in the various countries in Europe, North America and Asia.
Within these overseas business activities there are certain inherent risks, including changes in political and economic environments,
undeveloped infrastructures, changes in laws, tax affairs or various other systems, or social unrest.
For example, much of the Group’s production activity is conducted in China and Vietnam. The occurrence of an unexpected event(such as changes in the political or legal environment, changes in economic conditions, problems related to the employment
environment, or other changes to the social environment) may lead to significant problems for our production and/or sales activities,
and these may lead to the Group’s business results and financial position being subject to significant adverse effects.

Annual Report 201516

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

Protection of Intellectual Property
We recognize that the acquisition of intellectual property can greatly influence the growth of the Mabuchi Group. However, in certain
regions, for certain inherent reasons, the Group’s intellectual property rights may not be completely protected. In such instances, theGroup’s intellectual property may be used without authority by third parties, and through the manufacture of similar products, we may
suffer damages. Or we may lose our competitive advantage through the outflow of other technology or expertise, and then having it
exploited by other companies. Or even still, there is a possibility that it could be claimed that the Group has impinged on theintellectual property of another company.
The failure of protection or the violation of intellectual property rights, or the outflow of other intellectual property may lead to theGroup’s business results and financial position being subject to significant adverse effects.

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

Procurement of Raw Materials
Depending on the type of raw material that the Mabuchi Group procures from external sources, we may be dependent on a limited
number of suppliers.
There is a possibility that supply of the raw material is suspended due to an accident befalling the supplier or for some otherreason, or that a shortage of supply transpires due to a sudden upsurge in demand. If such conditions were to continue long-term andalternative materials were not easily available, then there is a possibility that the Group’s production activities would be affected
dramatically, and in turn this would undermine the assurance of delivery and quality of products to its customers. It is also possible,that the prices of such materials would escalate, which would trigger a rise in manufacturing costs.
If such an event were to occur, then the Group’s business results and financial position may be subject to significant adverse
effects.

Natural Disasters and Accidents
The Mabuchi Group has established a system of international division of labor. We conduct business activities in countries throughout
the world, and we own facilities and equipment at our various bases, including plants and offices. The Group has implemented
measures to prevent its exposure to risks associated with the occurrence of disasters and accidents at these centers, and it has
implemented measures to reduce damages, including by insuring. However, there is no guarantee that completely protects us against,
or which can reduce as planned, the effects of disruptions to our business activities caused by disasters or accidents at our Head Office
or individual bases. In the event that these kinds of unforeseeable events occur, the Group’s business results and financial position may
be subject to significant adverse effects.
17

MABUCHI MOTOR CO., LTD.

Activities for Sustainable
Management

The “Management Principle” of Mabuchi Motor encompasses the belief that we at Mabuchi
must elevate our level of contribution to society and persevere as a prominent entity the world
cannot do without. This principle is not only a guide for running our corporation but a gene to
be carried down to subsequent generations of the Mabuchi enterprise.

Mabuchi’s Management Vision
Contributing to International Society and Continuously
Increasing Our Contribution

MANAGEMENT
PRINCIPLE

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

Our Missions

Mabuchi’s missions embrace a
set of values for all Mabuchi
Group employees to share in
overcoming various difficulties
and conflicts that occur incarrying out their duties andachieving further growth.

Our Management Vision
MANAGEMENT GUIDELINES
Mabuchi’s management guidelines, which flow from ourmanagement principle, spell out specifically how we“contribute.” These guidelines outline the mission of Mabuchi’sbusiness activities.

MANAGEMENT POLICIESMabuchi’s management policies provide guidelines for its
corporate activities, which are a starting point for creating value
and lead to greater levels of social contribution and achievingsound growth.

MANAGEMENT SCHEME
Based on Mabuchi’s business policy of maximizing the potentialof small DC (direct-current) brush motors as our core business,
we mobilize our organizational skills and promote businessactivities in which we can continuously exert a unique“Mabuchi-ism” that cannot easily be emulated. Naturally, we do
not aim at diversification without contributing to society,namely, diversification only to expand sales. We generate
revenues and profits as a result of our contributions to markets
in which we are truly welcome. We plan to continue reflecting
this management philosophy, which has served us well in thepast, into the future.
Annual Report 201518

Corporate Governance
Basic Approach to Corporate GovernanceCorporate Governance Institutions

At Mabuchi, our Management Principle is “Contributing tointernational society and continuously increasing our contribution,”
and we regard the realization of this principle, through our small
motors, as our raison d’être. Our corporate governance comprisesorganizational/management systems that are designed to help realize
our Management Principle, and various managerial measures that
support those systems. Accordingly, we believe that the fundamental
objective in establishing and implementing an appropriate corporate
governance framework is to further the interests of our shareholders
and other stakeholders on an ongoing basis through the creation offair profits and the enhancement of corporate value. Constructing
and maintaining a corporate governance system along the lines given
below are indispensable to Mabuchi as a listed company.
- To clearly separate management decision-making and efficientbusiness execution, and to clarify the scope of accountability;- 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 general shareholders to ensure
objectivity and neutrality of management supervision functions;- To foster a corporate culture in which all Group employees
recognize and share the understanding that the practices ofcorporate ethics and compliance support the organization’s social
impartiality and are fundamental to living up to the trust andexpectations of all stakeholders; and- To disclose corporate information to all shareholders and otherstakeholders in an appropriate, fair, timely, and clear manner and toensure accountability through the Board of Directors, the Audit &Supervisory Board, and other bodies.

	Directors, Board of Directors, Executive Committee andExecutive Officer System
Significant management decision-making is carried out by the Boardof Directors, consisting of six inside directors and two independent
outside directors who are familiar with the Company’s management
environment and business. The Board of Directors quintessentiallyserves the functions of management decision-making andsupervision of the execution of directors’ duties and, as required bylaws and ordinances, reporting on important executive management
decisions and conditions. Responsibility for executing decisions
that have been made by the Board of Directors is transferred
to representative directors and executive officers. The Board of
Directors convenes regularly once a month and at other times as
required. The Company deems that independent outside directors
shall act in a supervisory and advisory role to the Company’s
management at the Board of Directors’ meetings to not only ensure
but also enhance transparency.
Mabuchi has also introduced an Executive Officer System that
centralizes strategic decision-making and supervision functions on
directors and delegates powers and responsibilities to executive
officers for the everyday execution of their duties. This system serves
to enhance the functions of both directors and executive officers.
Furthermore, Mabuchi has established an Executive Committee,
primarily composed of executive officers, with the objectives of
supporting the functions of the Board of Directors, conducting
preliminary consultations relating to important issues for deliberationby the Board of Directors, carrying out executive business decisionmaking outside the scope of the Board of Directors’ legal powers,
and reporting on executive business conditions. This arrangement

General Meeting of Shareholders
Appoint/Dismiss
Consult/Report
Independent
Auditors

ReportLiaiseAudit & Supervisory Board
Advise(Including three outside Audit &Supervisory Board members/
independent outside officers) Audit

Department for Audit &Supervisory Board Members

ReportDirectSuperviseGroup Management Vision

LiaiseConsult

Executive Committee(Executive Managing Officers)

ExecuteCompany Departments(Responsible for Compliance)

Internal
Audit

19

MABUCHI MOTOR CO., LTD.

Subsidiaries(One Director in Chargeof Compliance)(Internal Audit Committee)

Meeting of Head of Group Offices(Risk Management Committee)

AdviseReportRepresentative Directors

ReportInternal Reporting
SystemCompensation Committee

Management Principle

Internal Audit Department

Accounting
Audit

Nominating Committee

Board of Directors(Including two outside directors/
independent outside officer)

Basic Policy on Internal Control
Mabuchi Motor Ethical Standards
Other Supervisory Frameworks• Environmental Management
Committee (Audit of the Environmental
Management System)• Quality Management Committee (Auditof the Quality Management System)• Design Reviews• Division of Duties/Company Rules andRegulations• Ringi System and Other Regulations• (Subsidiaries) Regulations on Powers ofApprovalenhances the Board of Directors’ function, as it allows the Board toprioritize deliberation of reports and proposals, making decisions onthese topics and monitoring and supervising the execution of duties.
The Executive Committee meets regularly twice a month.
In addition to compiling its own “Election Criteria for Directorand Audit & Supervisory Board Member Candidates,” Mabuchi has
set up a Nomination Committee and a Remuneration Committee,
both of which serve as advisory bodies to the Board of Directors.
The Nomination Committee deliberates matters relating to theelection of directors, Audit & Supervisory Board members, executive
officers, and associate directors. The Remuneration Committee
deliberates remuneration and the like of directors, executive officers,
and associate directors. Both committees report the results of theirdeliberations to the Board of Directors. In these ways, Mabuchi
works to ensure transparency of the decision-making process—withrespect to nomination and remuneration of directors and the like—while reinforcing the corporate governance system.

Management Monitoring System	Audit and Supervisory Board Members and Audit andSupervisory Board
Mabuchi has appointed four Audit & Supervisory Board members,
three of whom are outside members with a high degree of
independence. Mabuchi has also established a department for Audit& Supervisory Board members and has made it possible for Audit &Supervisory Board members to request audit-related assistance from
employees of the Internal Audit Department and other departments
where appropriate.
Audit & Supervisory Board members carry out audits on theexecution of duties by directors and other bodies in accordance withlegal stipulations and the auditing standards, policies, plans, andapportioned duties determined by the Audit & Supervisory Board.
Specifically, Audit & Supervisory Board members attend meetingsof the Board of Directors and the Executive Committee as well asother important meetings and oversee major business execution
decisions and documentation related to their execution, if necessary,requesting directors and employees to provide such documents or
submit reports, in order to audit and supervise the execution ofduties by directors. The Audit & Supervisory Board convenes every
second month and holds regular monthly meetings for the exchangeof opinions between Audit & Supervisory Board members along withessential deliberations regarding the execution of duties by directors.
Beyond emphasizing high-level independence of outside Audit
and Supervisory Board members, Mabuchi’s policy is for outside
Audit and Supervisory Board members to represent more thanhalf of the Audit & Supervisory Board. Mabuchi also elects Audit& Supervisory Board members with either specialist viewpoints or
considerable knowledge of legal, financial and accounting matters.
As necessary, Audit & Supervisory Board members receive relevantmaterial information from the director responsible for internal
control, the Internal Control Department, the independent auditor,
and the Internal Audit Department upon inquiry. Audit & Supervisory
Board members and directors receive reports and advice from the
Audit & Supervisory Board.

	Internal Audit Department
Mabuchi has established the Internal Audit Department under the
direct control of the president. This body liaises with the Audit &Supervisory Board (members), the director responsible for internal
control, and the Internal Control Department on a timely basis
and conducts ongoing supervision of the upgrading, running, andeffectiveness of the internal control framework for Mabuchi and its
Group companies. The Internal Audit Department reports its findings
to the president, directors, and Audit & Supervisory Board members.

	Independent Auditor
With respect to accounting audits, the Company has formed an
auditing agreement with Ernst & Young ShinNihon LLC to carry out
audits under Japan’s Companies Act and Financial Instruments andExchange Law. Ernst & Young ShinNihon conducts audits and reviewsof the Company’s annual and quarterly financial results based on an
independent, third-party standpoint. From Ernst & Young ShinNihon,
the Company receives reports as appropriate on issues identified
during the audit implementation process. The Company also receives
reports from Ernst & Young ShinNihon on both the results of audits
and the effectiveness of internal control regarding financial reportingat the Audit Report Meeting (attended by the director responsible forinternal control and Audit & Supervisory Board members) following
the end of each financial period, and responds in a timely manner if
there are any discrepancies.

