(Summary English Translation of the Materials disclosed via the Internet pursuant to Laws, Regulations, and the Articles ofIncorporaion regarding the Notice of the 106th Ordinary General Meeting of Shareholders Originally Issued in Japanese
Language)

June 5, 2018

MATERIALS DISCLOSED VIA THE INTERNET PURSUANT TO LAWS, REGULATIONS,AND THE ARTICLES OF INCORPORATION REGARDING THE NOTICE OF THE 106TH
ORDINARY GENERAL MEETING OF SHAREHOLDERS

Notes to Consolidated Financial Statements
Notes to Non-consolidated Financial Statements

MAKITA CORPORATION

Pursuant to applicable laws and regulations and Article 15 of the Articles of Incorporation of the Corporation, these contents
are deemed to be provided to shareholders by posting them on our website (http://www.makita.biz/ir/stock.html).

Notes to Consolidated Financial Statements
Notes to Important Basic Matters for Preparation of Consolidated Financial Statements
1. Basis of presentation
The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles(“U.S. GAAP”) pursuant to the provision of Article 120-3, paragraph 1 of the Ordinance on Accounting of Companies.
Provided that certain statements and notes required by U.S. GAAP are omitted in accordance with Article 120, the second
sentence of Paragraph 1 of the said Ordinance, as applied mutatis mutandis pursuant to Article 120-3, Paragraph 3 of thesaid Ordinance.
2. Scope of consolidation
Number of consolidated subsidiaries: 51
Major subsidiaries are as follows:
Makita U.S.A. Inc., Makita (U.K.) Ltd., Makita Werkzeug G.m.b.H. (Germany), Makita France SAS,
Makita Oy (Finland), Makita LLC (Russia), Makita Gulf FZE (U.A.E.), Makita (China) Co., Ltd., Makita (Kunshan)Co., Ltd., Makita (Australia) Pty. Ltd., Makita do Brasil Ferramentas Elétricas Ltda., etc.
3. Valuation of Short-term investments and Investments
The Corporation and its affiliates (“Makita”) conforms to Accounting Standards Codification (“ASC”) 320,
“Investments-Debt and Equity Securities”.
Held-to-maturity securities:
Amortized cost
Available-for-sale securities:
Evaluation by the fair value
All valuation allowance are reported in Accumulated othercomprehensive income (loss).
The cost of securities sold is based on the moving-average method.
4. Valuation of inventories
Inventories are valued at the lower of cost or market price, with cost determined principally based on the averagemethod. Inventory costs include raw materials, labor and production overheads.
5. Depreciation method of fixed assets
Property, plant and equipment:
Goodwill and other intangible assets, net:

6. Allowances
Allowance for doubtful receivables:

Retirement and termination allowance:

Depreciation of property, plant and equipment of Makita is computed byusing the straight-line method for computing depreciation.
With respect to goodwill, in compliance with ASC 350, “Intangibles-Goodwill and Other”, amortization is not performed, but impairment
testing is carried out at least once a year in principle. Amortization is
performed using the straight-line method with regard to other intangible
assets with definite useful lives.

The allowance is determined based on, but is not limited to, historicalcollection experience adjusted for the effects of the current economic
environment, assessment of inherent risks, aging and financial performance.
Allowance for doubtful receivables represents the Makita's best estimate of
the amount of probable credit losses in its existing receivables.
In accordance with ASC 715, “Compensation-Retirement Benefits”, pension
and severance cost is accrued based on the projected benefit obligations andthe fair value of plan assets at the balance sheet date.
Each overfunded plans and postretirement plans is recognized as an asset
and each underfunded plan and postretirement plans is recognized as aliability.
Unrecognized prior service cost is amortized by the straight-line method
over the average remaining service period of employees.
-1-Unrecognized actuarial difference is recognized by amortizing a portion inexcess of 10% of the greater of the projected benefit obligations or the fairvalue of plan assets at the beginning of the period by the straight-line
method over the average remaining service period of employees.
7. Consumption tax is accounted for by allocation separately from related sales and purchase accounts.
Changes in accounting principles, procedures and presentations
In July 2015, the U.S. Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-11,“Inventory (Topic 330): Simplifying the Measurement of Inventory”. This Update applies to all inventory except for
inventory which is measured using last-in, first-out (LIFO) or the retail inventory method, and requires an entity to measure
inventory at the lower of cost and net realizable value. The Corporation adopted this standard on April 1, 2017. The
adoption has no material impact on the Corporation’s consolidated financial statements.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17, “Income Taxes (Topic 740): Balance
Sheet Classification of Deferred Taxes”. This Update requires that all deferred tax liabilities and assets be classified as
noncurrent in a consolidated balance sheet. The Corporation adopted this standard on April 1, 2017.

