Annual Report

2012Year ended December 31, 2012

ID-549XW

ID-529XW

Small Motors
Delivering Performance
into the Future

Profile

Small DirectCurrent
Electric Motor

Small Motors
Delivering Performance
into the FutureEver since its founding, Mabuchi Motor Co., Ltd. has been a specialist
manufacturer of small motors that deliver consistently high quality andefficiency at low prices in line with our basic policy “Bringing betterand more reasonably priced goods to the market.” Small motors from
Mabuchi contribute to convenient, comfortable living for people theworld over as functional components in a wide variety of applications
in many industries, including automotive products, audio and visualequipment, optical and precision instruments, home appliances, power
tools, toys, and hobbies.
The Mabuchi Group is the world’s leading producer of small
motors. Our annual production volume of approximately 1,435 million
units (2012 results) is testimony to the excellent reputation and trust
we have built with our customers and a source of great pride forus. In the coming years, we will continue to aspire to create
new value through product development adaptable tomarket needs and a flexible supply system.

1

MABUCHI MOTOR CO., LTD.

Marketing
We engage in marketing 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 discover commonalities that permit standardization.

Research and Development
Continuing to respond to a variety of needs with regard to motors,
primarily the ability to be highly efficient and low in noise, Mabuchi
Motor has always been leading the market of small motors.
From basic research, product development, product design, andproduction technology to motor-applied technology in these small
machine parts, Mabuchi has collected every wide range of technicalcapability that has been acquired over many years.

Production
Mabuchi is establishing production bases across Asia with the aimof developing a competitive motor production system and providing
employment opportunities in host countries. Furthermore, we strive
to combine high quality and low cost in our production process byseeking an optimal balance between people and machines.

Quality Assurance
Small motors from Mabuchi play an important role 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
product performance, including the material quality and processing
accuracy of parts, noise, change in temperature and humidity, andvibration.

Annual Report 20122

Table of Contents
Our Business1

ProfilePresident’s Message
4

To Our Shareholders

How We’re Doing
9	Segment Information by Motor Application
11	Research and Development Activities

Activities for Sustainable Management
12	Mabuchi’s Management Vision
13 Corporate Governance
15 Board of Directors, Audit & Supervisory Board Members, and Executive Officers
16 Corporate Social Responsibility

Financial Section
17	Financial Summary
19	Management’s Discussion and Analysis
21 Business and Other Risks
23 Consolidated Balance Sheets
25	Consolidated Statements of Operations
25 Consolidated Statements of Comprehensive Income
26	Consolidated Statements of Changes in Net Assets
27	Consolidated Statements of Cash Flows28	Notes to Consolidated Financial Statements
39 Independent Auditor’s ReportCompany Information
40
41

Investor Information
Corporate Data

Forward-Looking Statements
This annual report contains forward-looking statements about Mabuchi’s future plans, beliefs, strategies, and performance that are nothistorical facts. These statements are based on current expectations, forecasts, estimates, and projections about the industry in which
Mabuchi operates and the beliefs and assumptions made by its management. As such expectations, forecasts, estimates, and projections are subject to a number of risks, uncertainties, and assumptions, they may cause actual results to differ materially from 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 aresult 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; theoutcome of pending and future litigation; commodity prices; and the continuing status of financing, financial instruments, and financial
resources.

3

MABUCHI MOTOR CO., LTD.

To Our Shareholders
Mabuchi will steadily proceed with the establishment of new growth axes and cost
optimization aligned with the business environment in preparation for the next breakthrough.

Shinji Kamei

Hiroo Okoshi

Representative Director
and Chairman

Representative Director
President and CEO

Overview of Sales during Fiscal 2012

developed countries and demand contraction in emerging

During fiscal 2012, the year ended December 31, 2012, theleading up to the peak year-end sales season, for which ourdebt crisis in Europe had a major impact on the real economy

expectations were high.

countries. Another negative factor was sluggish demandacross the entire continent and was a main cause of the
global economic slowdown. Although the U.S. economy

Under these business conditions, the Mabuchi Group

showed signs of a recovery, partly attributable to progresscontinued its efforts from the previous year to address

in household debt adjustment, it lacked the dynamism toseveral issues: continued strengthening of the automotive

drive the global economy. The economies of China andproducts business, enhancing sales performance in China,

other emerging countries slowed further, hindered byreorganization of production bases, and plant efficiency

sluggish export growth.

improvements.

In Japan as well, an economic downtrend became clear as
the persistently high yen, the energy problem, and othercauses for concern remained unresolved, particularly so inthe second half of the year as a result of the slowdown inoverseas economic activity and contraction of domestic
demand.
In the small motor industry, to which the Mabuchi Groupbelongs, although demand increased for reasons including
recovery in the automotive products market, other consumer and industrial products markets were slack due tofactors such as the impact of the economic slowdown in

Financial Highlights
Millions of yen

2011

2012

Net sales ¥ 78,886 ¥ 85,254
Operating
3,066
5,052
incomeNet
income(466)
6,385(loss)
Total
181,351
196,702
assetsNet assets 168,538
181,372

Thousands of
U.S. dollars

Rate ofchange2012

YoY$991,325+8.1%

58,744+64.8%

74,244—2,287,232+8.5%

2,108,976+7.6%

Annual Report 20124

In fiscal 2012, the Mabuchi Group actively devised measures
to reliably ensure sales and market share expansion, stableproduct supply, and high quality and high efficiency.

Specifically, the Mabuchi Group actively devised measuresdue to increases in loss on sales of investment securities

to realize management that reliably ensures sales andand loss on revaluation of investment securities and themarket share expansion, stable product supply, and highrecording of restructuring expenses at overseas subsidiaries,

quality and high efficiency. These measures included 1) the

despite the non-recurrence of loss on reversal of foreign

introduction of new motors for power window lifters (twocurrency translation adjustments, the main extraordinarymodels); 2) accelerated development of products that doloss item in the previous year. Net income was ¥6,385

not use neodymium; 3) the start of activities to establish amillion (a net loss of ¥466 million in the previous year) due

locally self-contained business unit structure in China; 4)

to a lower effective tax rate on income before income taxes

the start of operation at MABUCHI MOTOR (JIANGXI) CO.,resulting from the non-recurrence of expenses in connec-

LTD., Mabuchi’s second inland production base in China; 5)tion with the reversal of deferred tax assets recorded in thethe start of mass production of new products developed

previous year.

jointly by Mabuchi headquarters and the R&D base in
China (Dongguan); and 6) improvement in labor productivity

The next section describes market trends and sales condi-

by means including the introduction and expansion oftions categorized into separate markets for motors.

facilities to rationalize production and the implementationof laborsaving measures.
As a result, consolidated net sales for the period were¥85,254 million (an 8.1% increase on a year-on-year basis).

Implementation of Growth and Cost
Strategies in Preparation for New
Breakthroughs

Sales of motors, which account for the majority of consoli-

In fiscal 2013, Mabuchi will focus on the following four

dated net sales, were ¥85,131 million (an 8.1% increase).

strategies for the establishment of new growth axes andOperating income for the year was ¥5,052 million (acost optimization aligned with the business environment.

64.8% increase on a year-on-year basis), due to improvement in the gross profit ratio as a result of stabilization in
the steep rise in materials costs that occurred up to theprevious year and a trend toward improvement in the5 ontinued Strengthening of the AutomotiveC
Products Business and New Activities in theConsumer and Industrial Products Businesses

product mix coupled with the effect from controlling sell-

There is substantial room for growth in medium-size auto-

ing, general and administrative expenses to roughly the

motive motors, a market sector that Mabuchi only recently

prior-year level. Income before income taxes was ¥8,426

entered, due to factors including the mainstreaming of

million (a 159.4% increase on a year-on-year basis) as a

low-cost cars, an increase in the option installation rate,

result of worsening of the balance of extraordinary items

and progress made with interchangeable parts development.

MABUCHI MOTOR CO., LTD.

Mabuchi will continue to position this sector as an impor-Sales Expansion in Chinatant growth driver, focusing the collective strength of the

In fiscal 2012, Mabuchi established the China Business Unit

Mabuchi Group to implement a growth strategy.

to accurately ascertain and promptly respond to market
needs in China, taking the first step toward a locally self-

With regard to motors for power window lifters, we willcontained business by linking the cross-organizational

accelerate growth in sales of medium-torque products andfunctions of the R&D center, production bases, and sales

expand our customer base in the European and Northbases in China and partially transferring authority to theAmerican markets for new high-torque products as well. In

local operation. In fiscal 2013, we will ascertain in an inte-

addition, we will maintain our top market share in China by

grated way the overall state of our business in China andincreasing the number of car models equipped with ourbegin rebuilding a management system for centralized

products.

management.

Since uncertainties still remain with respect to the supply ofReorganization of Production Bases

neodymium over the medium to long term, we have begun

Approximately 20 years have passed since the start ofdevelopment of new motors for power seats that use

operation at the factories in Guangdong, Dalian, andneodymium-free magnets and aim to start mass production

Jiangsu, the Mabuchi Group’s main production bases inand shipment at an early date.

China, and over the course of that time many local employees have developed a great many skills and expertise. We

Furthermore, we plan to develop the business for motors

will leverage the technological and management capabili-

for electric parking brakes and motors for engine intake

ties at these coastal production bases in China as strengths

and exhaust by leveraging the track record built since theto increase the ratio of high-value-added operations: theintroduction of these products to obtain major projects.

production of technologically complex products, process
innovation through the independent design and production

We will then undertake new activities to discover latentof laborsaving equipment, and local selling of own prod-needs in the consumer and industrial products businessucts. To develop a structure that can generate profits evensectors, where growth has stalled the past few years. As

at low prices, we will transfer in stages to Yingtan Mabuchi

our first initiative, we will begin mass production andand Jiangxi Mabuchi in Jiangxi Province the production of

shipment of motors for office multifunction printers andlow-end products for which price competition is intense.

motors for office laser printers. In addition, we will boost

Furthermore, since the two production bases in Vietnam

activities in the home automation, healthcare, and unit

have more favorable cost conditions than the production

motor sectors.

bases in China, we aim to boost profitability by increasing
factory capacity utilization and mitigating the fixed cost

The Mabuchi Group will continue to strengthen the auto-

burden.

motive products business, from which growth is expected.