Internal Control System
In accordance with the Basic Policy on Internal Control approved
at a meeting of the Board of Directors, Mabuchi established and is
now operating an internal control system. In this way, inadequacies
in internal control and other issues discovered in risk management
activities, compliance activities, Audit & Supervisory Board members’audits, and internal audit activities are reported to the directors andAudit & Supervisory Board members on a periodic or non-periodic
basis, and appropriate corrective measures are taken in a timely
manner. These efforts provide the Company with a framework forcontinuously enhancing the functioning and effectiveness of theinternal control system.
By establishing and ensuring the appropriate application ofinternal regulations governing the approval system, job authority anddivision of responsibilities, and other matters, the Company seeks tofurther ensure the appropriate conduct of business. These various
internal mechanisms serve to support the monitoring and supervisionof the conduct of business by directors.

Risk Management System
In accordance with the Basic Policy on Internal Control, Mabuchi has
designated a director with overall control over risk management andthe departments responsible for risk management; has prepared andestablished internal rules and procedures necessary for appropriate
management of risk; and has taken necessary measures, including
informing and educating employees about risk management.
In addition, Mabuchi has established the Risk Management
Committee, whose members are the persons responsible for risk
management at each company department and subsidiary; has madepossible cross-organizational activities concerning risk awarenessand assessment in routine business activities, risk response, andinformation provision; and has put in place a Group Emergency
Response System to prepare for contingencies, with the objective ofprotecting all Group business activities in the event of an emergency.
Furthermore, the Internal Audit Department periodically audits
the status of risk management and reports the audit results to theBoard of Directors and Audit & Supervisory Board. The Board of
Directors reviews the report and takes any necessary measures.
In this way, Mabuchi pursues continuous improvement of the risk
management system.

Annual Report 201520

Board of Directors, Audit & Supervisory Board
Members, and Executive Officers(As of March 30, 2016)

Board of Directors
Shinji Kamei

Hiroo Okoshi

Tadashi Takahashi

Representative Director
and Chairman

Representative Director
and President,
President and CEO

Director, Managing
Executive Officer
and Senior General
Manager of Researchand Development
Headquarters

Masato Itokawa

Tadahito Iyoda

Hirotaro Katayama

Director, Executive Officer
and Senior General Manager
of Quality Assurance
Headquarters, in charge of
Quality and Environmental
Management

Director, Executive
Officer and Senior
General Manager
of Administration
Headquarters, in chargeof Internal Control

Director, Executive Officer
and Senior General
Manager of Operations
Control Headquarters,in charge of Production
Bases Control

Iwao Nakamura

Ichiro Hashimoto

Outside Director

Outside Director

Audit & Supervisory Board Members
Kazuyuki Someya

Nobutaka Motohashi

Toru Masuda

Audit & Supervisory
Board Member (Full-time)

Outside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberTsuyoshi Nakamura

Eiji Uenishi

Touichi Koyata

Executive Officer, Senior
General Manager ofSales & Marketing
Headquarters

Executive Officer,
Deputy Senior General
Manager of Researchand Development
Headquarters, in chargeof Product Development

Executive Officer, Senior
General Manager,
Business Platform
Innovation Headquarters

Kentaro Shirai

Katsuhiko Katayama

Executive Officer, General
Manager, Purchasing
Dept., Operations Control
Headquarters

Managing Group
Executive Officer,
in charge of China andTaiwan BusinessTakashi Asai
Outside Audit &Supervisory Board
MemberExecutive Officers (excluding those also serving as directors)

21

MABUCHI MOTOR CO., LTD.

Corporate Social Responsibility
Mabuchi actively pursues social contribution activities. Of particular note is our proactive and ongoingeducational support of the young, our future leaders, through our business activities.
“Empowering dreams.” We firmly believe in these words. People are the driving force behind social
advancement, and fostering the next generation of technical engineers is extremely important from theperspective of international society. We help foster the people who will become our future leaders
through activities enabling them to experience first-hand our motors, the technologies contained therein,
and manufacturing processes. Success in these endeavors gives us immense joy.
Through our business activities, we will continue actively embracing future-oriented initiatives together
with all of our stakeholders.
At the Mabuchi Group, we are committed
Makingto safely providing better and cheaper
Environmentproducts in a more reliable way, whileaiming to make our products lighter, more
Friendlycompact and more energy-efficient for end
Products
users, and helping to save resources andenergy to benefit society as a whole. To thisend, we relentlessly exploit the potential of
motors and strive to maximize their value.
Our environment-friendly, high-performance, low-cost products
are supplied through a flexible manufacturing system and are
finding more and more applications in wide-ranging fields. We are
the world’s No. 1 brand, with annual production of around 1.5
billion units.
GD-558RE/LE, GD-558RF/LF (motors for power window lifters)
The GD-558RE/LE, which conforms to specifications for European and North American
markets, has been added to the GD-558
series of motors for power window lifters.
With reduced weight, it offers improved fuelefficiency and represents the pinnacle ofenvironment-friendly product manufacturing.
IS-94BZA

IS-92BZA

Robot Contest by providing event management support and motors
on an ongoing basis. Our aim here is to help foster future engineers
and the development of science and technology.
Motor Support
Support for the
National TechnicalCollege Robot
Contest (around
20,400 motors
provided in total)

Sharing the Joy of Science with Children
Teaching Children
Every year, Mabuchi dispatches staff toelementary schools in Matsudo City,
where it is headquartered, to give scienceclasses. In these classes, children gain
hands-on experience in handling motors
and learning about electromagnetic
properties and the like. Thanks to theseclasses, participating children have said,“Science has become fun.”IS-92BZA, IS-94BZA(motors for light electric vehicles)
These motors, which contribute to advancesin compactness and electrification, can be
fitted to power electrically assisted bicycles
and other welfare equipment, thus helping
people enjoy safe, comfortable lives.

ID Series (brushless motors for MFPs)
The ID Series of inner-roller-type brushless
motors for multifunction printers (MFPs) ismore environment-friendly than conventional stepping motors. It also addresses
customer demand for compactness, lightweight, and energy efficiency.

ID-519XW (right)
ID-539XW (left)

Our Management Principle is “Contributing
to international society and continuously
increasing our contribution.”To realize thisprinciple, we support local communities
and society at large by engaging in various
activities to broadly foster social development. As one such activity, we provide
support to the young, our future leaders,to help them grow up surrounded by the joy of science and manufacturing.

Support for
Product
Manufacturing/
Education

RS-555VC with gear head (top) JC/LC-578VA
RS-385PH with gear head (bottom)

Educational Support at Overseas Bases
At our bases in China, we provide ongoing educational support for local students,from elementary to university level. These
activities include constructing schoolbuildings, providing scholarships, anddonating books and learning materials.
Internship Program
We work to provide work-experience
opportunities for students who areabout to become members of society, enabling them to become familiar with working and understand our“Management Principle”. To this end,
we offer internships at our headquarters to vocational high school
students, graduate students, and college students from the U.S.

Community
SupportActivities

The entire Mabuchi Group engages incommunity-rooted environmental protection activities, as well as visiting children
and the elderly and sick at orphanages andnursing homes and making donations tosuch facilities,
on an ongoingbasis.

Robot Contest Sponsorship
Mabuchi has long been co-sponsoring the National TechnicalCollege Robot Contest, the ABU Robot Contest, and the College

Annual Report 201522

Consolidated Balance Sheets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2014 and 2015

Yen
(Millions)

U.S. Dollars(Thousands)

2014

2015

2015

¥110,808¥106,305$  885,882

23,33325,527

212,726

(67)

(113)

(948)

Short-term investments

12,414

11,014

91,786Merchandise and finished goods

20,17921,417

178,481Work in process

1,585

1,271

10,597

Raw materials and supplies

7,283

8,316

69,303

Deferred tax assets – current

1,635

1,637

13,641Other current assets

3,980

3,601

30,013

181,154

178,978

1,491,485

Land

6,031

6,238

51,989Buildings and structures

47,25347,221

393,508

Machinery and equipment

56,71961,927516,058

Construction in progress

4,370

4,694

39,120114,375

120,0811,000,677(60,366)(61,317)(510,979)

54,00858,763

489,698

18,88516,001

133,342

2––

Deferred tax assets – non-current

367

407

3,395

Other investments and other assets

1,950

2,045

17,044

21,20518,453

153,783¥256,368¥256,196$2,134,966

ASSETS
Current Assets:
Cash and bank deposits
Trade notes and accounts receivable
Less – Allowance for doubtful accounts

Total current assets

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

Investments and Other Assets:
Investment securities
Long-term loans receivable

Total investments and other assets

Total Assets

23

MABUCHI MOTOR CO., LTD.

Yen
(Millions)

U.S. Dollars(Thousands)

2014

2015

¥  7,035¥  6,434$    53,618

Short-term loans payable

113

113

946

Accrued income taxes

3,079

2,119

17,662

Accrued bonuses due to employees

192

218

1,821

Accrued bonuses due to directors

127

130

1,083

Deferred tax liabilities – current

58

16

134

8,319

7,860

65,50018,926

16,892

140,767

283

170

1,419

1,461

2,080

17,334

17

15

132

2,095

3,481

29,011

271

311

2,591

Total long-term liabilities

4,129

6,058

50,490Total liabilities

23,055

22,950191,257

Net Assets:
Shareholders’ Equity
Common stock, no par value:
Authorized: 200,000,000 shares
Issued: 75,751,762 shares in 2014
70,927,562 shares in 2015
Additional paid-in capital

20,704
20,41920,704
20,419172,540
170,165

Retained earnings

192,606

183,853

1,532,112

Treasury stock, at cost: 5,619,828 shares in 2014 and1,589,906 shares in 2015

(20,010)(6,046)(50,383)

213,720

218,932

1,824,434

Net unrealized holding gains (losses) on securities

1,968

2,441

20,347

Foreign currency translation adjustments

18,311

12,775

106,461Retirement benefits liability adjustments

(742)

(965)

(8,046)

19,537

14,251

118,762

54

61

513

Total net assets

233,312233,245

1,943,709

Total Liabilities and Net Assets¥256,368¥256,196$2,134,966

LIABILITIES AND NET ASSETS

2015

Current Liabilities:
Trade notes and accounts payable

Other current liabilities
Total current liabilities
Long-term Liabilities:
Long-term loans payable
Liability for retirement benefits
Asset retirement obligations
Deferred tax liabilities – non-current
Other long-term liabilities – non-current

Total shareholders’ equity
Accumulated other comprehensive income

Total accumulated other comprehensive income
Subscription rights to shares

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

Annual Report 201524

Consolidated Statements of Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2014 and 2015
Yen
(Millions)
Net Sales
Cost of Sales
Gross profit
Selling, General and Administrative Expenses
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
Gain on sales of investment securities, net
Business structure improvement expenses
Impairment loss
Loss on valuation of golf club membership
Other, net
Income before Income Taxes and Minority Interests
Income Taxes:
Current
DeferredIncome before Minority Interests
Net Income

U.S. Dollars(Thousands)

2014¥122,544
86,92935,614
18,73916,875

2015¥143,143
99,67343,47020,50822,9612015$1,192,863
830,610362,252
170,904
191,348

715
5,124
1,162
(242)
342
(434)
–
–
51
6,720
23,595

938
2,329
983
744
5
(355)
(906)
(7)
(100)
3,632
26,593

7,823
19,412
8,198
6,205
45
(2,964)(7,551)(61)(841)
30,267
221,616

6,210
(705)
5,504
18,090¥ 18,090

6,883
1,164
8,047
18,546¥ 18,546

57,358
9,705
67,063
154,552$  154,552

2014

2015

U.S. Dollars
2015¥ 258.02
257.95214.00¥ 266.98
266.90110.00$     2.22
2.22
0.91

Yen
Per Share Data:
Basic net income
Diluted net income
Dividends applicable to current year earnings

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

Consolidated Statements of Comprehensive Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2014 and 2015
Yen
(Millions)
Income before Minority Interests
Other Comprehensive Income
Net unrealized holding gains (losses) on securities
Foreign currency translation adjustments
Retirement benefits liability adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Shareholders of the parent
Minority interests

U.S. Dollars(Thousands)

2014¥18,0902015¥18,546

2015$154,552(193)
13,242–
13,048¥31,139472(5,536)(222)(5,286)¥13,259

3,940(46,135)(1,856)(44,052)$110,499¥31,139–¥13,259–$110,499–

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

25

MABUCHI MOTOR CO., LTD.