Notes to Consolidated Balance Sheet
Guarantee (contingent liabilities):

4

million yen

Notes to Consolidated Statement of Changes in Equity
1. Matter regarding shares issued
Kind of shares
Common stock

Beginning of the period
140,008,760 shares

Increase
140,008,760 shares

Decrease-

End of the period
280,017,520 shares

Note: The Corporation implemented a two-for-one common stock split, effective April 1, 2017. The number of increase in
outstanding shares represents the 140,008,760 shares increased by the stock split.
2. Matter regarding dividend distribution(1) Amount of dividend distribution
Resolution

Record date(Millions of Yen)

Dividend
per share(Yen)

Common stock

11,13082

March 31, 2017

June 29, 2017

Common stock

2,715

10

September 30, 2017

November 27, 2017

Kind of shares

Ordinary General Meeting of
Shareholders held on June 28, 2017
Board of Directors' meeting held on
October 30, 2017

Total amount ofdividends

Effective date

Note: The Corporation implemented a two-for-one common stock split, effective April 1, 2017. Dividends, the record date ofwhich is March 31, 2017, were distributed based on the number of shares before the relevant stock split.

(2) Although the record date falls during the period, some dividends become effective during the following period.
Scheduled resolution
Ordinary General
Meeting of Shareholders
to be held on June 27,
2018

Kind of shares

Common stock

Dividend resource

Retained earnings

Total amount ofdividends(Millions of Yen)

Dividend
per share(Yen)

13,84551

Record date

Effective date

March 31, 2018

June 28, 2018

Notes to Financial Instruments
1. Matter regarding status of financial instruments
Makita carries out short-term and Investments in order to secure profits on a stable basis. Short-term investment
consists primarily of MMF (Money Management Fund). Investment is made mainly in marketable shares (shares otherthan those purely for trading purpose). Long-term liabilities comprise long-term loans from capital-lease obligations.
-2-Forward exchange contracts was entered into with the aim of reducing such market risks as foreign exchange rate
fluctuations.
2.

Matter regarding such as fair value of financial instruments
The following methods and significant assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate a fair value:(1) Cash and cash equivalents, Time deposits, Trade receivable, Short-term borrowings, Trade notes and accounts payable,
Other payables, and Accrued expenses
The carrying amount is considered to be fair value since maturities are either short or do not exist.

(2) Long-term time-deposits
The fair value is estimated by discounting the future cash flow by the market interest rate at the end of the period fortime deposits for the period corresponding to the remaining period up to the maturity date.
(3) Short-term investments and Investments
The fair value of marketable investment securities is estimated based on quoted market prices. For certain
investments such as non-marketable securities, since there are no quoted market prices existing, a reasonableestimation of a fair value could not be made without incurring excessive cost, and such securities have been excluded
from fair value disclosure. Fair value is measured if it declines significantly or there is a likelihood of such. There are
non-marketable securities in the amount of 4 million yen for short-term investments and 382 million yen forinvestments as of March 31, 2018.
(4) Long-term indebtedness
The fair value of the long-term indebtedness is calculated based on the present value, which is calculated bydiscounting from the future cash flow for each borrowing, using the borrowing rate at the end of the period that is
applied to borrowings with similar maturity date.
(5) Derivative financial instruments
The fair values of other derivative financial instruments, composed by foreign currency contracts which is used forhedging purposes, are estimated by obtaining quotes and other relevant information from brokers.
The carrying amounts and estimated fair value of the financial instruments, and the amount of difference thereof as of March 31,2018 are as follows:(Millions of Yen)
Carrying amount
Short-term investments
Investments
Long-term time deposits
Long-term indebtedness including current maturities
Foreign currency contracts:
AssetsLiabilities

Estimated fair value Amount of difference

14,77833,4339(183)

14,77833,437
9
(183)

4
-

0

125
(379)

125
(379)

-

The fair value estimates are made at a specific point in time, based on relevant market information and information about
the financial instrument.
These estimates are made by the Corporation based on the Corporation’s judgment and contain uncertainties. Therefore,
any changes to the underlying assumptions may significantly affect estimates.