Power Window Motor Sales Results and Projections(100 millions of yen)Power Seat Motor Sales Results and Projections(%)(100 millions of yen)

(%)

180

210

60

700

150

180

50

600

150

120

120

90

90

60

60

10

0

0

0

Sales amount
Sales volume (2009=100%)

2011

2012

2013
Projection

300

20

30
2010

400

30

30
2009

500

40

200
100
2009

2010

2011

2012

2013
Projection

0

Sales amount
Sales volume (2009=100%)

Annual Report 20126

Production Base Strategy:
Enhancement of Consolidated Earning Power Through Reinforcement of Strengths at Each Production Base

Reinforcement of High-End Product Production at Coastal Production
Bases in China
Jiangsu Mabuchi:
Sales expansion from establishment of a sales division and integration of
production and sales
Dongguan Mabuchi:
Expansion of high-value-added motors for MFP and other applications


MFP: Multifunction printers

Production Capacity Expansion at Two Inland Production Bases in
China
Yingtan Mabuchi/Jiangxi Mabuchi:
Transfer of production from coastal areas and pursuit of cost competitivenessthat can prevail in global competition
Reinforcement of Automotive Motors at Two Production Bases inVietnamVietnam Mabuchi:
Expansion of production scale to the highest level ever (420 million pieces)
Danang Mabuchi:
Increase in the production ratio of motors for automotive products

Manufacturing Process Innovation

detection information and facility operation status.

The Mabuchi Group considers a manufacturing base that

Mabuchi will develop factories that can stably delivercannot be easily imitated by competitors important for

high-quality and high-efficiency performance while realiz-prevailing in global competition and will undertake devel-

ing low-cost production through manufacturing innovation

opment of such a manufacturing base. To cope with abuilt on three pillars: laborsaving measures, built-in quality

dramatic increase in labor costs in countries where Mabuchi

of upstream activities, and leading-edge IT.

maintains production bases, we have pursued activities toachieve our medium-term target of laborsaving of 30%
from the fiscal 2010 level, the equivalent of 10,000 direct
employees, by the end of fiscal 2013. We will continue to

Basic Policy on Returning Profit to
Shareholders and Dividends for the Yearrealize laborsaving measures of 10% or higher in fiscal

Our basic policy on the appropriation of retained earnings

2014 and beyond by engaging in activities focused on theis to retain necessary earnings for sound business activities,

reduction of non-value-added processes, such as the reduc-to maintain healthy financial strength and to ensuretion of inspection and correction of man-hours, throughadequate dividends to our shareholders based on perfor-

the reinforcement of ensuring quality in upstream activities.

mance for the year. Based on the above policy, theCompany makes it a principle to consistently distribute an

At the same time, an increase in the relative importance ofordinary dividend of ¥60 per share on an annual basis plus

automotive applications has resulted in more stringent

a special dividend equivalent to 20% (paid out on a per

quality requirements, and the importance of Mabuchi’s

share basis) of the annual consolidated net income. In

manufacturing processes and of communicating the value

addition, the actual full-year dividend amount shall beof those processes to customers is increasing. In fiscal 2013,

based in principle on the above calculation standards andJiangsu Mabuchi, a dedicated medium-size automotive

calculated in consideration of the dividend payout ratio,

motor factory, will begin full-scale implementation of thedividend levels prior to the previous period, internal

smart factory concept for linking factory facilities and corereserves, cash flows, and other factors. The amount shallsystems. Smart factory is a leading-edge system for the

not be less than the expected full-year dividend amountearly detection of abnormalities in production processes

announced during the full-year period.

and minimization of the ramifications of problems bymonitoring in real time in an integrated manner abnormality

7

MABUCHI MOTOR CO., LTD.

Mabuchi will develop factories that deliver high-quality
and high-efficiency performance while realizing low-cost
production through manufacturing innovation built on
three pillars: laborsaving measures, built-in quality of
upstream activities, and leading-edge IT.

As a result, the Company has decided to pay a year-end

The situation in the markets in which the Mabuchi Group’s

dividend of ¥50 per share (consisting of an ordinary divi-

products are sold is mixed. Markets showing clear signs ofdend of ¥30 and a special dividend of ¥20). Since thea recovery and an underlying growth trend are the Auto-

Company has already paid an interim dividend of ¥50 per

motive Products market and the Home Appliances, Powershare (an ordinary dividend of ¥30 and a special dividend

Tools & Toys market, where demand is expected to increaseof ¥20), the annual dividend for fiscal 2012 will be ¥100in developed countries and emerging countries alike. In the

per share (an ordinary dividend of ¥60 and a special divi-

Audio & Visual Equipment market and Optical & Precision

dend of ¥40), as planned and announced during the term.

Instruments market, which continue to contract, we expect
a further decrease in demand in fiscal 2013.

The Company purchased a total of 12 million shares of treasury stock through public tender offers or market purchasesWith respect to the annual dividend forecast for fiscal

and purchases of fractional shares from fiscal 2002 to fiscal

2013, in a business environment that remains difficult, the2012, and has canceled 7.2 million of these shares. (OnCompany will provide shareholder returns that reflect

February 22, 2013, the Company canceled 2 million shares.)recognition of the importance of continuity and stability.

The Company will continue to consider purchases of treasury

We plan to pay a dividend of ¥120 per share, consisting ofstock as appropriate as a flexible response to changes inan ordinary dividend of ¥60 and a special dividend of ¥40,

the share price or management environment and capitalthe same as in fiscal 2012, as well as a commemorative

policy and as a method of returning profits to shareholders.

dividend of ¥20 to mark the 60th anniversary of the founding of the Company in January 2014 and express gratitude

The remaining surplus will be used for measures aimed at

for the continuing support of our shareholders.

further strengthening our existing businesses and investingin areas of future growth, with a view to further increasing

Finally, at a meeting of the Board of Directors held follow-

corporate value.

ing the conclusion of the Ordinary General Meeting of
Shareholders held on March 28, 2013, Shinji Kamei was

Outlookelected representative director and chairman, Hiroo Okoshi

In the outlook for fiscal 2013, in developed countries, theand both assumed their respective new offices. We intend

U.S. economy is expected to show gradual recovery, while

to work diligently to promote continuing contributions tobusiness conditions in Europe are likely to remain stagnant

the world community and further development of Mabuchi’s

despite the fact that the outlook of uncertainty is expectedbusiness, and kindly request the continued support andto fade, weighed down by drastic austerity measures. In

encouragement of our shareholders in the coming years.

was newly elected representative director and president,

Japan, no reliable signs pointing to economic recovery andgrowth are discernible. In emerging countries, economic
activity is likely to stabilize, and growth should continue,
although at a slower pace.

Annual Report 20128

Segment Information by
Motor Application
In fiscal 2012, the Mabuchi Group actively devised measures to realize management that
reliably ensures sales and market share expansion, stable product supply, and high quality
and high efficiency. These efforts led to an 8.1% year-on-year increase in motor sales,
which account for the majority of the Group’s consolidated net sales, reaching 85,131
million yen.

Automotive
Products

Major Applications
Door locks, mirrors, power window lifters, air conditioner dampers, power seats, etc.

Automotive Products Market
Net sales in this market rose sharply to 49,055 million yen (a 20.7% increase on a year-on-yearbasis). Mabuchi increased its share of motors for mirrors and air conditioner dampers, major existing
applications in this market. Automobile production growth, share expansion, and an increase in
the number of models equipped with Mabuchi’s motors contributed to a sales increase across allother applications, including power window lifters and power seats, our prioritized businesses. New
applications such as motors for electronic parking brakes and steering column adjusters also contributed
to the sales increase.
Net sales

Net sales by principal item

(Millions of yen)(100 millions of yen)

(Year-on-year change)

49,05540,06338,63366

134.2%

37
36

150.9%
120.1%

Door locks
Mirrors(including folding)135

124.9%

Power window
lifters

81

97

119.4%

111

117

105.0%

20112012

40,65149
24
30

30,346

108

2008

Audio & Visual
Equipment

2009

2010

2011

2012

Air conditioner
dampers
Power seats
OthersMajor Applications
CD players, DVD players/recorders, etc.

Audio & Visual Equipment Market
Net sales in this market decreased to 9,045 million yen (a 7.0% decrease on a year-on-year basis). Salesof motors for DVD players fell due to market contraction, and sales of motors for CD players in cars
declined as a result of the economic recession in Europe.
Net sales

Net sales by principal item

(Millions of yen)(100 millions of yen)

(Year-on-year change)

7
15,908
10,6792008

9

MABUCHI MOTOR CO., LTD.

200911,435

2010

9,725

2011

23

7
18

96.8%
77.5%

66

64

98.1%

2011

2012

9,045

2012

CD players
DVD players/
recorders
OthersOptical&Precision
Instruments

Major Applications
Inkjet printers, PC drives, digital cameras, etc.

Optical & Precision Instruments Market
Net sales in this market decreased to 11,334 million yen (a 10.0% decrease on a year-on-year basis).
Sales of motors for inkjet printers were unfavorable in developed countries and emerging countries alike,sales of motors for digital cameras fell in a slack market for compact cameras, and sales of motors forPC drives fell due to adherence to a policy of emphasizing profitability.
Net sales

Net sales by principal item

(Millions of yen)(100 millions of yen)

15,896
13,024

2008

Home
Appliances,Power Tools&
Toys(Year-on-year change)

1
8
13

2009

13,821

2010

12,589

2011

2
4
8

106.8%
52.3%
62.0%

Inkjet printers
PC drives
Digital cameras

11,3342012

Others

102

98

2011

2012

96.4%

Major Applications
Beauty-related equipment, power tools, toys, health-related equipment, etc.

Home Appliances, Power Tools & Toys Market
Net sales in this market were roughly at the prior-year level, decreasing slightly to 15,695 million yen(a 0.6% decrease on a year-on-year basis). Although sales of motors for shavers, hair dryers, andtoothbrushes fell due to factors including market stagnation leading up to the peak year-end sales
season, higher sales of motors for power tools and other applications compensated for the decrease.
Net sales

Net sales by principal item

(Millions of yen)(100 millions of yen)

22,071
16,2302008(Year-on-year change)

9
7

2009

17,337

2010

15,792

2011

15,695

2012

28

8
7
30

97.8%
100.3%
105.7%

49

52

105.1%

62

57

92.1%

2011

2012

Beauty-related
equipment
OthersPower tools
Toys
Health-related
equipment

Annual Report 201210

Research andDevelopment Activities(3) The enhancement of option support technologies for achieving

Mabuchi’s R&D Systemversatility(4) The strengthening of capabilities that enable rapid sample production

The Mabuchi Group conducts its research and development activities

and mass production start-up

at Mabuchi Motor Co., Ltd. and MABUCHI MOTOR (DONGGUAN) CO.,In the automotive products business, a high-priority business sector,

LTD. (in the Asia segment). In this section, we provide an overview of the

Mabuchi is making every effort to increase customer satisfaction andGroup’s R&D activities.

customer appeal for each motor application.