Consolidated Statements of Changes in Net Assets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2014 and 2015
Number of Shares(Thousands)

Yen(Millions)

2014

2015

2014

75,751–75,75175,751(4,824)70,927¥ 20,704–¥ 20,704¥ 20,704–¥ 20,704$  172,540–$  172,540

Additional Paid-in Capital:
Beginning balanceEnding balance¥ 20,419¥ 20,419¥ 20,419¥ 20,419$  170,165$  170,165

Retained Earnings:
Beginning balance
Cumulative effect of change inaccounting principle (Note 2)
Restated balance
Net income
Dividends paid
Treasury stock disposal
Treasury stock cancellation
Ending balance¥180,490–
180,490
18,090(5,974)––¥192,606¥192,606(190)
192,416
18,546(8,216)(7)(18,884)¥183,853$1,605,052(1,585)
1,603,467
154,552(68,468)(65)(157,372)$1,532,112

Treasury Stock:
Beginning balance
Treasury stock acquisition
Treasury stock disposal
Treasury stock cancellation
Ending balance¥ (20,084)
(12)
86
–
¥ (20,010)¥ (20,010)(5,011)91
18,884¥  (6,046)$  (166,754)(41,764)762
157,372$   (50,383)

Net Unrealized Holding Gains (Losses) on Securities:
Beginning balance
Net change during the year
Ending balance¥  2,162(193)¥  1,968¥  1,968472¥  2,441$   16,407
3,940$   20,347

Foreign Currency Translation Adjustments:
Beginning balance
Net change during the year
Ending balance¥  5,069
13,242¥ 18,311¥ 18,311(5,536)¥ 12,775$  152,597(46,135)$  106,461

Retirement Benefit Liability Adjustments:
Beginning balance
Net change during the year
Ending balance¥       –(742)¥    (742)¥    (742)(222)¥    (965)$    (6,189)(1,856)$    (8,046)

Total Accumulated Other Comprehensive Income:
Beginning balance
Net change during the year
Ending balance¥  7,232
12,305¥ 19,537¥ 19,537(5,286)¥ 14,251$  162,814(44,052)$  118,762

Subscription Rights to Shares:
Beginning balance
Net change during the year
Ending balance¥     2924¥     54¥     547¥     61$      45161$      513

Total Net Assets:
Beginning balance
Cumulative effect of change inaccounting principle (Note 2)
Restated balance
Net income
Dividends paid
Treasury stock acquisition
Treasury stock disposal
Net changes in items other thanthose in shareholders’ equity
Ending balance¥208,791–
208,791
18,090(5,974)(12)
86
12,330¥233,312¥233,312(190)
233,122
18,546(8,216)(5,011)
83(5,278)¥233,245$1,944,270(1,585)
1,942,684
154,552(68,468)(41,764)
696(43,991)$1,943,709

Common Stock:
Beginning balance
Treasury stock cancellation
Ending balance

2015

U.S. Dollars(Thousands)

2015

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

Annual Report 201526

Consolidated Statements of Cash Flows
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2014 and 2015

Yen
(Millions)

2014

2015

2015

¥ 23,595
5,066–¥ 26,593
6,580
906$ 221,616
54,840
7,551

(483)

–

–

452
(715)
(1,432)

427
(938)
(157)

3,563
(7,823)(1,313)

(342)

(5)

(45)

242
(1,738)(1,731)788(1,213)22,488723(0)(5,092)
18,118(744)(3,341)(3,683)(758)
2,150
27,029953(0)(7,866)
20,115(6,205)(27,844)(30,693)(6,323)
17,923
225,2457,941(0)(65,557)
167,628

Cash Flows from Investing Activities:
Increase in time deposits
Proceeds from withdrawal of time deposits
Purchases of short-term investments
Proceeds from sales of short-term investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Other, net
Net cash used in investing activities(16,070)
14,422(7,995)7,600(9,838)31(2,066)2,070(132)(11,977)(9,978)17,237(5,500)8,400(15,592)
1,208
(4)
3,064
(14)
(1,178)(83,151)
143,645(45,833)
70,002(129,935)
10,074(37)
25,533(118)(9,820)Cash Flows from Financing Activities:
Repayment of long-term loans payable
Cash dividends paid
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities(113)(5,974)(12)
86(6,014)(113)(8,214)(5,049)65(13,312)(946)(68,454)(42,079)546(110,934)

6,631
6,758
102,462¥109,220(1,888)3,736
109,220¥112,956(15,737)
31,136910,170$ 941,307

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for retirement benefits, net ofpayments
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Exchange gain
(Gain) loss on sales of short-term investments and investment
securities(Gain) loss on disposal of fixed assets
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and Cash Equivalents at the Beginning of Year
Cash and Cash Equivalents at the End of Year

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

27

U.S. Dollars(Thousands)

MABUCHI MOTOR CO., LTD.

Notes to Consolidated Financial Statements
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2014 and 2015

1. Summary of Significant Accounting Policies
a Basis of presentation
The accompanying consolidated financial statements of Mabuchi Motor Co., Ltd. (the “Company”) and consolidated subsidiaries areprepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects to theapplication and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated
financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.
For the purpose of this report, certain reclassifications have been made to present the accompanying consolidated financial
statements in a format which is familiar to readers outside Japan.
The consolidated financial statements are expressed in Japanese yen. However, the consolidated financial statements as of, and forthe year ended, December 31, 2015 have been translated into U.S. dollars at a rate of ¥120 = U.S.$1, the approximate exchange rate
prevailing on December 31, 2015. Those U.S. dollar amounts presented in the consolidated financial statements and related notes areincluded solely for the convenience of the reader. This translation should not be construed as a representation that all the amounts
shown could be converted into U.S. dollars.
b Principles of consolidation
The consolidated financial statements include the accounts of the Company and all significant subsidiaries. All significant intercompany balances, transactions, and profits have been eliminated on consolidation. Investments in unconsolidated subsidiaries arestated at cost.
c Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statement of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets which are translated at their historical exchange rates. Revenue andexpense accounts are translated at the average rate of exchange in effect during the year. Differences arising from the translation arepresented as foreign currency translation adjustments in the consolidated financial statements.
d Cash equivalents
For the purposes of the 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 “trading securities”, when they are held for the purpose of earning capital gains in the short-term,“held-to-maturity”, where management has the positive intent and ability to hold the securities to maturity, and “other securities”,
where those securities are not classified as either trading or held-to-maturity, which represent primarily available-for-sale securities.
Held-to-maturity securities are reported at amortized cost. Available-for-sale securities are stated at fair value with changes in
unrealized holding gains or losses, net of the applicable income taxes, presented in a separate component of net assets. However,when the fair value of held-to-maturity securities and available-for-sale securities declines significantly and the decline is considered tobe irrecoverable, such unrealized holding losses are recognized as impairment losses. Available-for-sale securities for which fair value is
not readily determinable are stated at moving average cost.
Corporate bonds classified as held-to-maturity securities and debt securities (corporate bonds) classified as available-for-salesecurities include compound financial instruments.
The Company considers a decline in the value of securities to be irrecoverable where market values decline to more than 50% of
acquisition costs. Where market values decline to between 30% and 50% of acquisition costs, the Company judges the necessity ofrecognizing any impairment losses by assessing the potential of market values to recover taking into consideration declining pricetrends and other individually relevant factors.
f Inventories
Finished goods, work in process and raw materials are stated at average cost, however, where net realizable value is lower than cost,
the carrying value of the inventory is reduced.
g Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. Depreciation is computed primarily using the declining-balance method for theCompany (except for certain buildings) and for overseas subsidiaries, principally using the straight-line method over their estimateduseful lives. Buildings acquired by the Company on or after April 1, 1998 are depreciated using the straight-line method. Maintenanceand 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 tothe lessee, are depreciated using the straight-line method over the lease period and making the assumption that there is no residual
value.
i Retirement benefits
The Company and certain subsidiaries have funded noncontributory pension plans covering substantially all qualifying full-time
employees. Under the plan, eligible employees are entitled to a 10-year annuity or a lump-sum payment based on the rate of pay at
the time of retirement or termination, length of service and certain other factors. Annual payments to the trustees for the pension
plan, which are deductible for tax purposes, are based on the actuarially determined costs of the plan.
The allowance for retirement benefits is provided based on the amount of the retirement benefit obligation, reduced by the fairvalue of pension plan assets at the end of each fiscal year.
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.
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.
j Income taxes
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases ofassets and liabilities and their reported amounts using current enacted tax rates.
k Derivative and hedging activities
If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, the Company
defers recognition of gains or losses on revaluation of the forward foreign exchange contract until the related losses or gains on thehedged items are recognized.