-3-Notes to Information Per ShareTotal Makita Corporation shareholders' equity per share

2,033.16 yen

Total Makita Corporation shareholders' equity per share attributable to common stock was computed based onfollowing;
551,939 million yen
Total Makita Corporation shareholders' equity in the consolidated balance sheet
Total Makita Corporation shareholders' equity available to common stock
Number of shares issued (excluding treasury stock) as of March 31, 2018551,939 million yen
271,467,928 shares

Earning per share (Basic) Net income attributable to Makita Corporation common
201.70 yen
shareholders
Earning per share (Basic) Net income attributable to Makita Corporation common shareholders was computed
based on following;
Net income attributable to Makita Corporation in the consolidated statement ofincome54,755 million yen
54,755 million yen
Net income attributable to Makita Corporation available to common stock
The average number of shares of common stock outstanding during the period

271,465,951 shares

Earning per share (Diluted) Net income attributable to Makita Corporation
201.68 yen
common shareholders
Earning per share (Diluted) Net income attributable to Makita Corporation common shareholders was computed
based on following;
Net income attributable to Makita Corporation in the consolidated statement of
54,755 million yen
income54,755 million yen
Net income attributable to Makita Corporation available to common stock
The average number of diluted shares of common stock outstanding during theperiodNotes to Significant Subsequent Events:
None.
*Amounts less than 1 million yen have been rounded.

-4-

271,493,821 shares

Notes to Non-consolidated Financial Statements
Notes to Significant Accounting Policies
1. Valuation of securities
Held-to-maturity securities:
Stocks of subsidiaries:
Other securitiesThose having fair market value:

Amortized cost (straight-line method)At moving-average costThose having no fair market value:

Fair market value as of the end of the period(Valuation differences are presented as valuation and translation
adjustments in net assets.
The cost of securities sold is calculated based on the moving-averagemethod.)At moving-average cost

2. Valuation of net assets and liabilities accrued from derivative transactions:
Fair market value as of the end of the period
3. Valuation of inventories
Inventories are valued at the lower of cost based (the balance sheet amount is computed using the method of devaluing
the book price to reflect declines in profitability).
Finished goods, merchandise, work in process, and raw materials:
At average cost
Supplies:
At latest purchase cost
4. Depreciation method of fixed assets
Tangible fixed assets:(Excluding lease assets)

Straight-line method
Useful life:
Buildings:
Machinery and equipment:

38 to 50 years
5 to 10 years

Intangible fixed assets:(Excluding lease assets)

Straight-line method
Software for internal use is depreciated on the straight-line method over its
estimated useful life (5 years).
Industrial property rights are depreciated on the straight-line method over 8 to
14 year period.

Lease assets:

Lease assets relating to finance lease transactions, excluding those whose
ownership is transferred to the lessee upon lease expiration, are depreciated by
the straight-line method over the lease term with no residual value, the leaseterm being regarded as the useful life.

-5-5. Allowances
Allowance for doubtful accounts:

The allowance for doubtful accounts is reserved based on the historical
write-off ratio for accounts receivable. For accounts receivable that are
difficult to collect, individually estimated write-off amounts are reserved.
Allowance for directors’ bonuses:
In preparation for the anticipated payment of directors’ bonuses, weappropriate the amount estimated to pay for the period.
Allowance for product warranties:
In preparation for the payment of product after-service and free post-salerepair services, we appropriate the projected amount based on actual
payment in the past.
Retirement and termination allowance:
To be prepared for employee retirement, retirement and termination
allowance and prepaid pension cost are reserved based on projected benefit
obligations and plan assets at the balance sheet date. In calculating the
projected benefit obligations, the Corporation adopted the benefit formulabasis as the method for attributing the expected benefit to the period up to
the end of the period. Past service costs are amortized by the straight-line
method over the average remaining employment period. Actuarial
differences are amortized starting immediately after the year of accruementby the straight-line method over the average remaining employment
period.
Retirement allowance for Directors and Audit & Supervisory Board Members:
The Corporation terminated the retirement allowance plan for Directors
and Audit & Supervisory Board Members as of the conclusion of theordinary general meeting of shareholders held on June 29, 2006. Thebalance of the period end is the amount of the reserve for the period of
office served until abolition of the plan by those current directors(excluding outside directors) who served until June 29, 2006.