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, the Pro-

Motors for Power Window Lifters

duction Engineering Dept., and the Production Engineering Innovation

Net sales in this market increased, reaching ¥10.0 billion in fiscal 2012.

Center. In addition, the Research and Development Headquarters directly

This success has brought an increase in trade inquiries from customers incontrols groups that engage in activities pertaining to fundamental

Japan and abroad, and Mabuchi is ramping up personnel in light of thistechnology, intellectual property, testing and evaluation, and technology

development.

research, principally high-value-added work including the developmentof elemental technologies based on the technology roadmap and newMotors for Power Seats

product development centered on strategically important applications

The introduction of small, high-torque motors has boosted Mabuchi’s(please see below). To date the Research and Development Center ofname recognition in this market and increased adoptions by large cus-

MABUCHI MOTOR (DONGGUAN) CO., LTD. (the “R&D Center”) has

tomers, and Mabuchi will undertake product enhancements to further

mainly engaged in design improvement work to ensure the allocation ofincrease its share of this market.

headquarters R&D resources. During the year under review, it also began
Motors for Other Small Automotive Applications

new product development activities for the purpose of accelerating thiswork and supporting the rapid introduction of products to the Chinese

Although this is a market in which Mabuchi has long enjoyed competi-

market.

tive advantage, without succumbing to complacency, we are pursuing
activities aimed at further boosting competitive strength by such means
as offering a new line of small, high-torque motors.

Strategic R&D Fields

With regard to existing models for other markets, Mabuchi faces

To realize timely product development and new product introductions,increasingly fierce competition and is undertaking efforts to improve

Mabuchi has prepared the technology roadmap based on information

their features as well as to promote remodeling, while utilizing the afore-

obtained from market research and benchmarking-based technicalmentioned R&D Center to put in place a structure for promptly meetinginvestigation and is steadily developing elemental technologies in accor-

market and customer needs.
A summary of our technical achievements in fiscal 2012 is as follows.

dance with the roadmap. Among these development projects, Mabuchi
considers examination of the following issues and the implementation of

R&D expenses for the year were ¥3,794 million. The total number ofmeasures to address them as an urgent task for coping with the recent

industrial properties held by the Company stood at 607 (99 domestic

soaring prices of neodymium and other rare earths, the uncertainty ofand 508 overseas), and the total number of domestic and overseas new

their supply, and the rapid, steep rise in labor costs in overseas countries

industrial property applications during the year was 25. A total of 414

where Mabuchi operates plants—and we are proceeding with these

employees engaged in R&D activities (236 at our headquarters and 178

efforts.

at MABUCHI MOTOR (DONGGUAN) CO., LTD. R&D Center).

(1) Continuous research into technologies for the maximally effective useof inexpensive, readily available ferrite magnets(2) Innovative planning and implementation of a substantial reduction in
the number of production line workers

R&D expenses/R&D expenses ratio(Millions of yen)
4.2

4.7

4.0

3,892
3,298

3,337

4.4

3,493

4.5

3,794

R&D personnel

Number of intellectual properties(Persons)(Intellectual properties)

338

348

368

386

414
132

2008

2009

2010

2011

R&D expenses ratio (%)

11

MABUCHI MOTOR CO., LTD.

2012

2008

2009

2010

2011

2012

536

545

129

126

407

419

2008

2009

Overseas

624

607

108

99

473

516

508

2010

2011

2012

591
118

Domestic

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 ourcorporation but a gene to be carried down to subsequent generations of the Mabuchi
enterprise.

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

MANAGEMENTGUIDELINES

MAN

MAN

AGEMENT POLICIESMabuchi’sManagement Vision
MANAGEMENT PRINCIPLE
Contributing toInternational Society and Continuously
Increasing Our Contribution
Mabuchi believes that a company can continue to exist andgrow only if its business activities contribute to society on anever-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 andremain 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 atthe management helm.

AGEMENT SCHEME

Our Management Vision◦ MANAGEMENT GUIDELINES
Mabuchi’s management guidelines, which flowfrom our management principle, spell out
specifically how we “contribute.” These guidelines
outline the mission of Mabuchi’s business 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 ofsocial contribution and achieving sound growth.

◦ MANAGEMENT SCHEME
Based on Mabuchi’s business policy of maximizing the potential ofsmall DC brush motors as our core business, we mobilize our organizational skills and promote business activities 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 inwhich we are truly welcome. We plan to continue reflecting this management philosophy, which has served us well in the past, into the
future.

Annual Report 201212

Corporate Governancesocial impartiality and are fundamental to living up to the trustand expectations of all stakeholders; andBasic Approach to Corporate GovernanceWe understand that realizing this principle is our raison d’être,and we recognize that corporate governance comprises theorganizational/management systems and various managerial
measures that support those systems. Accordingly, we believethat the fundamental objective in establishing and implementing
an appropriate corporate governance framework is to further theinterests of our shareholders and other stakeholders on an ongoingbasis through the creation of fair profits and the enhancement ofcorporate value.
Constructing and maintaining a corporate governance systemalong the lines given below are indispensable for Mabuchi as alisted company.
1. To clearly separate management decision-making and efficientbusiness execution, and to clarify the scope of accountability;
2. To build and operate a sound internal control system, namely, toeffectively work the internal check system and the management
supervision system;
3. To appoint a suitable number of independent officers whose
interests do not conflict with those of general shareholders toensure the objectivity and neutrality of management supervisionfunctions;
4. To foster a corporate culture in which all Group employees
recognize and share the understanding that the practices ofcorporate ethics and compliance support the organization’s

5. To disclose corporate information to shareholders and otherstakeholders in an appropriate, fair, timely and clear mannerand to ensure accountability through the Board of Directors, theAudit & Supervisory Board, and other bodies.
The Mabuchi Group employs a simple corporate management
structure by establishing a corporate group consisting of Mabuchi
Motor Co., Ltd., and its wholly owned subsidiaries as well as
focusing and specializing its business resources on and in the small
DC motor business. The Mabuchi Group employs the Audit &Supervisory Board System as the best-suited organizational design
after considering such matters as directors’ duties, management
efficiency, and the maintenance of a management supervisorysystem that is appropriate to the above business contents andcorporate management structure.

Outline of Corporate Institutions
Board of Directors and Executive Committee
Significant management decision-making is carried out by the
Board of Directors, consisting of six inside directors and one
independent outside director who are familiar with the Company’s
management environment and business. The Board of Directors
quintessentially serves the functions of management decisionmaking and supervision of the execution of directors’ duties
and, as required by laws and ordinances, reporting on important

General Meeting of Shareholders
Appoint/Dismiss
LiaiseIndependent
Auditors

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

Department for Audit &Supervisory Board Members

ReportDirectAdviseMABUCHI MOTOR CO., LTD.

Group Ethical Standards

Other Supervisory Frameworks

Consult
Executive Committee(Executive Managing Officers)(One Executive Officer in
Charge of Internal Control)

Company Departments(Responsible for Compliance)

13

Basic Policy on Internal Control

Supervise

ExecuteInternal
Audit

Group Management Vision

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

Meeting of Head of Group Offices(Risk Management Committee)

ReportInternal Reporting
SystemManagement Principle

ReportRepresentative Directors

Internal Audit Department

Accounting
Audit

Board of Directors(Including one outside director/
independent outside officer)• 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

executive management decisions and conditions. Responsibility forexecuting decisions that have been made by the Board of Directors
is transferred to the representative directors and the executive
officers. The Board of Directors convenes regularly once a monthand at other times as required.
The Company deems that the independent outside director
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 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 deliberation by the
Board of Directors, carrying out executive business decision-making
outside the scope of the Board of Directors’ legal powers, andreporting on executive business conditions. This arrangement
enhances the Board of Directors’ function, as it allows the Board toprioritize deliberation of reports and proposals, making decisions
on these topics and monitoring and supervising the execution ofduties. The Executive Committee meets regularly twice a month.
In addition, Mabuchi has introduced an Executive Officer
System that centralizes strategic decision-making and supervisionfunctions on directors and delegates powers and responsibilities to
executive officers for the everyday execution of their duties. Thissystem serves to enhance the functions of both directors and theexecutive officers.
Audit & Supervisory 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, with one employee assigned
to the department to assist the members with their audits, andhas made it possible for the Audit & Supervisory Board members
to request audit-related assistance from employees of the Internal
Audit Department and other departments where appropriate.
The Audit & Supervisory Board members (three of whom areoutside members) carry out audits of the execution of duties bydirectors and other bodies in accordance with legal stipulations
and the auditing standards, policies, plans, and apportioned
duties determined by the Audit & Supervisory Board. Specifically,
Audit & Supervisory Board members attend meetings of the Boardof Directors and the Executive Committee and other important
meetings and oversee major business execution decisions anddocumentation 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 of duties
by the directors. The Audit & Supervisory Board convenes every
second month and holds regular monthly meetings for theexchange of opinions between Audit & Supervisory Board members
and essential deliberations regarding the execution of duties bydirectors.
Internal Audit Department
Mabuchi has established an Internal Audit Department, with one
full-time member, under the direct control of the president. Thisbody liaises with the Audit & Supervisory Board (members), theExecutive Officer Responsible for Internal Control, and the Internal
Control Department on a timely basis and conducts ongoingsupervision of the upgrading, running, and effectiveness of theinternal control framework for Mabuchi and its Group companies.

The Internal Audit Department reports its findings to the president,
directors, and Audit & Supervisory Board members.

Internal Control System
In accordance with the Basic Policy on Internal Controls approved
at a meeting of the Board of Directors under the provisions of theCompanies Act, Mabuchi is working to establish an internal control
system that includes systems for risk management, complianceassurance, document management, Group management, and Audit& Supervisory Board members’ audits. In this way, inadequacies ininternal controls and other issues discovered in risk management
activities, compliance activities, Audit & Supervisory Board
members’ audits, and internal audit activities are reported to thedirectors and Audit & Supervisory Board members on a periodic
or nonperiodic basis, and appropriate corrective measures aretaken in a timely manner. These efforts provide the Company
with a framework for continuously enhancing the functioning
and effectiveness of the internal control system. By establishingand ensuring the appropriate application of internal regulations
governing the approval system, job authority and division of
responsibilities, and other matters, the Company seeks to further
ensure the appropriate conduct of business. These various internalmechanisms serve to support the directors and Audit & Supervisory
Board members in their monitoring and supervision of the conductof business by directors.