Annual Report 201528

l Standards issued but not yet effective“Implementation Guidance on Recoverability of Deferred Tax Assets” (Accounting Standards Board of Japan (ASBJ) Guidance No.26 ofDecember 28, 2015)
1) Overview
The new standard basically continues to apply the framework used in the JICPA Guidance No.66 (classify companies based on fivecategories, and according to the category, estimate the amount of deferred tax assets) where recoverability of deferred tax assets is
assessed based on an entity’s category, but certain accounting treatments were changed as necessary.
① Treatment for companies that do not meet any of the criteria for the categories② Criteria for categories 2 and 3③ Treatment of unscheduled deductible temporary differences for category 2 entities④ Treatment of reasonable estimated duration of taxable income before adjustments for future temporary differences of category 3
entities⑤ Treatment if an entity in category 4 also meets the criteria for category 2 or 3
2) Scheduled date of application
The Company will apply this standard from the fiscal year beginning January 1, 2017.
3) Impact of application of accounting standard
The Company is currently evaluating the impact of the application of this accounting standard on the consolidated financial
statements.
m Additional information(Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc. through Trusts)
1. Outline of Transactions
The ESOP Trust is a trust-type employee incentive plan that uses the mechanism of an employee shareholding association, with the
purpose of attempting to expand the savings system that promotes the asset accumulation of employees who own the Company’s
shares (enhancement of the employee welfare programs). It is based on the Employee Stock Ownership Plan (ESOP) System in the
United States.
A major purpose of introducing the ESOP Trust is to improve welfare programs for employees who support the Company’s growth.
The introduction thereof also aims to enhance the Company’s corporate value over the medium to long term by granting an incentive
toward high stock prices and creating greater awareness of the Company’s business performance and stock value among its
employees.
The Company has established a trust with those employee members of Mabuchi Motor Employee Shareholding Association(hereinafter “Our Shareholding Association”) who meet certain requirements as its beneficiaries, and during a predetermined period
for acquisition, said trust, or the ESOP Trust, will acquire the number of the Company’s shares that Our Shareholding Association is
expected to acquire over the next several years. Afterward, the ESOP Trust sells off the Company’s shares to Our Shareholding
Association on a fixed day every month. The remaining funds will be distributed according to the contribution ratio of the employees
as beneficiaries when there are ESOP Trust earnings resulting from an upward swing in stock prices when the term of the ESOP Trustends. There is no additional burden on the employees as the Company will pay back the loan payable collectively to the bank based on
its guarantee clause in the loan agreement with the bank if a liability associated with the trust estate resulting from a loss is caused bya drop in stock prices.
2. Treasury Shares Remaining in the Trust
Shares of the Company remaining in the trust are recorded as treasury shares under net assets through the carrying value (net of
associated costs) in the trust. The carrying value was ¥398 million at December 31, 2014 and ¥333 million ($2,777 thousand) at
December 31, 2015.
Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the ESOP trust
account. The number at year end and weighted average number of such treasury shares were 156,400 and 175,028 shares,
respectively, during the fiscal year ended December 31, 2014 and 130,700 and 145,780 shares, respectively, during the fiscal year
ended December 31, 2015.
3. Carrying Value of Loans Recorded through Application of the Gross Price Method
As of December 31, 2014: ¥397 million; As of December 31, 2015: ¥283 million ($2,366 thousand).

2. Accounting Changes(Accounting Standard for Retirement Benefits)
The Company has applied the “Accounting Standard for Retirement Benefits” (ASBJ Statement No.26 issued on May 17, 2012) and“Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No.25 revised on March 26, 2015) pursuant to certain
provisions in the main clause of Article 35 of the standard and in the main clause of Article 67 of the guidance effective from the
beginning of the fiscal year ended December 31, 2015.
Under the new standards, the calculation methods of retirement benefit obligations and service costs were revised. In addition, themethod of attributing the projected benefits was changed from the straight-line basis to the benefit formula basis, and the calculation
method of the discount rates was also changed from the discount rate based on the average remaining service years of the employees
to a single weighted average discount rate.
In accordance with transitional treatment as stipulated in Article 37 of the standard, the cumulative effect of these changes wasrecognized in retained earnings at January 1, 2015.
As a result, liability for retirement benefits has increased by ¥289 million ($2,412 thousand), and retained earnings has decreased by¥190 million ($1,585 thousand) at December 31, 2015.
The impact on operating income and income before income taxes and minority interests for the year ended December 31, 2015 wasimmaterial.

29

MABUCHI MOTOR CO., LTD.

3. Changes in Net Assets
Information regarding changes in net assets for the years ended December 31, 2014 and 2015 is as follows:a Shares issued and outstanding/Treasury stock
2014
Shares Issued (Thousands)
Common stock
37,875––37,875

Type of shares
Number of shares as of December 31, 2013
Increase in number of shares
Decrease in number of shares
Number of shares as of December 31, 2014

Treasury Stock (Thousands)
Common stock
2,825
1
17
2,809

Notes: 1. The increase in the number of shares of treasury stock was due to the purchase of 1 thousand shares of less than one unit.
2. T he decrease in the number of shares of treasury stock was due to sales of 17 thousand shares to Our Shareholding
Association by the ESOP Trust.
3. There were 95 thousand shares and 78 thousand shares of treasury stock held by the ESOP Trust included in the number ofshares of treasury stock as of January 1, 2014 and December 31, 2014, respectively.
2015
Shares Issued (Thousands)
Common stock
37,87537,875
4,824
70,927

Type of shares
Number of shares as of December 31, 2014
Increase in number of shares
Decrease in number of shares
Number of shares as of December 31, 2015

Treasury Stock (Thousands)
Common stock
2,809
3,636
4,856
1,589

Notes: 1. The Company carried out a 2-for-1 stock split of its common stock effective January 1, 2015. The increase of 37,875 thousand
shares during the fiscal year was due to the common stock split.
2. T he increase in the number of treasury stock was due to the common stock split of 2,809 thousand shares, purchase of thetreasury stock of 824 thousand shares and purchase of shares of less than one unit of 2 thousand shares.
3. The decrease in the number of shares issued and the number of shares of treasury stock were due to the cancellation of
4,824 thousand shares by resolution of the Board of Directors.
4. The decrease in the number of shares of treasury stock was, other than that above, due to the exercise of stock options of 6
thousand shares and sales of 25 thousand shares to Our Shareholding Association by the ESOP Trust.
5. T here were 78 thousand shares and 130 thousand shares of treasury stock held by the ESOP Trust included in the number ofshares of treasury stock as of January 1, 2015 and December 31, 2015, respectively.
b Share subscription rights
2014
Number of shares issued
Company

Description

ParentCompany

Subscription
rights as stock
options
Total

Type of sharesissuedNumber ofshares at
January 1,
2014

Increase

Decrease

Number ofshares at
December 31,
2014

Balance at
December 31,
2014
Yen (Millions)

U.S. Dollars(Thousands)

–

–

–

–

–

¥54

$450

–

–

–

–

–

¥54

$450

Type of sharesissuedNumber ofshares at
January 1,
2015

Increase

Decrease

Number ofshares at
December 31,
2015

Balance at
December 31,
2015
Yen (Millions)

U.S. Dollars(Thousands)

–

–

–

–

–

¥61

$513

–

–

–

–

–

¥61

$513

2015
Number of shares issued
Company

Description

ParentCompany

Subscription
rights as stock
options
Total

c Dividends
Dividends paid during the fiscal year ended December 31, 2014
2014
Resolution by
Total amount of dividends
Dividends per share
Record date
Effective date

Shareholders’ Meeting
March 28, 2014
¥3,057 million¥87
December 31, 2013
March 31, 2014

Board of Directors’ Meeting
August 12, 2014
¥2,917 million¥83
June 30, 2014
September 12, 2014

Note: Dividends approved at the shareholders’ meeting on March 28, 2014 paid to the ESOP Trust in the amount of ¥8 million havebeen included in the total amount of dividends. Dividends approved at the Board of Directors’ meeting on August 12, 2014 paid
to the ESOP Trust in the amount of ¥7 million have been included in the total amount of dividends.

Annual Report 201530

Dividends whose record date was in the fiscal year ended December 31, 2014 but whose effective date was in the following fiscal year
2014
Shareholders’ Meeting
March 27, 2015
¥4,603 million¥131
December 31, 2014
March 30, 2015

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

Note: D
 ividends paid to the ESOP Trust in the amount of ¥10 million ($83 thousand) have been included in the total amount of dividends.
Dividends paid during the fiscal year ended December 31, 2015
2015
Shareholders’ Meeting
March 27, 2015
¥4,603 million($38,358 thousand)¥131($1.09)December 31, 2014
March 30, 2015

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

Board of Directors’ Meeting
August 12, 2015
¥3,612 million($30,102 thousand)¥52($0.43)June 30, 2015
September 18, 2015

Note: Dividends approved at the shareholders’ meeting on March 27, 2015 paid to the ESOP Trust in the amount of ¥10 million ($83thousand) have been included in the total amount of dividends. Dividends approved at the Board of Directors meeting on
August 12, 2015 paid to the ESOP Trust in the amount of ¥7 million ($58 thousand) have been included in the total amount ofdividends.
Dividends whose record date was in the fiscal year ended December 31, 2015 but whose effective date was in the following fiscal year
2015
Shareholders’ Meeting
March 30, 2016
¥4,029 million($33,576 thousand)¥58($0.48)December 31, 2015
March 31, 2016

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

Note: Dividends paid to the ESOP Trust in the amount of ¥7 million ($58 thousand) have been included in the total amount ofdividends.
d Stock options
The Company issued the following share subscription rights for the purchase of new shares of common stock in accordance with the
Corporation Law of Japan.
For the years ended December 31, 2014 and 2015, the Company recognized and allocated share-based compensation costs asfollows:
Yen (Millions)
2014
¥24
¥24

Selling, general and administrative expenses
Total

2015
¥25
¥25

U.S. Dollars (Thousands)
2015
$211
$211

A description of the 2013, 2014 and 2015 Stock Option Plans as of December 31, 2014 and 2015, respectively, are summarized asfollows:
Grantee categories and number of grantees
Number of shares
Grant date
Vesting conditions
Service period
Exercisable period

2013 Stock Option Plan
6 directors of the Company
11,940 shares of common stock
May 20, 2013
None
None
May 21, 2013 to May 20, 2033

2014 Stock Option Plan
6 directors of the Company
7,980 shares of common stock
April 21, 2014
None
None
April 22, 2014 to April 21, 2034

2015 Stock Option Plan
6 directors of the Company
4,650 shares of common stock
April 20, 2015
None
None
April 21, 2015 to April 20, 2035

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 during the years ended December
31, 2014 and 2015.
2013 Stock Option Plan

31

2014 Stock Option Plan

2015 Stock Option Plan

Non-vested:
Beginning of the year
GrantedForfeited
VestedEnd of the year

–
–
–
–
–

–
–
–
–
–

–
4,650
–
4,650
–

Vested:Beginning of the year
VestedExercised
Forfeited
End of the year

11,940
–
3,980
–
7,960

7,980
–
2,660
–
5,320

–
4,650
–
–
4,650

MABUCHI MOTOR CO., LTD.

Price information of stock options for the 2013, 2014 and 2015 Stock Option Plans as of December 31, 2014 and 2015, respectively,
are summarized as follows:

Exercise price
Average price on exercise
Fair value on grant date2013 Stock
Option Plan
Yen¥    1
6,210
4,967

2014 Stock
Option Plan
Yen¥    1
6,210
6,158

2015 Stock
Option Plan
Yen¥    1–
5,465

2015 Stock
Option Plan
U.S. Dollars
$ 0
–
45

Fair value as of the grant date for the stock options issued during the year ended December 31, 2015 was estimated using the BlackScholes option pricing model with the following assumptions:2015 Stock Option Plan
24.1%
5.6 years¥214 per share($1.78 per share)
0.06%

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

The expected volatility is estimated based on a period of 5 years and 7 months (September 7, 2009 to April 13, 2015).
The expected remaining period is based on the estimated term of incumbency of directors.
The expected dividend yield is based on the actual dividend amount for interim and year-end dividend of 2014.
*4	Risk-free interest rate represents the interest rate of Japanese government bonds whose remaining period corresponds to the
expected remaining period of the stock options.
		 Because it is difficult to estimate the forfeited number of stock options for future periods, an estimation of the vested number isbased upon actual forfeitures in prior periods.
*1

*2
*3

4. Cash and Cash Equivalents
Cash and cash equivalents at the end of the year in the accompanying consolidated statements of cash flows are reconciled to cash
and bank deposits reported in the accompanying consolidated balance sheets as of December 31, 2014 and 2015 as follows:
Yen (Millions)
Cash and bank deposits
Time deposits with maturities over three months at the time of purchase
Short-term investments
Securities exposed to price risk
Cash and cash equivalents