6. Consumption tax is accounted for by allocation separately from related sales and purchase accounts.

-6-Notes to Balance Sheet
1. Accumulated depreciation on tangible fixed assets:
Buildings

28,045

million yen

Structures

2,406

million yen

Machinery and equipment

12,964

million yen

249

million yen

Tools, furniture and fixtures

26,907

million yen

Total

70,571

million yen

5,312

million yen

4million yen

9million yen

5,325

million yen

Short-term receivables

39,915

million yen

Short-term payables

40,246

million yen

Sales

200,717

million yen

Purchases, etc.
Amount of non-operating transactions

182,535

million yen

30,052

million yen

Vehicles and transportation equipment

2. Guarantee:
Guarantee for borrowing from financial institution
Maximum amount of guarantee for Makita U.S.A. Inc.
(50 million U.S. dollars)
Guarantee for educational loan to employees
Guarantee for accounts payable of the following company
Makita General Service Co., Ltd.
Total
3. Receivables and payables for affiliates:

Notes to Statement of Income
Transactions with affiliates
Amount of operating transactions

Notes to Statement of Changes in Net Assets
1. Matter regarding treasury stock
Beginning of theKind of sharesperiodCommon stock
4,278,474 shares(Reasons for the change)

Increase
4,279,808 shares

The reasons for the increase are as follows:
Stock split:
Purchase of shares constituting less than a full unit:

Decrease

End of the period

8,690 shares

8,549,592 shares

4,278,474

shares1,334

shares8,680

shares10

shares

The reasons for the decrease are as follows:
Exercise of stock options:
Sales of shares constituting less than a full unit:

Note: The Corporation implemented a two-for-one common stock split, effective April 1, 2017.

-7-

2. Matter regarding stock acquisition rights
Type and number of shares to be issued or transferred upon the exercise of Stock Acquisition Rights(excluding Stock Acquisition Rights that are not exercisable) at the end of the period
Common stock
29,180 shares

Note: The Corporation implemented a two-for-one common stock split, effective April 1, 2017. The number of theshares of common stock of the Corporation to be issued upon exercise of the stock acquisition rights wascalculated, reflecting the stock split.

-8-Notes to Tax Effect Accounting
1. The main reasons for deferred income tax assets and liabilities are as follows:
Short-term deferred income tax assets
Accrued expenses
1,976
Inventories
591
Accrued enterprise taxes
424
Other
46

million yen
million yen
million yen
million yen

Net amount of short-term deferred income tax assets

3,037

million yen

593
3,067

million yen
million yen

98

million yen

84
47

million yen
million yen

Long-term deferred income tax assets
Loss on evaluation of investment securities
Excess in depreciation
Retirement allowance for directors and audit &supervisory board members
Loss on impairment of fixed assets
Other
Subtotal
Valuation allowance

3,889 million yen(369) million yen

Total

3,520

million yen(2,749)(4,818)
(593)
(271)

million yen
million yen
million yen
million yen

Long-term deferred income tax liabilities
Prepaid pension cost

Net unrealized gains on securities
Reserve for advanced depreciation of fixed assets
Other
Total

(8,431) million yen

Net amount of long-term deferred income tax liabilities(4,911) million yen

2. Major items causing the significant difference between the statutory income tax rates applicable to the Corporation and theeffective income tax rates after the adoption of tax effect accounting are as follows:

Statutory income tax rate

30.4%

(Reconciliations)
Dividend income and other permanently
non-taxable income
Withholding tax on foreign dividends(14.1%)
3.4%

Tax credit for R&D expenses
Other
Effective income tax rate after the adoption of tax effectaccounting-9-(0.9%)
0.3%
19.1%

Notes to Fixed Assets Used through Leases
Operating leases
Lease commitments under non-cancelable operating leases
Within 1 year
Over 1 year

159
601

million yen
million yen

Notes to Transactions with Related Parties
1. Directors and primary individual shareholders
Attribute
Corporate namePrincipal business or
position

Companies which directors and their relatives own the majority of voting rights (including thesubsidiaries of such companies)
TOA Co., Ltd. (Note 1)

Maruwa, Ltd. (Note 2)

Design, production and distribution of automatic
regulators

Real estate business

Owning and owned
ratio of voting rights

Direct owned ratio: 0.0

Direct owned ratio: 3.1(%)
RelationshipPrincipaltransactions

Purchase of production equipment

AdvertisingInterlocking Directors(Number of directors: 2)

Interlocking Directors (Number of directors: 2)

Purchase of production equipment (Note 3)Advertising (Note 3)

150

2

Other payable

-

6

-

Transaction amount(Millions of Yen)
(Note 4)
Account title
Balance at end of
the period (Millions
of Yen) (Note 4)