Risk Management System
In accordance with the Basic Policy on Internal Controls, Mabuchi
has designated an executive officer with overall control overrisk management and the departments responsible for risk
management; has prepared and established internal rules andprocedures necessary for appropriate management of risk; andhas 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 forrisk management at each company department and subsidiary;
has made possible cross-organizational activities concerning risk
awareness and assessment in routine business activities, risk
response, and information provision; and has put in place a Group
Emergency Response System to prepare for contingencies, with theobjective of protecting all the Group business activities in the eventof 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.

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

Annual Report 201214

Board of Directors, Audit & Supervisory Board
Members, and Executive Officers(As of March 28, 2013)

Directors

Shinji Kamei

Hiroo Okoshi

Takashi Kamei

Representative Director
and Chairman

Representative Director
President and CEO

Executive Managing Director
Senior Managing Executive Officer and General Manager ofOperations Control Headquarters, in charge of China Business

Tadashi Takahashi

Akihiko Kitahashi

Masato Itokawa

Iwao Nakamura

Director
Executive Officer and General
Manager of Research andDevelopment Headquarters

Director
Executive Officer and General
Manager of Sales & Marketing
Headquarters

Director
Executive Officer and General
Manager of Quality Assurance
Dept., in charge of Quality andEnvironmental Management

Director (Outside)

Audit & Supervisory Board Members

Masahiro Gennaka

Keiichi Horii

Nobutaka Motohashi

Toru Masuda

Audit & Supervisory Board
Member (Full-time)

Audit & Supervisory Board
MemberAudit & Supervisory Board
MemberAudit & Supervisory Board
MemberExecutive Officers (excluding those also serving as directors)

15

Tadahito Iyoda

Chin Tai Yen

Katsuhiko Katayama

Tsuyoshi Nakamura

Executive Officer
General Manager of
Administration Headquarters, incharge of Internal Controls

Executive Officer
Chairman of the Board andPresident, MABUCHI TAIWAN
CO., LTD.

Executive Officer
Director of the Board andPresident, MABUCHI MOTORDALIAN CO., LTD.

Executive Officer
Deputy General Manager –Sales & Marketing Headquarters

MABUCHI MOTOR CO., LTD.

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

Workshop in a Disaster-Stricken Area
Mabuchi supports the activities of Action for Ozashi Tsunami
Recovery, an organization that assists in the recovery of
Jyusanhama-Ozashi, a district in Kitakami Town, Ishinomaki
City, Miyagi Prefecture, stricken by the Great East Japan
Earthquake in 2011. In September 2012, Mabuchi held ahandicraft workshop for children at Ozashi-Jusanhama
		Childresn’s House. We
will continue to support
activities that provide
fun and excitement tochildren through social
contributions distinctive
to Mabuchi.

Provision of Learning Materials
Each year Mabuchi provides a large amount of learningmaterials to support science education. In 2012, Mabuchi
provided approximately 17,000 motors as well as caseexamples of handicrafts powered by motors. These learningmaterials are put to good use in science classes at public
elementary schools in Matsudo City and at handicraft
workshops held by numerous educational institutions all overJapan.

Summer Vacation Handicraft Workshops
Every year since 2008, Mabuchi has held Summer Vacation
Handicraft Workshops for parents and children to provide
kids—the leaders of the next generation—with experience inthe magnificence of making things and in the mysteries ofscience, thus stimulating their interest in manufacturing.
During the summer
holidays, we invited
approximately 160
parent–child duos who
used motors as power
generators to create
handicrafts using readily
available waste materials
such as discarded CDs
and PET bottle caps.

Robot Contest SponsorshipScience Lessons for Elementary SchoolStudents by the Company’s Technical Staff
The aim of this program is to encourage children to experience the joys and wonders of science, while knowing thatwhat they learn in the science lessons will be useful in theireveryday lives. Based on this principle, Mabuchi dispatchedemployees to teach science classes for elementary school
students at four schools in Matsudo City and at the Science
Museum in Tokyo.
Lessons primarily comprised dismantling equipment andexperiments, using the Company’s motors as educational
aids. During the classes, the pupils also learned how therotational mechanism of the motors and electrical power		generation result from electromagnetic properties. In addition, we illustrated just how
many motors support our
everyday lives through a displayof products that contain motors.

To support the education of tomorrow’s technologists andencourage developments in science and technology, Mabuchi
has sponsored ABU Robocon, NHK University Robocon andKosen (technical college) Robocon every year since 2002,
providing funding and motors.

Providing Educational Opportunities
Since 1996, Dalian Mabuchi has been supporting the establishment of schools and carrying out other activities with theobjective of providing children with the opportunity ofgaining an education. To date, the company has helped toestablish three primary schools and one junior high school.
Subsequently, the company has continued to furnish theschool’s students with invitations to tour its factories and toprovide them with facilities and equipment. In addition,
Dalian Mabuchi has established a scholarship system tosupport children and young people whose economic circumstances prevent them from attending schools and universities,
providing assistance that enables them to grow into adults
who will benefit society.

Annual Report 201216

Financial SummaryMarket Environment

Net Sales and Operating Income Margin

In fiscal 2012, the small motor industry, to which the
Mabuchi Group belongs, saw an increase in demand,
partly owing to a recovery in the automotive products
market. Other consumer and industrial products
markets were weak, however, due to factors including
the impact of the economic slowdown in developed
countries and demand contraction in emerging
countries. Under these conditions, the Mabuchi Group
continued its efforts to address several issues: continued
strengthening of the automotive products business,enhancing sales performance in China, reorganizationof production bases, and plant efficiency improvements.

(Millions of yen)(%)

Net sales
Operating income margin 10

100,000
8.0%
80,000

8
6.1%

5.9%

60,0006
4.3%

40,00092,60282,75270,3693.9%

478,88620,000
0

2

2008

2009

2010

2011

Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries (Years Ended December 31)
For the year:

85,2540

2012

Millions of yen

Thousands of
U.S. dollars

2008

2009

2010

2011

2012

2012

¥92,602¥70,369¥82,752¥78,886¥85,254$991,325

Cost of sales

68,79951,80560,062

59,83864,214

746,674

Selling, general and administrative expenses

18,15015,544

16,064

15,981

15,987

185,895

5,652

3,019

6,624

3,066

5,052

58,744

5,330

3,013

7,291

3,248

8,426

97,976

3,565

5,450

5,260

(466)

6,385

74,244

Capital expenditures

3,777

3,659

3,210

6,524

6,825

79,360Depreciation and amortization

4,408

4,031

3,603

3,326

3,579

41,616R&D expenses

3,892

3,298

3,337

3,493

3,794

44,116

Net cash provided by operating activities¥ 6,542¥10,708¥ 5,457696¥ 9,091$105,709

Net cash (used in) provided by investing
activities

45(1,630)8,601(2,874)

8,230

95,697(18,641)(3,927)(3,507)(3,507)(3,509)(40,802)

Total assets¥188,691¥192,362¥185,408¥181,351¥196,702$2,287,232

Net assets

178,291

180,311

174,570

168,538

181,372

2,108,976(13.31)¥ 182.25$ 2.11

Net sales

Operating income
Income before income taxes
Net income (loss)

Cash flows:

Net cash used in financing activities¥

At year-end:

Per share data:(Yen and U.S. dollars)

Net income (loss)

¥

94.77

¥ 155.54¥ 150.14

Net assets

5,088.18

5,146.04

4,982.43

4,810.36

5,176.75

60.19

123.00100.00100.00100.00100.001.16

Dividends payable¥

Other data:
Operating income margin (%)

6.1

4.3

8.0

3.9

5.9

—

ROE (%)

1.8

3.0

3.0

(0.3)

3.5

—

Shareholders’ equity ratio (%)

94.5

93.7

94.2

92.9

92.2

—

Number of shares outstanding(Thousands of shares)

35,04035,03835,03735,03635,035—

Number of employees (Persons)41,32838,251

37,46633,91829,058—Notes
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥86=U.S.$1, the approximate exchange rate on December 31, 2012.
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.

17

MABUCHI MOTOR CO., LTD.

Net Sales

Operating Income

Net Income

Consolidated net sales in fiscal
2012 rose 8.1% from the previous
fiscal year to ¥85,254 million(US$991,325 thousand).

Operating income rose 64.8% to¥5,052 million (US$58,744
thousand).

The Mabuchi Group recorded net
income of ¥6,385 million(US$74,244 thousand).

¥85,254 million¥5,052 million

Net Sales by Application
2011

40,6512012

Net Sales by Geographic Area

9,725

49,0550

20,000¥6,385 million

12,58915,792

9,045 11,334
40,00015,69560,0002011 8,773 7,461 12,362

126

122

2012 9,664 8,714

80,000032,135

14,211

20,00018,02732,27040,00020,27060,000(Millions of yen)

Automotive Products
Audio & Visual Equipment
Optical & Precision Instruments

126

122

80,000(Millions of yen)Home Appliances, Power Tools & Toys
Other

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

Analysis of Operating Income

Increase in
selling prices
and change
in model mix¥1.8 billion

Decrease inmaterials andcommodities prices(copper, steel,precious metals)¥0.8 billion

Other¥0.1 billion

Lowerrare earth
prices¥0.2 billion

Volume decrease¥0.3 billion

Cost increase¥0.5 billion

Foreign exchange¥0.1 billion

Fiscal 2011 Results¥3.0 billion

Fiscal 2012 Results¥5.0 billion

Factors Affecting FY2008–FY2012 Consolidated Operating Income
Selling, General and Administrative Expenses(Millions of yen)

SG&A

20,000
19.6%

Exchange Gain/Loss

SG&A ratio
22.1%
19.4%

20.3%

18.8%

15,000(%)(Millions of yen)

25

4,000

20

3,000

15
10,00018,150

2008

2,000
1,000

15,544

16,064

15,981

15,987

5,000
0

3,647

2009

2010

2011

2012

10

0

5

-1,0000-2,000

596
2008

2009

2010
-1,036

2011
-272

2012

-1,567

Annual Report 201218

Management’s
Discussion and Analysis
Market Conditions ..........................................................................................