2014¥110,808(7,602)
12,414(6,400)¥109,2202015¥106,305(363)
11,014(4,000)¥112,956

U.S. Dollars (Thousands)
2015$885,882(3,027)
91,786(33,334)$941,307

Significant non-cash transactions for the years ended December 31, 2014 and 2015 were as follows:
Yen (Millions)
Treasury stock cancellation

2014
¥  –

2015
¥18,884

U.S. Dollars (Thousands)
2015$157,372

5. 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 held-to-maturity securities, other securities and investments in thestocks of trading partners, are exposed to the risk of fluctuations in market price.
Trade notes and accounts payable are due within one year, and some are exposed to foreign currency risk.
The Company uses forward foreign exchange contracts to hedge the risk of foreign exchange fluctuations associated withreceivables and payables 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. The due
dates and the balances of trade notes and accounts receivable from major counterparties are monitored and managed regularly toensure early detection and to mitigate the risk of doubtful receivables.
2 Management of market risk (risks associated with fluctuations in foreign exchange rates and interest rates)
The Company and some of its consolidated subsidiaries hedge the risk of foreign exchange rate fluctuations on foreign currency
denominated receivables and payables, using foreign exchange forward contracts on a monthly and individual currency basis. The
Company enters into exchange contracts based on the decision of the Board of Directors and these are monitored regularly by thehead office administrative department.
The Company monitors the fair value and the financial position of the respective issuers of short-term investments and investment
securities regularly in the head office administrative department, and continually reviews the condition of stocks held. The Company
reports the condition of stocks held and their fair value to the Board of Directors, and monitors the rating and financial conditions ofissuers.
3 Management of liquidity risk related to financing activities (risk of non-payment on due date)
The Company manages liquidity risk centrally through the administrative department, which ensures a certain amount of liquidity
through the preparation and update of cash forecasts based on reports from each department and the finance plans prepared by theaccounting departments of each subsidiary.

Annual Report 201532

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 are described in Note 7. Derivative Financial Instruments below and are not indicative of themarket risk associated with derivatives transactions.
(2) Fair Value of Financial Instruments
The carrying value, fair value and variance for financial instruments as of December 31, 2014 and 2015 are as follows. Fair values thatare not readily determinable are not included in the following table.

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

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

Carrying value

Yen (Millions)
2014
Fair value¥110,808
23,33331,187¥165,329¥110,808
23,33331,885¥166,027

¥  –
–
697
¥697

¥  7,035¥  7,035¥  7,035¥  7,035

¥  –
¥  –

Variance

Carrying value

Yen (Millions)
2015
Fair value¥106,305¥106,305¥  –$  885,882$  885,882$    –

25,52725,527–

212,726

212,726–

Variance

U.S. Dollars (Thousands)
2015
Carrying value
Fair value

Variance

26,90327,527623

224,198

229,392

5,194¥158,736¥159,360¥623$1,322,807$1,328,001$5,194¥  6,434¥  6,434¥  6,434¥  6,434

¥  –
¥  –

$   53,618$   53,618$   53,618$   53,618$    –$    –

1: Method for calculating the fair values of financial instruments, short-term investments and derivative transactions
Assets:(1) Cash and bank deposits and (2) Trade notes and accounts receivable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
(3) Short-term investments and investment securities
Market prices on securities exchanges are used to determine the fair value of stock. Prices quoted by exchanges or financial institutions
are used to determine the fair value of bonds.
Liabilities(1) Trade notes and accounts payable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
Derivative instruments
Please refer to Note 7. Derivative Financial Instruments.
2: Carrying value of financial instruments for which fair values were extremely difficult to determine
Yen (Millions)
Unlisted stocks

2014
112

2015
111

U.S. Dollars (Thousands)
2015
931

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, 2014 and 2015

Cash and bank deposits
Trade notes and accounts receivable
Short-term investments and investment securities
Held-to-maturity securities
Corporate bonds
Commercial paper
Other securities
Corporate bonds
Certificates of deposit
Investment trust
Total

33

MABUCHI MOTOR CO., LTD.

Within 1 year
¥110,808
23,333

Yen (Millions)2014
1–5 years¥    ––

5–10 years¥    –
–

–
1,500

5,375
–

4,000
–

4,400
2,000
2,000
¥144,042

1,000––¥6,375–––¥4,000Cash and bank deposits
Trade notes and accounts
receivable
Short-term investments andinvestment securities
Held-to-maturity securities
Corporate bonds
Commercial paper
Other securities
Corporate bonds
Certificates of deposit
Investment trust
Total

Within 1 year
¥106,305

Yen (Millions)2015
1–5 years¥    –

U.S. Dollars (Thousands)
2015
1–5 years$     –

5–10 years¥    –

Within 1 year$  885,882

25,527––

212,726

–

–

–
2,000

3,375
–

3,000
–

–
16,66628,126–25,000
–

2,000
2,000
2,500
¥140,333

500––¥3,875–––¥3,00016,666
16,666
20,833$1,169,442

4,166
–
–
$32,293–––$25,000

5–10 years$     –

6. Investment Securities
The carrying value, fair value and variance for held-to-maturity securities as of December 31, 2014 and 2015 were as follows:(1) Held-to-maturity securities

Carrying value

Yen (Millions)
2014
Fair value¥ 8,375
8,375¥ 9,169
9,169

¥794
794

2,499
2,499
¥10,874

2,403
2,403
¥11,572

(96)
(96)
¥697

Securities whose fair value exceeds their carrying value
Corporate bonds
Subtotal
Securities whose carrying value exceeds their fair value
Corporate bonds
Subtotal
Total

Securities whose fair value exceeds
their carrying value
Corporate bonds
Subtotal
Securities whose carrying value
exceeds their fair value
Corporate bonds
Subtotal
Total

Carrying value

Yen (Millions)
2015
Fair value

Variance¥5,375
5,375¥6,079
6,079

2,999
2,999
¥8,374

2,919
2,919¥8,998

Variance

U.S. Dollars (Thousands)
2015
Carrying value
Fair value

Variance¥703
703$44,793
44,793$50,658
50,658$5,865
5,865

(80)
(80)
¥623

24,997
24,997$69,790

24,32624,326$74,984

(670)
(670)
$5,194

The acquisition cost, carrying value and variance for other securities as of December 31, 2014 and 2015 were as follows:(2) Other securities

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

Acquisition cost

Yen (Millions)
2014
Carrying value

Variance¥ 4,533
1,500
–
6,033

¥ 7,262
1,501
–
8,763

¥2,729
1
–
2,730

54
3,900
7,635
11,590¥17,623

51
3,897
7,599
11,548¥20,312

(2)
(2)
(36)
(41)
¥2,689Annual Report 201534

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

Acquisition cost

Yen (Millions)
2015
Carrying value

Variance

U.S. Dollars (Thousands)
2015
Acquisition cost
Carrying value

Variance¥ 3,529500
4,029¥ 7,070500
7,570¥3,54003,540$ 29,412
4,166
33,579$ 58,918
4,168
63,086$29,5052
29,507

999
2,000
8,140
11,139¥15,169

866
1,999
8,092
10,958¥18,528

(132)
(0)
(48)
(181)
¥3,3598,326
16,666
67,83892,832$126,411

7,224
16,661
67,434
91,321$154,407(1,101)(5)(404)(1,511)$27,996

Unlisted stocks (¥41,000 thousand) are not included in “Other securities” because their market prices do not exist and their fair values
are not readily determinable.
(3) Other securities soldYen (Millions)

Stock
Other
Total

Sold amount¥    1
1,969¥1,9702014
Total gain
¥  0
341
¥342

Total loss
¥  –
–
¥  –

Sold amount
¥64
–
¥64

2015
Total gain
¥15
–
¥15

Total loss
¥9–¥9

U.S. Dollars (Thousands)
2015
Sold amount Total gain
Total loss
$533
$125
$79
–
–
–
$533
$125
$79

7. Derivative Financial Instruments
The Company enters into forward exchange contracts and options, and forward precious metal contracts, as a normal part of risk
management efforts. The Company also utilizes compound financial instruments for the purpose of efficient management of surplus
funds. However, only principal guaranteed instruments are used, and derivatives are not used for speculative trading purposes. As aresult, the Company is exposed to risk of currency rate fluctuations and commodity price risk. The Company is also exposed to credit
related losses in the event of the nonperformance of the counterparties to foreign exchange contracts, precious metal contracts andcompound instruments. Management believes such credit risks are minor because of the high credit worthiness of the counterparties
and as such financial instruments are not held for trading purposes.
Forward precious metal contracts are used by the Company to hedge the risk of changes in market prices resulting from thepurchase of precious metals as raw materials for motor products. The contracted amounts outstanding at December 31, 2014 and2015 were ¥16,774 million and ¥22,126 million ($184,390 thousand), respectively.
The estimated fair values at December 31, 2014 and 2015 were ¥15,598 million and ¥17,387 million ($144,896 thousand),
respectively.
These forward contracts are long-term purchase contracts of raw materials, and are also not in the scope of the accounting
standards of financial instruments.

8. Retirement Benefit Plans
The table below sets forth the plans’ statuses and amounts recognized in the balance sheet at December 31, 2014 and 2015.
1. Movement in retirement benefit obligations
Yen (Millions)
Beginning balance
Cumulative effect of change in accounting principle
Restated balance
Service cost
Interest cost
Actuarial loss (gain)
Benefit paid
Other
Ending balance

2014

2015

U.S. Dollars (Thousands)
2015¥10,006–
10,006
358
189
978
(320)
271
¥11,482¥11,482289
11,772
437
118
391
(934)
(105)
¥11,679$95,689
2,412
98,102
3,643
990
3,262
(7,789)(881)$97,326

2014

2015

U.S. Dollars (Thousands)
2015¥ 9,869
129
58
398
(320)
244
¥10,378¥10,378
137
92
441
(934)
(96)
¥10,017$86,487
1,144
771
3,675
(7,789)(806)$83,483

2. Movement in plan assets
Yen (Millions)
Beginning balance
Expected return on plan assets
Actuarial gain (loss)
Contributions paid by the employer
Benefit paid
Other
Ending balance

35

MABUCHI MOTOR CO., LTD.