Terms of transactions and the policy to decide the terms(Note 1) Masahiko Goto, Chairman and Representative Director of the Corporation, Munetoshi Goto, President andRepresentative Director of the Corporation, and their relatives own 100% of voting rights of TOA Co., Ltd.
(Note 2) Masahiko Goto, Chairman and Representative Director of the Corporation, Munetoshi Goto, President andRepresentative Director of the Corporation, and their relatives own 68.1% of voting rights of Maruwa, Ltd.
(Note 3) The terms of the transactions with TOA Co., Ltd. and Maruwa, Ltd. are the same as those other generaltransactions.
(Note 4) The above stated transaction amount does not include consumption tax, and that balance at the end of theperiod includes consumption tax.

- 10 -

2. Subsidiaries
Attribute

Subsidiaries
Makita U.S.A. Inc.

Corporate name

(United States)

Owning and owned
ratio of voting

Direct owning ratio: 100.0

rights (%)
Debt guarantee

Sales, etc. of merchandise and finished goods
RelationshipPrincipaltransactions

Subscription of additional increase of capitalInterlocking Directors (Number of directors:2)

Debt guarantee (Note 1)

Sales, etc. of merchandise andfinished goods (Note 2)

Capital increase (Note 3)

5,312

31,043

11,606-

Trade accounts receivable

Stocks of affiliates

-

4,549

38,047

Transaction amount(Millions of Yen)
(Note 4)
Account title
Balance at end of
the period (Millions
of Yen) (Note 4)

Attribute

Subsidiaries
Makita LLC

Corporate name
Owning and owned
ratio of voting
rights (%)
RelationshipPrincipaltransactions(Russia)
Direct owning ratio : 80.2
Indirect owning ratio: 19.8
Subscription of additional increase of capital
Capital increase (Note 3)

Transaction amount(Millions of Yen)

12,145(Note 4)
Account title

Investment in affiliates

Balance at end of
12,145the period (Millions
of Yen) (Note 4)- 11 -

Attribute

Subsidiaries
Makita Werkzeug GmbH

Corporate name(Germany)

Owning and owned

Direct owning ratio: 75.3

ratio of voting

Indirect owning ratio: 24.7

rights (%)

Subscription of additional increase of capital

Relationship

Interlocking Directors (Number of directors:2)

Principal

Capital increase (Note 3)transactions
Transaction amount(Millions of Yen)

5,198

(Note 4)
Account title

Investment in affiliates

Balance at end of
5,236

the period (Millions
of Yen) (Note 4)

Attribute
Corporate nameSubsidiaries
Makita (China) Co., Ltd.

Makita (Kunshan) Co., Ltd.

(China)(China)Direct owning ratio: 100.0

Direct owning ratio: 100.0

Owning and owned
ratio of voting
rights (%)
RelationshipPrincipaltransactions

Purchase of merchandise and finished goods, etc. Purchase of merchandise and finished goods, etc.
Interlocking Directors (Number of directors: 4)Interlocking Directors (Number of directors: 4)Purchase of merchandise and finished goods, etc. Purchase of merchandise and finished goods, etc.
(Note 2)

(Note 2)

43,328133,243

Trade accounts payable

Trade accounts payable

9,436

28,816

Transaction amount(Millions of Yen)
(Note 4)
Account title
Balance at end of
the period (Millions
of Yen) (Note 4)

Terms of transactions and the policy to decide the terms(Note 1) For Makita U.S.A. Inc., the Corporation has guaranteed its debt, and the amount shown in “Transaction
amount” represents the maximum amount of guarantee (50 million U.S. dollars with no payment deadline).
(Note 2) The price and other terms of transactions are determined upon consultation, considering the prevailingmarket conditions.
(Note 3) Investment by way of capital increase was made.
(Note 4) Consumption tax is not included in the transaction amount and the balance at the end of the period.

- 12 -

Notes to Information Per Share
Net assets per share

1,196.29

yen

Total net assets in the balance sheet

324,755

million yen

Net assets available to common stock

324,755

million yen

Net assets per share attributable to common stock was computed based on following:

Number of shares issued (excluding treasury stock) as of March 31, 2018

271,467,928

Net income per share

shares

182.09yen

49,432

million yen

49,432

million yen

Net income per share attributable to common stock was computed based on following:
Net income
Net income available to common stock
Average number of outstanding shares of common stock

Notes to Significant Subsequent Events:
None.
*Amounts less than 1 million yen have been rounded.

- 13 -

271,465,951

shares