Net sales /Gross profit margin(Millions of yen)
26.4

25.7

24.7

24.1

92,60282,75278,8862010

2011

70,36920082009

During the fiscal year ended December 31, 2012 (fiscal 2012), the debt crisis in Europe had a major impact
on the real economy across the whole of Europe and was a main cause of the global economic slowdown.
Although the U.S. economy showed signs of a recovery, partly attributable to progress with household
debt adjustment, it lacked the dynamism to drive the global economy. The economies of China and otheremerging countries slowed further, hindered by sluggish export growth.
In Japan as well, an economic downtrend became clear as the persistently strong yen, the energy
problem, and other causes for concern remained unresolved, particularly so in the second half of the year,
as a result of the slowdown in overseas economic activity and contraction of domestic demand.
In the small motor industry, to which the Mabuchi Group belongs, although demand increased forreasons including recovery in the automotive products market, other consumer and industrial products
markets were slack due to factors including the impact of the economic slowdown in developed countries
and demand contraction in emerging countries. Another negative factor was sluggish demand leading up
to the peak year-end sales season, for which the Group’s expectations were high.

27.4

85,2542012

Gross profit margin (%)

Operating income/Operating income margin

Operating Results ...........................................................................................

(Millions of yen)
8.0
6.1
4.3

6,624

5,652

Consolidated net sales in fiscal 2012 increased 8.1% from the previous fiscal year to ¥85,254 million(US$991 million). Sales of motors, which account for the majority of consolidated net sales, increased
8.1% to ¥85,131 million (US$989 million). Although a robust year-on-year increase was achieved in salesof products for the automotive products market, a high-priority business, sales in other markets were
weak. Unit selling prices increased due to an improvement trend in the product mix and other factors,
resulting in a full-year sales increase.

5,052
3,066

3,019

2008

Net Sales

5.9

3.9

2009

2010

2011

Cost, Expenses and Operating Income

2012

Operating income for the year increased 64.8% to ¥5,052 million (US$58 million), due to improvement in
the gross profit ratio as a result of stabilization of the steep rise in materials costs that occurred up to theprevious year and a trend toward improvement in the product mix coupled with the effects from controlling selling, general and administrative expenses to roughly the previous year’s level.

Operating income margin (%)

Net income (loss) /ROE(Millions of yen)

Other Income (Expenses), Income before Income Taxes, and Net Income
Other income was ¥3,374 million (US$39 million), ¥3,192 million (US$37 million) above the previous fiscal
year. The reasons for the increase were the recording at year-end of an exchange gain due to weakeningof the yen through the year-end and non-recurrence of a loss on reversal of foreign currency translation
adjustments recorded at the previous year-end, which offset restructuring expenses at overseas subsidiaries and a loss on sales of investment securities.
Consequently, income before income taxes in fiscal 2012 was ¥8,426 million (US$97 million), up
159.4% from the previous fiscal year. Income taxes were ¥2,041 million (US$23 million), down ¥1,673
million (US$19 million), a change attributable to the non-recurrence of a reversal of deferred tax assets
recorded the previous fiscal year, which resulted in an ordinary effective income tax rate for the period.
As a result of the above factors, net income was ¥6,385 million (US$74 million) in fiscal 2012.

3.5

3.0

3.0

5,450

5,260

2009

2010

1.8
6,385

3,565

-466

2008

2011

2012

ROE (%)Net Sales by Application

Net Sales by Geographic Area
Thousands of
U.S. dollars

Millions of yen

2008

2009

2011

2012

2012

2008

Automotive
Products¥38,633 ¥30,346 ¥40,063 ¥40,651 ¥49,055$570,406

Audio & Visual
Equipment

15,908

10,67911,435

9,725

9,045

105,174

Optical & Precision
Instruments

15,896

13,024

13,821

12,58911,334

131,790

Home Appliances,Power Tools & Toys

22,071

16,23017,337

15,792

15,695

182,500

92

88

93

126

122

1,418

Other

¥92,602 ¥70,369 ¥82,752 ¥78,886 ¥85,254$991,325

Total

Other
Total

Note: Other includes parts and equipment sales.

19

2010

MABUCHI MOTOR CO., LTD.

Thousands of
U.S. dollars

Millions of yen

Japan

2009

2010

2011

2012

¥10,663 ¥ 8,056 ¥10,069 ¥ 8,773 ¥ 9,664

2012$112,372

North & Latin
America

8,487

5,995

7,438

7,461

8,714

101,325

Europe13,914

10,476

11,79312,362

14,211

165,244

China & HongKong

36,68629,423

34,47732,13532,270375,232

Asia Pacific

22,75816,327

18,88018,027

20,270235,697

92

88

93

126

122

1,418

¥92,602 ¥70,369 ¥82,752 ¥78,886 ¥85,254$991,325

Note: Other includes parts and equipment sales.

Financial Position ............................................................................................
AssetsConsolidated total assets as of December 31, 2012 stood at ¥196,702 million (US$2,287 million), an
increase of ¥15,350 million (US$178 million) from a year earlier. The most noticeable changes included anincrease in cash and bank deposits of ¥24,151 million (US$280 million), an increase in trade notes andaccounts receivable of ¥2,404 million (US$27 million), an increase in inventories of ¥1,869 million (US$21
million), an increase in construction in progress of ¥1,958 million (US$22 million), a decrease in short-term
investments of ¥10,402 million (US$120 million), and a decrease in investment securities of ¥8,294 million(US$96 million).

Liabilities
Total liabilities as of December 31, 2012 stood at ¥15,330 million (US$178 million), an increase of ¥2,516
million (US$29 million) from a year earlier. The most noticeable change was an increase in the provision forbusiness structure improvement of ¥1,126 million (US$13 million).

Net Assets
Total net assets were ¥181,372 million (US$2,108 million), an increase of ¥12,833 million (US$149 million).
Net unrealized holding losses on securities decreased by ¥1,298 million (US$15 million), and foreign
currency translation adjustment losses decreased by ¥8,656 million (US$100 million).
Net assets per share were ¥5,176.75 (US$60.19), and the shareholders’ equity ratio was 92.2%.

Cash Flows ......................................................................................................

Total assets(Millions of yen)

188,691

192,362 185,408

181,351

2008

2009

2011

2010

196,7022012

Net Cash Provided by Operating Activities
Net cash provided by operating activities amounted to ¥9,091 million (US$105 million), an increase of¥8,394 million (US$97 million) compared with the previous fiscal year. The change was mainly attributable to
the recording of ¥8,426 million (US$97 million) in income before income taxes and a decrease in inventories.

Net Cash Provided by Investing Activities
Net cash provided by investing activities amounted to ¥8,230 million (US$95 million), an increase of¥11,105 million (US$129 million) compared with the previous fiscal year. Cash flows from investing activities
increased as a result of factors including an increase of ¥10,355 million (US$120 million) in the balance ofpurchases and sales of short-term investments and investment securities due to decreases in the purchasesof short-term investments and investment securities.

Shareholders’ equity/
Shareholders’ equity ratio(Millions of yen)
94.5

93.7

94.2

92.9

92.2

193,597

193,895 195,644

191,671

194,551

2008

2009

2011

2012

Net Cash Used in Financing Activities
Net cash used in financing activities amounted to ¥3,509 million (US$40 million), owing primarily to
payment for dividends.
As a result, cash and cash equivalents at the end of year amounted to ¥79,904 million (US$929
million), an increase of ¥18,637 million (US$216 million) from the end of the previous year.

Capital Investments, Depreciation and Amortization ..................................
Capital investments increased ¥301 million (US$3 million) year on year to ¥6,825 million (US$79 million).
Major components were ¥3,164 million (US$36 million) for building construction costs at MABUCHIMOTOR (JIANGSU) CO., LTD., MABUCHI MOTOR (YINGTAN) CO., LTD., and MABUCHI MOTOR (JIANGXI)CO., LTD.; ¥193 million (US$2 million) for facilities and equipment for research and development; and¥3,466 million (US$40 million) for other facilities for expanding and updating motor production capacity.
Depreciation and amortization increased ¥253 million (US$2 million) year on year to ¥3,579 million(US$41 million).

2010

Shareholders’ equity ratio (%)

Working capital/Current ratio(Millions of yen)
13.9

11.3

12.4

11.5

10.0
117,373

94,621

103,186 105,935

102,980

2009

2011

Outlook ............................................................................................................
In the outlook for 2013, in developed countries, the U.S. economy is expected to show a gradual recovery,
while business conditions in Europe are likely to remain stagnant, weighed down by drastic austerity
measures, and despite waning concerns over financial uncertainty. In Japan, no reliable signs pointing toan economic recovery and growth are discernible. In emerging countries, economic activity is likely tostabilize, and growth should continue, albeit at a slower pace.
The conditions in the markets in which the Mabuchi Group’s products are sold are mixed. Markets
showing clear signs of a recovery and an underlying growth trend are the Automotive Products market
and the Home Appliances, Power Tools & Toys market, where demand is expected to increase in developed countries and emerging countries alike. In the Audio & Visual Equipment market and Optical &Precision Instruments market, which continue to contract, we expect a further decrease in demand in2013.
As a result, in 2013 we expect to record net sales of ¥94,000 million (US$1,093 million) (a 10.3%
increase on a year-on-year basis).
In terms of business results, despite a slight decrease in sales volume, we expect a number of positive
factors supporting profit growth, including a continuing improvement in the product mix, the positive
impact of a weaker yen, the effects of cost reduction measures, and decreases in the market prices ofmaterials. Consequently, we expect to record operating income of ¥7,000 million (US$81 million) (a38.6% increase on a year-on-year basis). We also anticipate net income of ¥6,300 million (US$73 million)(a 1.3% decrease).

2008

2010

2012

Current ratio (Times)

Capital expenditures/
Depreciation and amortization(Millions of yen)
6,524
4,408
4,031
3,777
3,659

2008

2009

3,603
3,210

2010

3,326

2011

6,825

3,579

2012

Capital expenditures
Depreciation and amortization

Annual Report 201220

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

Fluctuations in Foreign Exchange Rates
Items denominated in local currencies on the financial statements of our overseas subsidiaries are converted into Japanese yen
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 our Group’s consolidated business results, and conversely any depreciationof the Japanese yen will have a positive effect.
Appreciation of local currencies in regions where the Mabuchi Group carries out production will push up manufacturing andprocurement costs which are denominated in those local currencies. Increased costs will lower our Group’s profit margins and pricecompetitiveness, and will impact negatively on our 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 our Group cannot fully predict the changing needs of the market, or cannot develop appealing new products in atimely fashion, or in the event a technological innovation emerges which causes our products to become obsolete, then ourGroup’s business 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 our Group’s business results andfinancial position may be subject to significant adverse effects.