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

2014

2015

U.S. Dollars (Thousands)
2015

¥274
38
(10)
38
¥342

¥342
110
(13)
(19)
¥419

$2,850
916
(114)
(161)
$3,491

4. Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits
Yen (Millions)
Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Total net liability for retirement benefits at December 31

2014

2015

U.S. Dollars (Thousands)
2015¥11,482(10,378)
1,104
342¥1,446¥ 11,679(10,017)1,661
419¥   2,080$ 97,326(83,483)
13,843
3,491$ 17,334

Yen (Millions)
Liability for retirement benefits
Asset for retirement benefits
Total net liability for retirement benefits at December 31

2014

2015

U.S. Dollars (Thousands)
2015¥1,461(14)¥1,446¥2,080–¥2,080$17,334–$17,334

2014

2015

U.S. Dollars (Thousands)
2015¥  358
189
(129)
(64)
20
38
598
¥1,012¥  437
118
(137)
71
20
110
452
¥1,072$ 3,643990(1,144)
592
174
916
3,766
$ 8,940

2014

2015

U.S. Dollars (Thousands)
2015

¥  –
–
¥  –

¥   20(253)¥(232)$   174(2,111)$(1,936)

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

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

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

2014

2015

U.S. Dollars (Thousands)
2015¥    64968¥1,032¥   43
1,221¥1,265$   363
10,179$10,542

8. Plan assets
The fair values of plan assets, by major category, as a percentage of total plan assets were as follows:① Plan assets at December 31, 2014 and 2015 comprise:
General accounts
Bonds
Cash and deposits
Other
Total

2014
68.0%
19.2%
6.0%
6.8%
100.0%

2015
71.9%
17.5%
5.0%
5.6%
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 increase2014
Mainly 1.0%
Mainly 1.0%
Mainly 2.7%

2015
Mainly 0.7%
Mainly 1.0%
Mainly 2.8%

Annual Report 201536

9. Income Taxes
1. The Company is subject to a number of taxes based on income with the statutory income tax rates of approximately 37.8% and35.4% for the years ended December 31, 2014 and 2015, respectively. Foreign subsidiaries are subject to income taxes in the countries
in which they operate.
The following table summarizes the significant differences between the Japanese statutory income tax rates and the effective
income tax rates on pre-tax income for the years ended December 31, 2014 and 2015.
2014
Percentage
37.8
0.6(10.1)
1.0
(4.5)
(1.5)
(0.0)

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

23.3

2015
Percentage
35.4
0.3
(9.6)
5.1
0.5
(1.7)
0.3
30.3

2. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets andliabilities at December 31, 2014 and 2015 were as follows:
Yen (Millions)Deferred tax assets:
Evaluation losses on investment securities and other assets
Depreciation
Allowance for retirement benefits
Liability for retirement benefits
Unrealized loss on available-for-sale securities
Impairment loss
Unrealized profits on inventories and fixed assets
Net operating loss carry forwards
Other
Valuation allowance
Total
Deferred tax liabilities:
Tax on undistributed earnings in foreign subsidiaries
Unrealized holding gain on securities
Other
Total
As reported in the consolidated balance sheet:
Deferred tax assets – Current
Deferred tax assets – Non-current
Deferred tax liabilities – Current
Deferred tax liabilities – Non-current

2014

2015

U.S. Dollars (Thousands)
2015¥   573
125
–
415
24
494
1,243
237
454
(1,189)¥ 2,379¥   538
143
–
519
22
638
1,409
169
538
(1,319)¥ 2,659$   4,487
1,199
–
4,326
184
5,316
11,745
1,412
4,485(10,996)$ 22,161¥ 1,692
720
116¥ 2,529¥ 3,041917
152¥ 4,112$ 25,345
7,649
1,273
$ 34,268¥ 1,635367(58)(2,095)¥ 1,637407(16)(3,481)$ 13,641
3,395
(134)
(29,011)

3. The effects of changes in the corporate income tax rate
Act on Partial Amendment to the Income Tax Act, etc. and Act on Partial Amendment to the Local Tax Act, etc. were promulgated on
March 31, 2015, and accordingly, the effective statutory income tax rate used to calculate deferred tax assets and deferred tax
liabilities (only for temporary differences expected to be realized or settled after January 1, 2016) has changed from the 35.4% used
last year, to 32.8% in regard to temporary differences expected to be realized or settled from January 1, 2016 to December 31, 2016
and 32.1% in regard to temporary differences expected to be realized or settled from January 1, 2017.
As a result of this change in the corporate tax rate, deferred tax liabilities (net of deferred tax assets) decreased by ¥92 million ($772
thousand), deferred income taxes decreased by ¥45 million ($376 thousand), net unrealized holding gains on securities increased by¥60 million ($500 thousand) and retirement benefits liability adjustments increased by ¥(12) million ($(104) thousand) as of and forthe year ended December 31, 2015.

37

MABUCHI MOTOR CO., LTD.

10. Consolidated Statements of Comprehensive Income
The following table presents reclassification adjustments and tax effects for each component of other comprehensive income for theyears ended December 31, 2014 and 2015.
Yen (Millions)
Unrealized holding gains (losses) on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectUnrealized holding gains (losses) on securities
Foreign currency translation adjustments
Amount arising during the year
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effect
Retirement benefits liability adjustments
Total other comprehensive income

2014

2015

U.S. Dollars (Thousands)
2015¥   116
(341)
(225)
31
(193)

¥   675
(5)
670
(197)
472

$   5,631
(43)
5,587
(1,647)
3,940

13,242(5,536)(46,135)–––––¥13,048

(298)
66
(232)
9
(222)
¥(5,286)(2,490)553(1,936)79(1,856)$(44,052)

11. Shareholders’ Equity
Under the Japanese Corporation Law (“the Law”), the entire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital, which is included in capital surplus.
Under the Law, where a distribution of earnings is made, the smaller of an amount equal to 10% of the dividend or the excess, ifany, of 25% of common stock over the total of additional paid-in capital and the legal earnings reserve must be set aside as additional
paid-in capital or as part of the legal earnings reserve. The legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
As of December 31, 2015, the total amount of additional paid-in capital and the legal earnings reserve exceeded 25% of thecommon stock; therefore, no additional transfer is required.
Additional paid-in capital and the legal earnings reserve may not be distributed as dividends. However, by a resolution at ashareholders’ meeting, additional paid-in capital and the legal earnings reserve may be transferred to other retained earnings andcapital surplus, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statementsof the Company in accordance with the Law.
Year end dividends are approved by the shareholders after the end of each fiscal year, and semiannual interim cash dividends are
declared by the Board of Directors after the end of each interim six-month period.
On September 18, 2015, interim dividends (¥52 or $0.43 per share) totaling ¥3,612 million ($30,102 thousand) were paid toshareholders based on the shareholders’ record at June 30, 2015. On March 30, 2016, the shareholders approved a declaration ofdividends (¥58 or $0.48 per share) totaling ¥4,029 million ($33,576 thousand).

12. Amounts Per Share
Yen
2014

2015

Net Income
Basic
Diluted¥258.02¥257.95¥266.98¥266.90

Net Assets

2014¥3,325.99

Yen
2015¥3,363.01

U.S. Dollars
2015
$2.22
$2.22
U.S. Dollars
2015$28.02

Note: 1. The Company carried out a 2-for-1 stock split of its common stock effective January 1, 2015 and basic net income, diluted net
income and net assets per share have been calculated as if the stock split took place on January 1, 2014.
2. P er share amounts are computed based on the number of shares outstanding less treasury stock including shares of the ESOP
trust account.
3. A s shown in “2. Accounting Changes” the Company has adopted the “Accounting Standard for Retirement Benefits” inaccordance with the provisional treatment stipulated in Section 37 of the standard. This resulted in a ¥2.72 ($0.02) decline in
net assets per share as of December 31, 2015.
The bases for the calculations (Net assets per share) are as follows:
Yen (Millions)
Total net assets
Amounts deducted from total net assets:
Share subscription rights
Net assets attributable to shares of common stock
Number of common stock on December 31 (Shares)

2014

2015

U.S. Dollars (Thousands)
2015¥233,312
54
54¥233,258
70,131,934¥233,245
61
61¥233,183
69,337,656$1,943,709
513
513$1,943,196
69,337,656

Annual Report 2015

38

The bases for the calculations (Net income per share and Diluted net income per share) are as follows:
Yen (Millions)
Net income per share
Net income:Amounts not revert to ordinary shareholders
Net income in relation to common stock
Average number of common stock (Shares)
Diluted net income per share
Net income adjustments
Increase in number of shares of common stock (Shares)
Share subscription rights (Shares)

2014

2015

U.S. Dollars (Thousands)
2015¥18,090–
18,09070,115,136¥18,546–
18,546
69,466,567$154,552–
154,552
69,466,567–
17,48917,489–21,541
21,541–
21,541
21,541

13. Selling, General and Administrative Expenses
The main components of “Selling, General and Administrative Expenses” for the years ended December 31, 2014 and 2015 were as
follows:
Yen (Millions)
Packing and freightage expenses
Salaries and wages
Provision for bonuses due to employees
Provision for bonuses due to directors
Retirement benefit expenses
Employee benefit costs
Depreciation
Provision of allowance for doubtful debts
Research expenses

2014

2015

U.S. Dollars (Thousands)
2015¥1,198
7,865
186
127
457
1,408
1,304
10
1,153

¥1,300
8,536
212
130
581
1,561
1,572
49
1,325

$10,840
71,136
1,768
1,083
4,845
13,013
13,105413
11,043

14. Contingent Liabilities
As of December 31, 2014 and 2015, the Company is contingently liable principally for forward precious metal contracts in the amountsof ¥16,774 million and ¥22,126 million ($184,390 thousand), respectively.

15. Research and Development Expenses
Expenditures relating to research and development activities are charged to income as incurred and amounted to ¥4,503 million and¥5,164 million ($43,040 thousand) for the years ended December 31, 2014 and 2015, respectively.

16. Other Income (Expenses)
There were ¥1,118 million ($9,322 thousand) of gains from sale of land for the year ended December 31, 2015. It is included in Gain(loss) on disposal of fixed assets, net.

17. Impairment of Fixed Assets
There were no impairment losses relating to fixed assets for the year ended December 31, 2014. Impairment losses relating to a fixed
asset group in a subsidiary in China of ¥906 million were incurred due to the decline in demand for motors in the consumer andindustrial products market during the year ended December 31, 2015. The recoverable amount of the fixed asset group was calculated
by value in use. As expected future cash flows were negative, these assets were written down to zero.

18. 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.

39

MABUCHI MOTOR CO., LTD.

2. Methods for calculating net sales, income or loss, 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”.
As stated in “2. Accounting Changes”, in the fiscal year ended December 31, 2015, the Company changed the methods ofcalculating retirement benefit obligations and prior service costs. Accompanying this change, the Company has changed the methodsof calculating retirement benefit obligations and prior service costs for the reportable segments. The impact of the change on segment
income for the fiscal year ended December 31, 2015 is immaterial.
Intersegment net sales are based on prevailing market prices.
3. Information concerning net sales, income or loss, 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 Income:
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

2014

2015

U.S. Dollars (Thousands)2015¥   11,522
81,40592,927¥   11,305
93,729105,035$    94,214
781,079875,293

74,54876,057
150,606

85,37083,725
169,095

711,419
697,710
1,409,130

12,850–12,85017,204–
17,204

143,373–
143,373

23,624–
23,624(157,463)¥ 122,544

29,262–
29,262(177,454)¥ 143,143

243,855–
243,855(1,478,790)$ 1,192,863¥   5,311
11,221
265
910
(834)
¥   16,875¥   7,881
13,509
446
1,520
(396)
¥   22,961$65,676
112,582
3,719
12,671(3,300)$   191,348¥   82,008
157,216
8,665
11,667(3,190)¥ 256,368¥   88,903
156,105
12,23814,454(15,506)¥ 256,196$   740,863
1,300,882
101,985
120,452(129,218)$ 2,134,966¥     835
4,494
7
9
(279)
¥   5,066¥     998
5,784
70
7
(280)
¥   6,580$     8,323
48,206586
62(2,338)$    54,840¥     495
10,031539
3(13)¥   11,056¥   1,840
10,5302,829
11(1,092)¥   14,119$    15,339
87,75523,582
91(9,106)$   117,663

Notes: 1. (1) The segment income eliminations of ¥(834) million in fiscal 2014 and ¥(396) million ($(3,300) thousand) in fiscal 2015
represent intersegment transaction eliminations.
		 (2) The segment assets eliminations include: corporate assets of ¥86,090 million in fiscal 2014 and ¥78,966 million($658,054 thousand) in fiscal 2015, not allocated to each segment; intersegment debt and credit eliminations of¥(89,281) million in fiscal 2014 and ¥(94,472) million ($(787,272) thousand) in fiscal 2015. Corporate assets primarily
include the parent company’s surplus funds for investment (e.g., cash and bank deposits and short-term investments) andlong-term investment funds (e.g., investment securities).
		 (3) The depreciation and amortization eliminations of ¥(279) million in fiscal 2014 and ¥(280) million ($(2,338) thousand) in
fiscal 2015 represent intersegment transaction eliminations.
		 (4) Increase in tangible and intangible fixed assets eliminations of ¥(13) million in fiscal 2014 and ¥(1,092) million ($(9,106)
thousand) in fiscal 2015 represent intersegment transaction eliminations.
2. Segment income is adjusted for operating income reported in the consolidated statements of income.