Potential Risks in International Economic Transactions and Expanding Business Overseas
The majority of our 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 our 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 our Group’s business results and financial position being subject to significant adverse effects.

21

MABUCHI MOTOR CO., LTD.

Product Quality
There is no guarantee that all of our Group products will have no major quality issues. If a quality issue occurs, the amount 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 large amount of costs or downturn in sales due to a loss of credibility, and may have significant adverse
effects on our Group’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, incertain regions, for certain inherent reasons, our Group’s intellectual property rights may not be completely protected. In such
instances, our Group’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 orexpertise, and then having it exploited by other companies. Or even still, there is a possibility that it could be claimed that ourGroup has impinged on the intellectual property of another company.
The failure of protection or the violation of intellectual property rights, or the outflow of other intellectual property may leadto our Group’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 anddevelopment of employees who are highly skilled in related areas: engineers with specialist scientific and technological expertise,and managers with top business strategy acumen and executive capacities. Mabuchi is fully cognizant of the need for thecontinuous enhancement and improvement of its human resources for the next generation and beyond. Meanwhile, the Groupshould put in a great deal to recruit and develop such a workforce.
The failure to recruit and cultivate such a workforce on an ongoing basis through the requisite expenditure and long-term
human resource development vision would invite adverse impact on the Group’s future performance and financial position.

Procurement of Raw Materials
Depending on the type of raw material that our Group procures from external sources, we may be dependent on a limited numberof 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
and alternative materials were not easily available, then there is a possibility that our Group’s production activities would be
affected dramatically, and in turn this would undermine the assurance of delivery and quality of products to our customers. It isalso 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 our 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. Our Group has
implemented measures to prevent our exposure to risks associated with the occurrence of disasters and accidents at these centers,
and we have 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 these kinds of unforeseeable events occurred, our Group’s businessresults and financial position may be subject to significant adverse effects.

Annual Report 201222

Consolidated Balance Sheets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2011 and 2012

Yen
(Millions)

U.S. Dollars(Thousands)

2011

2012

2012

¥ 54,920¥ 79,071$ 919,430

11,977

14,381

167,220

(107)

(79)

(918)

Short-term investments

23,07812,675

147,383

Merchandise and finished goods

12,762

14,030163,139

886

1,055

12,267

4,958

5,391

62,686

Income taxes refundable

84

–

–

Deferred tax assets – current

294

751

8,732

3,909

3,111

36,174

112,764

130,390

1,516,162

Land

6,020

6,023

70,034

Buildings

37,37538,422446,767

Machinery and equipment

36,10036,331

422,453

Construction in progress

2,357

4,316

50,18681,85485,095

989,476(47,623)(45,220)(525,813)

34,231

39,874

463,651

32,644

24,349283,127

Long-term loans receivable

45

30

348

Deferred tax assets – non-current

221

357

4,151

Other investments and other assets

1,445

1,699

19,75534,35526,436

307,395¥181,351¥196,702$2,287,232

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

Work in process
Raw materials and supplies

Other current assets
Total current assets

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

Investments and Other Assets:
Investment securities

Total investments and other assets

Total Assets

23

MABUCHI MOTOR CO., LTD.

Yen
(Millions)

2011

LIABILITIES AND NET ASSETS

U.S. Dollars(Thousands)

2012

2012

4,028

$

Current Liabilities:
Trade notes and accounts payable

¥

3,854

¥

46,837

Accrued income taxes

615

1,040

12,093

Accrued bonuses due to employees

226

209

2,430

Accrued bonuses due to directors

–

44

511

Provision for business structure improvement

–

1,126

13,093

Deferred tax liabilities – current

0

15

174

5,087

6,551

76,174

9,784

13,017

151,360

Provision for retirement benefits for employees

416

440

5,116

Asset retirement obligations

15

15

174

Deferred tax liabilities – non-current

1,382

1,586

18,441Other long-term liabilities – non-current

1,214

270

3,139

Total long-term liabilities

3,029

2,312

26,883

Total liabilities

12,813

15,330178,255

Additional paid-in capital

20,704
20,41920,704
20,419240,744
237,430

Retained earnings

185,294

188,175

2,188,081

Treasury stock, at cost: 4,839,419 shares in 2011 and
4,840,007 shares in 2012

(34,747)(34,749)(404,058)

191,671

194,551

2,262,220

Net unrealized holding losses on securities(1,457)(158)(1,837)

Foreign currency translation adjustments(21,676)(13,020)(151,395)

Total accumulated other comprehensive income(23,133)(13,179)(153,244)

Total net assets

168,538

181,372

2,108,976

Total Liabilities and Net Assets¥181,351¥196,702$2,287,232

Other current liabilities
Total current liabilities
Long-term Liabilities:

Net Assets:
Shareholders’ Equity
Common stock, no par value:
Authorized: 100,000,000 shares
Issued: 39,875,881 shares in 2011 and 2012

Total shareholders’ equity
Accumulated other comprehensive income

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

Annual Report 201224

Consolidated Statements of Operations
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2011 and 2012
Yen
(Millions)
Net Sales
Cost of Sales
Gross profit
Selling, General and Administrative Expenses
Operating income
Other Income (Expenses):
Interest and dividend income
Exchange (loss) gain, net
Gain on sale of raw material scrap
Gain (loss) on disposal of fixed assets
Loss on realized foreign currency translation
adjustments due to liquidation of foreign subsidiaryBusiness structure improvement expenses
Loss on adoption of accounting standard for asset
retirement obligations
Impairment loss
Loss on cancellation of lease transactions
Loss on sales of investment securities
Loss on revaluation of investment securities
Other, net
Income before Income Taxes
Income Taxes:
Current
Deferred(Loss) Income before Minority Interests
Net (Loss) Income

U.S. Dollars(Thousands)

2011¥78,886
59,83819,047
15,981
3,066

2012¥85,254
64,214
21,03915,987
5,052

2012$991,325
746,674
244,639
185,895
58,744

680
(272)
1,155
309

617
3,647
1,045
(75)

7,174
42,406
12,151(872)(1,502)–––(1,046)(12,162)

(16)

–

–

(84)
(20)
–
(55)
(10)
182
3,248

–
–
(806)
(11)
4
3,374
8,426

–
–
(9,372)(127)
46
39,232
97,976

1,576
2,138
3,714
(466)
¥      (466)

2,422
(381)
2,041
6,385
¥ 6,385

28,162(4,430)23,732
74,244$ 74,244

Yen
Per Share Data:
Net (loss) income
Dividends applicable to current year earnings

2011

2012

¥   (13.31)
100.00¥182.25100.00U.S. Dollars
2012$   2.11
1.16

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, 2011 and 2012
Yen
(Millions)(Loss) Income before Minority Interests
Other Comprehensive Income
Net unrealized holding (losses) gains on securities
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Shareholders of the parent
Minority interests

2011¥    (466)2012¥ 6,385

U.S. Dollars(Thousands)
2012$ 74,244(1,200)(859)(2,059)¥ (2,525)

1,298
8,656
9,954
¥16,339

15,093
100,651
115,744$189,988¥ (2,525)–¥16,339–$189,988–

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, 2011 and 2012

Number of Shares(Thousands)

Yen(Millions)

U.S. Dollars(Thousands)

2011

2012

2011

2012

2012

Beginning balance

41,87539,875¥ 20,704¥ 20,704$   240,744

Treasury stock cancellation(2,000)

–

–

–

–

Ending balance

39,87539,875¥ 20,704¥ 20,704$   240,744

Beginning balance¥ 20,419¥ 20,419$   237,430

Ending balance¥ 20,419¥ 20,419$   237,430

Beginning balance¥203,625¥185,294$2,154,581

Net (loss) income

(466)

6,385

74,244

Dividends paid

(3,502)(3,502)(40,720)

Treasury stock cancellation(14,360)––¥185,294¥188,175$2,188,081¥ (49,105)¥     (34,747)$            (404,034)

14,358(2)(23)¥ (34,747)¥     (34,749)$            (404,058)¥      (257)¥       (1,457)$              (16,941)(1,200)

1,298

15,093¥   (1,457)¥         (158)$               (1,837)¥ (20,817)¥     (21,676)$            (252,046)

(859)

8,656

100,651¥ (21,676)¥     (13,020)$            (151,395)¥ (21,074)¥     (23,133)$            (268,988)(2,059)

9,954

115,744¥ (23,133)¥     (13,179)$            (153,244)

Common Stock:

Additional Paid-in Capital:

Retained Earnings:

Ending balance
Treasury Stock:
Beginning balance
Net change during the year
Ending balance
Net Unrealized Holding Losses on Securities:
Beginning balance
Net change during the year
Ending balance
Foreign Currency Translation Adjustments:
Beginning balance
Net change during the year
Ending balance
Accumulated Other Comprehensive Income:
Beginning balance
Net change during the year
Ending balance

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

Annual Report 201226

Consolidated Statements of Cash Flows
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2011 and 2012

Yen
(Millions)

2011
Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Increase in allowance for retirement benefits, net of payments
Interest and dividend income
Exchange loss (gain)
Loss on realized foreign currency translation adjustment due toliquidation of foreign subsidiaries

¥

3,248
3,326
84
54
(680)
38

2012
¥

2012

8,426
3,579
–
5
(617)
(1,164)$

97,976
41,616–58(7,174)(13,534)

1,502

–

–

(Gain) loss on sales of short-term investments and investment
securities(Gain) loss on disposal of fixed assets
Loss on revaluation of investment securities
Increase in trade notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in trade notes and accounts payable
Decrease in the allowance for the restructuring of production bases
Increase in provision for business structure improvement
Other, net
Sub totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

(10)

806

9,372

(309)
55
(977)
(3,473)912(373)–(2,012)
1,385
674–(1,363)
696

71
11
(968)
508
(516)
–
1,034
(741)
10,435645(0)(1,988)
9,091

825
127
(11,255)
5,906(6,000)–12,023(8,616)
121,3377,500(0)(23,116)
105,709

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) provided by investing activities(13,137)
12,301(12,713)
20,264(6,253)630(6,394)
2,589(162)(2,874)(7,511)
8,541(5,599)16,999(6,763)
24
–
2,702
(161)
8,230

(87,337)
99,313(65,104)
197,662(78,639)279–
31,418(1,872)
95,697

Cash Flows from Financing Activities:
Cash dividends paid
Purchases of treasury stock
Net cash used in financing activities(3,505)(2)(3,507)(3,507)(2)(3,509)(40,779)(23)(40,802)(588)(6,273)67,540¥ 61,266

4,824
18,637
61,266¥ 79,904

56,093
216,709712,395$ 929,116

Effect of exchange rate changes on cash and cash equivalents
Net (decrease) 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, 2011 and 2012

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, 2012 have been translated into United States dollars at a rate of ¥86 = U.S.$1, the approximate
exchange rate prevailing on December 31, 2012. Those U.S. dollar amounts presented in the consolidated financial statements andrelated notes are included solely for the reader. This translation should not be construed as a representation that all the amounts
shown could be converted into U.S. dollars.
b Principles of consolidation
The consolidated financial statements include the accounts of the Company and all significant subsidiaries. All significant intercompany balances, transactions, and profits have been eliminated on consolidation. Investments in unconsolidated subsidiaries arestated at cost.
c Translation of foreign currencies
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rate of exchange in effect at thebalance sheet date. Exchange gains and/or losses resulting from such translations are included in income before income taxes.
Foreign subsidiaries’ assets and liabilities are translated into yen at the rates of exchange in effect at the balance sheet date. The
components of net assets are translated at historical rates. Revenues and expenses are translated at the average rates of exchange forthe year. The resulting foreign currency translation adjustments are shown as a separate component of net assets.
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 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.
j Retirement benefits
The Company and certain subsidiaries have funded noncontributory pension plans covering substantially all qualifying full-time
employees. Under the plan, eligible employees are entitled to a 10-year annuity or a lump-sum payment based on the rate of pay at
the time of retirement or termination, length of service and certain other factors. Annual payments to the trustees for the pension
plan, which are deductible for tax purposes, are based on the 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.
k Derivative and hedging activities
If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, the Company
defers recognition of gains or losses on revaluation of the forward foreign exchange contract until the related losses or gains on the

Annual Report 201228

hedged items are recognized.
l Standards issued but not yet effective
On May 17, 2012, the Accounting Standards Board of Japan (ASBJ) issued “Accounting Standard for Retirement Benefits” (ASBJ
Statement No. 26) and its Implementation Guidance, “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No.
25), but which are not yet effective at the Company. This standard and related implementation guidance revise existing standards toaddress the current treatment of actuarial gains or losses, unrecognized prior service cost, projected benefit obligation, and service
cost. The Company is currently evaluating what effect that these revisions will have on its consolidated results of operations andfinancial position and the applicable date of adoption.
m Additional information
Effective the year ended December 31, 2012, the Company has adopted “Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No. 24 issued on December 4, 2009) and “Guidance on Accounting Standards for Accounting Changes
and Error Corrections” (ASBJ Guidance No. 24 issued on December 4, 2009) for accounting changes and corrections of prior period
errors.
n Provision for business structure improvement
As of December 31, 2012, the Company has reasonably estimated a provision for a subsidiary’s future business structure improvement.
The provision mainly includes severance payments. The estimated impairment loss on equipment is also included but the impact isinsignificant.

2. Cash and Cash Equivalents
Cash and cash equivalents at the end of year in the accompanying consolidated statements of cash flows are reconciled to cash andbank deposits reported in the accompanying consolidated balance sheets as of December 31, 2011 and 2012 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

2011¥ 54,920

2012¥ 79,071

U.S. Dollars (thousands)
2012$ 919,430(4,282)
23,078(12,450)¥ 61,266(3,679)12,675(8,164)¥ 79,904(42,779)
147,383(94,930)$ 929,116

3. 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.
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 5. 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, 2011 and 2012 are as follows. Fair values thatare not readily determinable are not included in the following table.

29

MABUCHI MOTOR CO., LTD.

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

Yen (millions)
2011
Fair value¥ 54,920
11,99753,615¥120,513

Carrying value¥ 54,920
11,97755,601¥122,499
¥
¥

3,854
3,854

¥
¥

Variance––¥(1,986)¥(1,986)

3,854
3,854

Yen (millions)––

U.S. dollars (thousands)
2012

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¥ 79,071
14,381

Fair value¥ 79,071
14,381

Variance––

Carrying value$ 919,430
167,220

Fair value$ 919,430
167,220

Variance––

36,91436,686¥(228)

429,232

426,581$(2,651)¥130,368¥130,140¥(228)$1,515,906$1,513,255$(2,651)

¥
¥

¥
¥

$
$

$
$

4,028
4,028

4,028
4,028

–
–

46,837
46,837

46,837
46,837––

1. Method for calculating the fair values of financial instruments, short-term investments and derivative transactions
Assets:(1) Cash and bank deposits (2) Trade notes and accounts receivable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
(3) Short-term investments and investment securities
Market prices on securities exchanges are used to determine the fair value of stock. Prices quoted by exchanges or financial institutions
are used to determine the fair value of bonds.
Liabilities(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 5. Derivative Financial Instruments.
2. Carrying value of financial instruments for which fair values were extremely difficult to determine

Unlisted stocks

Yen (millions)
2011
¥120

Yen (millions)
2012
¥110

U.S. Dollars (thousands)
2012$1,279These 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, 2011 and 2012
Yen (millions)
2011

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
Certificate of deposit
Money in trust
Investment trust
Total

Within1 year¥54,920
11,977

1–5
years
–
–

5–10
years
–
–

Over 10
years
–
–

500
4,118

¥2,800–¥15,375–¥3,000–11,998
2,000
2,000

6,300
–
–
180
¥9,280––––¥15,375––––¥3,000¥87,514Annual Report 201230

Yen (millions)

U.S. Dollars (thousands)
2012

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

Within1 year
¥ 79,071

1–5
years
–

5–10
years
–

Over 10years–

Within1 year$ 919,430

1–5
years

5–10
years
–

–

Over 10years–

14,381–––

167,220

–

–

–

1,800

¥4,375¥13,000–

20,930$50,872$151,162

–

6,199
2,000
180
¥103,633

1,200––¥5,575–––¥13,000––––

72,081
23,255
2,093$1,205,034

13,953––$64,825–––$151,162––––

4. Investment Securities
The carrying value, fair value and variance for held-to-maturity securities as of December 31, 2011 and 2012 were as follows:(1) Held-to-maturity securities

Securities whose fair value exceeds their carrying value
Corporate bonds
Sub total
Securities whose carrying value exceeds their fair value
Corporate bonds
Sub total
Total

Carrying value

Yen (millions)
2011
Fair value¥ 1,375¥ 1,375¥ 1,889¥ 1,889¥¥

24,418¥24,418¥25,793

21,917¥21,917¥23,807(2,500)¥(2,500)¥(1,986)

Yen (millions)

Variance
514
514

U.S. Dollars (thousands)
2012

Securities whose fair value
exceeds their carrying value
Corporate bonds
Sub total
Securities whose carrying value
exceeds their fair value
Corporate bonds
Sub total
Total

Carrying value

Fair value

Variance

Carrying value

Fair value

Variance¥ 2,375¥ 2,375¥ 2,977¥ 2,977

¥ 602
¥ 602

$ 27,616$ 27,616$ 34,616$ 34,616$ 7,000$ 7,000

16,800¥16,800¥19,175

15,969¥15,969¥18,947(830)¥(830)¥(228)

195,348$195,348$222,965

185,686$185,686$220,313(9,651)$(9,651)$(2,651)

The acquisition cost, carrying value and variance for other securities as of December 31, 2012 and 2011 were as follows:(2) Other securities

Acquisition cost
Securities whose carrying value exceeds their acquisition cost
Stock
Corporate bonds
Sub total
Securities whose acquisition cost exceeds their carrying value
Stock
Corporate bonds
Other
Sub total
Total

31

MABUCHI MOTOR CO., LTD.

¥

Yen (millions)
2011
Carrying value

Variance

430
1,198¥ 1,628

¥

965
1,199
¥ 2,165¥

2,915
17,1009,431¥29,446¥31,075

2,000
16,9608,681¥27,642¥29,808

(914)
(139)
(749)
¥(1,803)¥(1,267)

¥

535
1
536

Yen (millions)

U.S. Dollars (thousands)
2012

Acquisition cost
Securities whose carrying value
exceeds their acquisition cost
Stock
Corporate bonds
Sub total
Securities whose acquisition costexceeds their carrying value
Stock
Corporate bonds
Other
Sub total
Total

Carrying value

Variance

Acquisition cost

Carrying value

Variance

¥

983
1,000
¥ 1,983¥ 1,858
1,002¥ 2,860

¥ 874
2
¥ 877

$ 11,430
11,627$ 23,058$ 21,604
11,651$ 33,255$10,16223$10,197

1,856
6,399
7,430
¥15,686¥17,669

1,561
6,391
6,924
¥14,877¥17,738

(294)
(8)
(505)
¥(808)¥ 68

21,581
74,40686,395$182,395$205,453

18,151
74,31380,511$172,988$206,255(3,418)(93)(5,872)$ (9,395)$ 790

Unlisted stocks are not included in “Other securities” because their market prices do not exist and their fair values are not readily
determinable.

5. 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, 2011 and2012 were ¥4,342 million and ¥1,509 million ($17,546 thousand), respectively.
The estimated fair values at December 31, 2011 and 2012 were ¥4,070 million and ¥1,697 million ($19,732 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.