Annual Report 201540

Related information
Information on net sales, tangible fixed assets and impairment losses by geographic area is summarized as follows. There is no
information on major customers because individual sales ratios for major customers are lower than 10% of total net sales.
Geographical Information
Yen (Millions)
Net Sales
Japan
Asia
North and Latin America
Europe
Total

2014

2015

U.S. Dollars (Thousands)
2015¥ 11,310
74,75812,85023,625¥122,544¥ 11,618
85,057
17,20429,262¥143,143$   96,821
708,812143,373
243,855$1,192,863

2014

2015

U.S. Dollars (Thousands)
2015¥15,81237,615550
29¥54,008¥15,861
39,7083,164
29¥58,763$132,176
330,906
26,370243$489,698

2015

U.S. Dollars (Thousands)
2015

Yen (Millions)Tangible Fixed Assets
Japan
Asia
North and Latin America
EuropeTotal

Yen (Millions)2014
Impairment Loss
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Total

¥  –
¥  –
–
–
–
¥  –

¥  –
¥906
–
–
–
¥906

$    –$7,551–––$7,551

19. Subsequent Events
Purchase of treasury stock and cancellation of treasury stock
On February 12, 2016, the Company resolved, at the Board of Directors’ meeting, to purchase treasury stock pursuant to the provisionsof Article 156 of the Companies Act, applied by replacing terms pursuant to the provisions of Article 165, paragraph 3 of said Act, andresolved to cancel treasury stock pursuant to the provisions of Article 178 of the Companies Act, as described below.
1. Reasons for the purchase and cancellation of treasury stock
The Company will purchase and cancel treasury stock in order to implement a flexible capital policy to respond to changes in thebusiness environment and to improve shareholder returns and capital efficiency.
2. Details of matters pertaining to the purchase of treasury stock(1) Class of shares to be purchased: Common stock of the Company(2) Total number of shares to be purchased: 1,000,000 shares (maximum)(1.44% of the total number of shares issued [excluding treasury stock])(3) Total amount of purchase cost: ¥5.0 billion (maximum)(4) Purchase period: February 16, 2016 to March 24, 2016(5) Purchase method: Purchase in the open market through discretionary trading(6) As a result, the Company purchased 1,000,000 shares of common stock (total amount ¥4,771 million)
3. Details of matters pertaining to the cancellation of treasury stock(1) Class of shares to be cancelled: Common stock of the Company(2) Number of shares to be cancelled: All shares of treasury stock purchased as stated in item 2 above(3) Scheduled date of cancellation: April 15, 2016
(4) The Company will cancel 1,000,000 shares of common stock, pursuant to the above-mentioned Board of Directors’ resolution.
Introduction of performance-based stock compensation plan for directors and executive officers
The Company resolved at a meeting of the Board of Directors held on February 17, 2016 to introduce a new stock compensation plan(the “Plan”) for its directors and executive officers (excluding outside directors and those who are non-residents in Japan; collectively,
the “Directors, etc.”) and to submit a proposal regarding the introduction of the Plan for directors of the Company to the 75th
Ordinary General Meeting of Shareholders (the “Shareholders’ Meeting”) to be held on March 30, 2016. It was subsequently resolved
at the Shareholders’ Meeting.
1. Purpose of Introduction of the Plan
The Company has decided to introduce the Plan, which is an executive remuneration system closely linked with the achievement of theperformance targets as set out in the medium-term management plan, with the purpose of enhancing the motivation of Directors, etc.
to contribute to improved business performance and increased corporate value over the medium term.
2. Outline of the PlanThe Executive Compensation BIP (Board Incentive Plan) Trust (the “BIP Trust”) will be adopted. Under the Plan, the Company’s sharesacquired 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 the factors such as the positions and the level of attainment of the performancetargets throughout the trust term. Directors, etc. will receive the Delivery, etc. of the Company Shares, etc. during a certain timeframe
following the end of the target period. At first, the target period is over the three-year period from the fiscal year ending December
31, 2016 to the fiscal year ending December 31, 2018.

41

MABUCHI MOTOR CO., LTD.

3. Outline of Trust Agreement (Planned)
1) Type of trust	Monetary trust other than a specified solely-administered monetary trust (third-party beneficiary
trust)
2) Purpose of trust
To provide incentives to Directors, etc.
3) Entruster
The Company
4) Trustee	Mitsubishi UFJ Trust and Banking Corporation(Joint Trustee: The Master Trust Bank of Japan, Ltd.)
5) Beneficiaries
Directors, etc. who satisfy the beneficiary requirements
6) Trust administrator
Third party with no conflict of interest with the Company (certified public accountant)7) Date of trust agreement
June 3, 20168) Trust term
June 3, 2016 to the end of June 20199) Commencement of the Plan
July 1, 2016
Voting rights will not be exercised10) Exercise of voting rights
11) Class of shares to be acquired Common stock of the Company
12) Maximum limit	480 million yen for directors’ remuneration(including trust fees and trust expenses)
The amount for executive officers’ remuneration is yet to be determined.
13) Rights holder
The Company
14) Residual assets	The Company, as the rights holder, may receive residual assets within the scope of the reserve fortrust expenses after deducting funds to acquire the Company’s shares from trust money.
Stock-based compensation
On March 30, 2016, the Company resolved, at the Board of Directors’ meeting, to issue subscription rights to shares for directors
based on Articles 236, 238 and 240 of the Law, for the purpose of increasing their willingness to serve and motivation toward
improved corporate value and raised share prices.
Details
Resolution date
Classification and number of grantees
Type of shares to be issued under the subscription rights to shares
Number of shares
Amount to be paid at the time of exercise of the subscription rights to shares
Period during which the subscription rights to shares may be exercised
Conditions for the exercise of the subscription rights to shares
Matters relating to restriction on transfer of the subscription rights to shares
Matters relating to the distribution of the subscription rights to shares following a reorganization

March 30, 2016
6 directors of the Company (excluding outside directors)
5 executive officers of the Company
Common stock
Directors of the Company: 8,000 shares
Executive officers of the Company: 2,360 shares¥1 per share
Note 8Note 9Note 11
Note 13

Notes:(1) Designation of the subscription rights to shares
Mabuchi Motor Co., Ltd. 4th Subscription Rights to Shares (Stock-compensation Type)(2) Eligible persons to whom the subscription rights to shares are allotted and the number thereofSix (6) directors of the Company: 800 units
Five (5) executive officers of the Company: 236 units(3) Total number of the subscription rights to shares: 1,036 units
The above figure is the planned number to be allotted and therefore if the total number of the subscription rights to shares allotteddecreases, for example, in the case where applications for the subscription are not made, the total number of the subscription rights toshares to be allotted shall be the total number of the subscription rights to shares issued.
(4) The type and number of shares underlying the subscription rights to shares
The type of shares underlying the subscription rights to shares shall be the Company’s common stock, and the number of shares
underlying for each subscription right to shares (hereinafter the “Number of Granted Shares”) shall be ten (10).
In case where the Company conducts stock splits or reverse stock splits for the Company’s common stock, the Number of Granted
Shares shall be adjusted according to the following formula, and the resulting fractions of less than one (1) share, if any, shall be
rounded down.
Number of Granted Shares after adjustment = Number of Granted Shares before adjustment × Ratio of the stock split or reverse
stock split
In case where the Company conducts a merger, a demerger or a gratis allotment of shares after the allotment date or any
adjustment to the Number of Granted Shares is necessary mutatis mutandis to these cases, the Number of Granted Shares shall beappropriately adjusted within a reasonable range.
(5) Subscription amount for the subscription rights to shares
The subscription amount for the subscription rights to shares shall be the value based on the fair value, which is calculated using theBlack-Scholes option pricing model as of the allotment date of the subscription rights to shares. Persons to whom the subscription
rights to shares have been allotted (hereinafter the “Subscription Right Holders”) shall offset the claim for compensation held thereby
toward the Company instead of payment of said subscription amount.
(6) Allotment date of the subscription rights to shares
April 20, 2016
(7) Amount to be paid at the time of exercise of the subscription rights to shares
Amount to be paid per share in exercising subscription right to shares shall be one (1) yen, and total amount to be paid is calculated bymultiplying one (1) yen by the number of shares to be issued.
(8) Period during which the subscription rights to shares may be exercised
The period during which the subscription rights to shares may be exercised shall be from April 21, 2016 to April 20, 2036.
Provided, however, that if the last day of such exercise period falls on a holiday of the Company, the business day preceding said
date shall be the last exercisable day.
(9) Conditions for the exercise of the subscription rights to shares
1) A Subscription Right Holder shall be allowed to exercise the subscription rights to shares, solely in a lump sum, only within aperiod of ten (10) days after he/she forfeits the director’s position of the Company.

Annual Report 2015422) In case where a Subscription Right Holder dies, his/her heir may exercise the subscription rights to shares. Provided, however,that any person who has inherited the subscription rights to shares from the heir of an allotted person is not allowed to exercise
the subscription rights to shares.
(10) Matters relating to acquisition of the subscription rights to shares
1) In case where a Subscription Right Holder forfeits his/her subscription rights to shares before the exercise thereof pursuant toeither of the clauses in Item (9) above or any provision(s) of the Subscription Rights to Shares Allotment Agreement, the Company
may acquire said subscription rights to shares without charge as of a date separately specified by the Board of Directors of theCompany.
2) In case a General Meeting of Shareholders of the Company (the Board of Directors if such a General Meeting of Shareholders is
unnecessary) approves a proposal for (i) a merger agreement by which the Company becomes extinct; (ii) an absorption-typecompany split agreement or an incorporation-type company split plan by which the Company becomes a splitting company; or (iii)a share exchange agreement or a share transfer plan by which the Company becomes a wholly owned subsidiary of anothercompany or companies, the Company may acquire the subscription rights to shares that have not been exercised as of a dateseparately specified by the Board of Directors of the Company without charge as of such a date.
(11) Restriction on transfer of the subscription rights to shares
Approval of the Board of Directors of the Company via resolution thereat shall be required for the transfer of the subscription rights toshares.
(12) Matters relating to common stock and additional paid-in capital that will be increased in case of stock issuance as aresult of the exercise of subscription rights to shares
1) The amount of common stock that will be increased in case of stock issuance as a result of the exercise of the subscription rights
to shares shall be one-half (1/2) of the maximum limit of common stock, etc., which is calculated in accordance with Article 17,
Paragraph 1, of the Ordinance on Company Accounting, and the resulting fractions of less than one (1) yen, if any, shall be
rounded up.
2) The amount of additional paid-in capital that will be increased in case of stock issuance as a result of the exercise of thesubscription rights to shares shall be the amount of the maximum limit of common stock, etc., stated in 1) above after deducting
the amount of common stock to increase, which is set forth in 1) above.
(13) Treatment of the subscription rights to shares in conducting organizational restructuring
In cases where the Company conducts mergers (limited to cases where the Company is to become extinct as a result of the merger),absorption-type company splits, incorporation-type company splits, share exchanges or share transfers (hereinafter collectively an“Organizational Restructuring Action”), the subscription rights to shares of any of the joint-stock corporations (hereinafter the“Reorganized Company”), which are listed in sub-items (a) through (e) of Article 236, Paragraph 1, Item 8, of the Law, shall be newly
issued pursuant to the following conditions with regard to the subscription rights to shares that remain as of the effective date of theOrganizational Restructuring Action (hereinafter the “Residual Subscription Rights to Shares”). In such cases, the Residual Subscription
Rights to Shares shall be extinguished and the subscription rights to shares of the Reorganized Company shall be newly issued.
Provided, however, that the aforementioned clause shall apply only to cases where such issuance of subscription rights to shares of
the Reorganized Company pursuant to the following conditions has been stipulated in the statement to that effect in the relevant
merger agreement, the absorption-type company split agreement, the incorporation-type company split plan, the share exchange
agreement or the share transfer plan.
1) Number of the subscription rights to shares of the Reorganized Company to be issued
The subscription rights to shares of the Reorganized Company shall be issued in the same number as the Residual Subscription
Rights to Shares held by the Subscription Right Holders.
2) The type and number of the Reorganized Company’s shares underlying the subscription rights to shares
The type of shares underlying the subscription rights to shares shall be the Reorganized Company’s common stock, and thenumber of such Reorganized Company’s common stock to be issued as a result of the exercise of the subscription rights to sharesshall be determined mutatis mutandis to Item (4) above by taking into account the conditions for the Organizational Restructuring
Action and the like.
3) Amount to be paid at the time of exercise of the subscription rights to shares
The exercise price after the restructuring shall be one (1) yen per share of the Reorganized Company’s shares that could be issued
as a result of the exercise of the subscription rights to shares issued. Amount to be paid at the time of exercise of the subscription
rights to shares is calculated by multiplying the exercise price after the restructuring by the number of shares underlying each
subscription rights to shares.
4) Period during which the subscription rights to shares may be exercised
Period during which the subscription rights to shares may be exercised shall be from the later date of either the start date of theperiod during which the subscription rights to shares may be exercised, which is set forth in the aforementioned Item (8), or theeffective date of the Organizational Restructuring Action, until the expiration date of the period during which the subscription
rights to shares may be exercised, which is set forth in the aforementioned Item (8).
5) Matters relating to acquisition of the subscription rights to shares
Acquisition of the subscription rights to shares shall be determined mutatis mutandis to Item (10) above.
6) Restriction on transfer of the subscription rights to shares
Approval of the Board of Directors of the Reorganized Company shall be required for the transfer of the subscription rights toshares.
7) Matters relating to common stock and additional paid-in capital that will be increased in case of stock issuance as a result of theexercise of subscription rights to shares
Common stock and additional paid-in capital to be increased in case of stock issuance as a result of the exercise of subscription
rights to shares shall be determined mutatis mutandis to Item (12) above.
(14) Treatment of fractions of less than one (1) share
In case where there are fractions of less than one (1) share in the number of shares to be issued to a Subscription Right Holder when
the subscription rights to shares are exercised by said Subscription Right Holder, the resulting fractions shall be rounded down.
(15) Non-issuance of certificates for subscription rights to shares
The Company shall not issue certificates for the subscription rights to shares.
(16) Place for payment in exercising the subscription rights to shares
Asakusabashi Branch, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
23-6, Yanagibashi 1-chome, Taito-ku, Tokyo

43

MABUCHI MOTOR CO., LTD.

Independent Auditor’s Report

Annual Report 201544

Investor Information(As of December 31, 2015)

Stock Data

Composition of Shareholders

Number of Shares Authorized...................... 200,000,000
Number of Shares Issued.................................. 70,927,562
Number of Shareholders......................................... 13,446

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

Major Shareholders
Takaichi Mabuchi
Japan Trustee Services Bank, Ltd.
(Trust Account)
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Mabuchi International ScholarshipFoundation
Takashi Mabuchi
Tamotsu Mabuchi
Premiere Corporation
Taka Corporation Co., Ltd.
TEXAS Inc.
The Nomura Trust and Banking Co., Ltd.
(Trust Account)

5,000

7.2

4,238

6.1

3,317

4.8

3,000

4.3

2,110
2,110
2,068
2,056
1,856

3.0
3.0
3.0
3.0
2.7

1,140

Treasury Stock

Financial Institutions
26.5%

2.1%
Individuals andOthers23.3%

Financial Instruments
Firms
0.9%

By type ofshareholders

Other Companies
15.3%

Foreign Companies
32.0%

100-499 2.6%

Less than 100 0.0%500-999 1.0%
1,000-9,999 4.6%
10,000-99,999 8.5%
More than 1,000,000
34.4%

1.6

By number ofshares held

Notes: 1. In addition to the above, Mabuchi Motor Co., Ltd. retains
1,459,206 shares of treasury stock.
2. The number of shares of treasury stock is excluded from “Ratio of
Shareholders.” The percentages are rounded to one decimal place.
3. 130,700 shares held by the ESOP Trust Utilizing Employee
Shareholding Association are included in the calculation of“Percentage of shares held.”

Cash Dividends per Share/Payout Ratio

100,000-999,999 48.8%

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

54.9

46.6

(Yen)

41.5

41.2

100.0
50.0
50.0

100.0
50.0
50.0

2011

2012

InterimYear-end

131.0

87.0

110.0
58.0

53.0

83.0

52.0

2013

2014

2015

Changes in Standards for Calculating Dividends
YearOrdinary Dividendper Share

Standard Value for Calculating
Special Dividend

2015

30 yen30% of consolidated net income

3,503

3,503

2011

2012

Total Dividend

Payout Ratio

Note: The above graph does not show the payout ratio for 2011, as theCompany recorded a net loss for the year.

(%)

41.5

4,920

5,974

5,011
7,641

2013

2014

Amount for Repurchase of Own Stocks

2015
Total Dividend Payout Ratio

Note: The above graph does not show the total dividend payout ratio for
2011, as the Company recorded a net loss for the year.

Trend of Stock Price and Related Indicators
2011

2012

2013

2014

2015

High (Yen)

4,305

3,930

6,380

10,540

8,230

2014

60 yen30% of consolidated net income

Low (Yen)

3,075

2,931

3,675

5,430

4,385

2007*

60 yen20% of consolidated net income

At year-end (Yen)

3,205

3,655

6,250

9,620

6,640

2005

60 yen20% of consolidated net income

PER

−

20.1

20.8

18.6

24.9

2003

50 yen20% of consolidated net income

PBR

0.7

0.7

1.0

1.4

2.0

1999

50 yen5% of consolidated net income

The Company conducted a 2-for-1 stock split of its common stock on
January 1, 2015.
* The actual full-year dividend amount shall be based on 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.

45

46.6

(Millions of yen)

214.0
140.0

68.2
54.9

MABUCHI MOTOR CO., LTD.

Corporate Data
(As of December 31, 2015)

Company Name

Number of Employees

Shareholders’ Register Custodian

MABUCHI MOTOR CO., LTD.

762 (Non-consolidated)
24,419 (Consolidated)

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

Corporate Headquarters
430 Matsuhidai, Matsudo City,
Chiba 270-2280, Japan
Tel: +81-47-710-1111 Ordinary General Meeting of
Shareholders

Established
January 18, 1954

Paid-in Capital¥20,704 million

The Ordinary General Meeting of Shareholders
will be held every March at Corporate
Headquarters.

Stock Listing
Japanese Stock Exchange Listing
Tokyo Stock Exchange

Independent Accountants
Ernst & Young ShinNihon LLC
Tokyo, Japan

Corporate Directory
Consolidated Subsidiaries(North & Latin America)

MABUCHI MOTOR AMERICA CORP.
3001, West Big Beaver Road, Suite 328,
Troy, MI 48084, U.S.A.

MABUCHI MOTOR MEXICO S.A.DE.C.V.
Circuito Cerezos Oriente #105,
Parque Industrial San Francisco IV,
San Francisco De Los Romo,
AGS 20304, México
(Europe)

MABUCHI MOTOR (EUROPE) GmbH
Herriotstrasse 1, 60528 Frankfurt am
Main, Germany(China & Hong Kong)

MABUCHI INDUSTRY CO., LTD.
19 Sam Chuk Street, San Po Kong,
Kowloon, Hong Kong

MABUCHI MOTOR DALIAN CO., LTD.
No. 41 Harbin Road, Dalian Economic andTechnical Development Zone,
Dalian 116600, China

MABUCHI MOTOR (JIANGSU) CO., LTD.
No. 100 Liuxu Road, Wujiang Economic
and Technological Development Zone,
Jiangsu Province 215200, China

MABUCHI MOTOR (DONGGUAN) CO., LTD.
Guancheng Science & Technology Park,
Shilong Road, Guanlong Road’s Section,
Dongguan City, Guangdong Province
523119, China

MABUCHI MOTOR WAFANGDIAN CO., LTD.
Laohutun Town, Wafangdian City,
Liaoning Province 116322, China

MABUCHI MOTOR (SHANGHAI) CO., LTD.
Room 1901, Kirin Plaza Building, No. 666
Gubei Road, Changning District,
Shanghai 200336, China

MABUCHI MOTOR TRADING (SHENZHEN)
CO., LTD.

(Asia Pacific)

MABUCHI TAIWAN CO., LTD.
No. 18, Chunghwa Road, Hsinchu
Industrial District, Hsinchu 30352, Taiwan

MABUCHI MOTOR TAIWAN LTD.
No. 66 Kai-Fa Road, N.E.P.Z., Kaohsiung
81170, Taiwan

MABUCHI MOTOR (SINGAPORE) PTE. LTD.
111, North Bridge Road, #12-05
Peninsula Plaza 179098, Singapore

MABUCHI MOTOR VIETNAM LTD.
No. 2, 5A Street, Bien Hoa II Industrial
Zone, Bienhoa, Dong Nai, Vietnam

Room 2007-2008 Metro Building,
No.1016 Fuzhong First Road,
Futian District, Shenzhen City,
Guangdong Province 518038, China

MABUCHI MOTOR DANANG LTD.

MABUCHI PRECISION (DONGGUAN) CO.,LTD.

MABUCHI MOTOR KOREA CO., LTD.

Ludong Industrial Area, Humen Town,
Dongguan City, Guangdong Province
523935, China

MABUCHI MOTOR DONGGUAN DAOJIAO
CO., LTD.
Industrial Main Road, Daojiao Town,
Dongguan City, Guangdong Province
523179, China

Lot A2, No. 3 Street, Hoa Khanh Industrial
Zone, Lien Chieu District, Da Nang City,
VietnamG-five Central Plaza 328, 27,
Seochojungang-Ro 24-Gil, Seocho-Gu,
Seoul 06601, Korea

Non-consolidated Subsidiary
MABUCHI REAL ESTATE CO., LTD.

MABUCHI MOTOR (JIANGXI) CO., LTD.
No. 62 Jinlong Road,
Ganzhou Development Zone,
Jiangxi Province 341000, China

Annual Report 201546