6. Retirement Benefit Plans
The table below sets forth the plans’ statuses and amounts recognized in the balance sheets at December 31, 2011 and 2012.
Yen (millions)
Projected benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Unrecognized prior service cost
Unrecognized actuarial gains
Net retirement benefit obligation
Prepaid pension costAccrued retirement benefits

2011¥(8,765)
8,721
(43)
127
(369)
(285)
130
¥   (416)

2012¥(9,456)
9,196
(260)
106
(153)
(307)
133
¥   (440)

U.S. Dollars (thousands)
2012$(109,953)
106,930(3,023)
1,232(1,779)(3,569)1,546$  (5,116)

The components of net periodic pension cost for the years ended December 31, 2011 and 2012 were as follows:
Yen (millions)
Service cost
Interest cost
Amortization of prior service cost
Expected return on plan assets
Amortization of unrecognized actuarial gain
Net periodic pension cost

2011
¥456
164
20
(109)
(35)
¥497

2012
¥551
161
20
(111)
(44)
¥578

U.S. Dollars (thousands)
2012$6,4061,872
232(1,290)(511)$6,720

Other than the above pension cost, temporary severance benefit costs of ¥423 million for the year ended December 31, 2011 and¥142 million ($1,651 thousand) for the year ended December 31, 2012 were incurred, respectively.
The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on plan assets

2011
mainly 2.0%
mainly 1.0%

2012
mainly 2.0%
mainly 1.0%

Annual Report 201232

7. Income Taxes
The Company is subject to a number of taxes based on income with a normal aggregate tax rate of approximately 40.4% for the years
ended December 31, 2011 and 2012. 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 rate and the effective income
tax rate on pre-tax income for the years ended December 31, 2011 and 2012.
2011
%
40.4
(33.5)
(9.8)
6.7
7.7
78.1
–

Statutory income tax rate
Tax credits on dividend income
Different tax rates applied to foreign subsidiaries
Non-refundable withholding tax
Undistributed earnings in foreign subsidiaries
Valuation allowance
Tax deduction
Loss on reversal of foreign currency translation
adjustments due to liquidation of foreign subsidiary
Other, net
Effective income tax rate

2012
%
40.4
(0.3)
(10.0)
–
1.6
(9.4)
(0.6)

18.7

–

6.1
114.4

2.5
24.2

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, 2011 and 2012 were as follows:
Yen (millions)Deferred tax assets:
Unrealized profits on inventories and fixed assets
Evaluation losses on investment securities and other assets
Depreciation
Allowance for retirements benefits
Unrealized loss on available-for-sale securities
Net operating loss carry forwards
Allowance for restructuring of production bases
Other
Valuation allowance
Total
Deferred tax liabilities:
Tax on undistributed earnings in foreign subsidiaries
Other
Total
As reported in the consolidated balance sheet:
Deferred tax assets
Deferred tax liabilities

2011

2012

U.S. Dollars (thousands)
2012¥    601
907
61
95
643
511
–
706
(2,827)¥    699¥    752
911
91
89
286
108
281
742
(2,048)¥ 1,216$ 8,744
10,593
1,058
1,034
3,325
1,255
3,267
8,627
(23,813)$ 14,139¥ 1,236330¥ 1,567¥ 1,368342¥ 1,710$ 15,906
3,976$ 19,883¥    515¥ 1,383¥ 1,108¥ 1,602$ 12,883$ 18,627

8. Consolidated Statement of Comprehensive Income
The following table presents reclassification adjustments and tax effects for each component of other comprehensive income for theyear ended December 31, 2012.
Yen (millions)2012

Year ended December 31, 2012
Unrealized holding gain on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectUnrealized holding gain on securities
Foreign currency translation adjustment
Amount arising during the year
Total other comprehensive income

U.S. Dollars (thousands)
2012¥2,154
(817)
1,337
(39)
1,298

$ 25,046(9,500)15,546(453)
15,093

8,656¥9,954

100,651$115,744

9. Shareholders’ Equity
Under the Japanese Corporate Law (“the Law”), the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the
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, 2012, 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 statements

33

MABUCHI MOTOR CO., LTD.

of the Company in accordance with the Law.
Year end dividends are approved by the shareholders after the end of each fiscal year, and semiannual interim cash dividends are
declared by the Board of Directors after the end of each interim six-month period.
On September 14, 2012, interim dividends (¥50 or $0.58 per share) totaling ¥1,751 million ($20,360 thousand) were paid toshareholders based on the shareholders’ record at June 30, 2012. On March 29, 2013, the shareholders approved a declaration ofdividends (¥50 or $0.58 per share) totaling ¥1,751 million ($20,360 thousand).

10. Per Share Data
Net (loss) income per share was computed based on the net (loss) income reported in the consolidated statements of operations andthe weighted average number of shares of common stock outstanding during each year. In accordance with the accounting standard
for earnings per share, basic net (loss) income per share was computed based on the net (loss) income available for distribution toshareholders of common stock and the weighted average number of shares of common stock outstanding during the year.

11. Contingent Liabilities
As of December 31, 2012, the Company is contingently liable principally for forward precious metal contracts in the amount of ¥1,509
million ($17,546 thousand).

12. Research and Development Expenses
Expenditures relating to research and development activities are charged to income as incurred and amounted to ¥3,493 million and¥3,794 million ($44,116 thousand) for the years ended December 31, 2011 and 2012, respectively.

13. Impairment of Fixed Assets
Impairment losses relating to fixed assets of ¥84 million were incurred for the year ended December 31, 2011. Accumulated losses on
impairment are directly deducted from the related assets. There were no impairment losses relating to fixed assets for the year ended
December 31, 2012.

14. 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,
the U.S.A., Europe, etc. Subsidiaries located overseas are independent management units and propose comprehensive productstrategies 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,” “U.S.A.” and “Europe” as their reporting
segments.
2. Basis of measurement for reporting segment income or loss, segment assets and other material items
The accounting policies and methods for the Group’s reporting segments are the same as described in “1. Summary of Significant
Accounting Policies”.

Annual Report 201234

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
U.S.A.
External customers
Intersegment
Total
EuropeExternal customers
Intersegment
Total
Corporate and elimination
Consolidated
Segment Income (Loss):
Japan
Asia
U.S.A.
EuropeCorporate and elimination
Consolidated
Segment Assets:
Japan
Asia
U.S.A.
EuropeCorporate and elimination
Consolidated
Others:Depreciation and Amortization:
Japan
Asia
U.S.A.
EuropeCorporate and elimination
Consolidated
Increase in Tangible and Intangible Fixed Assets:
Japan
Asia
U.S.A.
EuropeCorporate and elimination
Consolidated

2011

2012

U.S. Dollars (thousands)
2012¥  9,765
44,87754,643¥ 10,177
53,58063,757$   118,337
623,023
741,360

49,36645,752
95,11952,151
54,579106,731

606,406
634,639
1,241,058

7,468
–
7,468

8,714
–
8,714

101,325–
101,325

12,285–
12,285(90,629)¥ 78,886

14,211–
14,211(108,160)¥ 85,254

165,244–
165,244(1,257,674)$   991,325¥   (2,048)
3,395
356
394
968
¥  3,066¥    (1,663)
4,964
498
805
447
¥  5,052$     (19,337)
57,720
5,790
9,360
5,197
$   58,744¥ 66,468
96,645
3,272
5,901
9,063
¥181,351¥ 67,451
110,813
4,122
7,216
7,097
¥196,702$   784,313
1,288,523
47,93083,90682,523$2,287,232

¥953
2,559
3
5
(194)
¥  3,326

¥944
2,819
3
6
(194)
¥  3,579$   10,976
32,77934
69(2,255)$   41,616¥    472
6,914
0
7(1,250)¥  6,145

¥270
8,335
5
4
(1,170)¥  7,445$    3,139
96,91858
46(13,604)$   86,569

1. (1) The reported “segment income (loss) corporate and elimination” of ¥968 million in fiscal 2011 and ¥447 million ($5,197
thousand) in fiscal 2012 represent intersegment transaction eliminations.
(2) The reported “segment assets corporate and elimination” include: corporate assets of ¥78,240 million in fiscal 2011 and¥80,799 million ($939,523 thousand) in fiscal 2012, not allocated to each segment; intersegment debt and credit eliminations of¥69,176 million in fiscal 2011 and ¥73,701 million ($856,988 thousand) in fiscal 2012.
(3) The reported “depreciation and amortization corporate and elimination” of ¥194 million in fiscal 2011 and ¥194 million ($2,255
thousand) in fiscal 2012 represent intersegment transaction eliminations.
(4) The reported “increase in tangible and intangible fixed assets corporate and elimination” of ¥1,250 million in fiscal 2011 and¥1,170 million ($13,604 thousand) in fiscal 2012 represent intersegment transaction eliminations.
2. Segment income (loss) is adjusted for operating income reported in the consolidated statements of operations.
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
U.S.A.
EuropeTotal

35

MABUCHI MOTOR CO., LTD.

2011

2012

U.S. Dollars (thousands)
2012¥ 8,776
50,277
7,469
12,362¥78,886¥ 9,718
52,6098,714
14,211¥85,254$113,000
611,732
101,325
165,244$991,325

Yen (millions)Tangible Fixed Assets
Japan
Asia
U.S.A.
Europe
Total

2011

2012

U.S. Dollars (thousands)
2012¥17,205
16,9879
27¥34,231¥16,526
23,30712
28¥39,874$192,162
271,011139
325$463,651

2012

U.S. Dollars (thousands)
2012

Yen (millions)2011
Impairment Loss
Japan
Asia
U.S.A.
Europe
Total

¥20
64
–
–
¥84

¥–
–
–
–
¥–

$–
–
–
–
$–

15. Subsequent Events(Introduction of stock-based compensation)
On February 15, 2013, the Company resolved, at the Board of Directors’ meeting, to propose a resolution for the determination ofstock-compensation-type stock options as directors’ (excluding outside directors) compensation at its 72nd Ordinary General Meetingof Shareholders held on March 28, 2013. Grants of the stock-compensation-type stock options to the directors (excluding outside
directors) were subsequently resolved pursuant to Article 361 of the Law, and the subscription requirement was resolved at the Boardof Directors’ meeting also held on March 28, 2013.
1. Purpose
The Company abolished the retirement allowance system for directors and statutory auditors of the Company at the 67th Ordinary
General Meeting of Shareholders held on March 28, 2008, and has subsequently studied enhancing the long-term incentives for
directors.
Consequently, the Company recently determined that stock-compensation-type stock options targeting directors of the Company(excluding outside directors) be implemented as part of its reform of the compensation system for directors for the purpose ofincreasing their willingness to serve and motivation toward improved corporate value and raised share prices. This reform measure shallbe closely linked to the Company’s business performance and share price by establishing a scheme through which directors of theCompany will share not only the benefits that may be enjoyed due to increased share prices but also the risk of a decline in shareprices along with shareholders.
To strengthen the linkage of directors’ remuneration with the share prices that reflect the Company’s corporate value, a system ofstock-compensation-type stock options (subscription rights to shares for which the exercise price is ¥1) for directors (excluding outside
directors) shall be implemented and the allotment thereof shall be capped at ¥60 million annually.
The total amount of the remuneration for directors of the Company has been previously determined to be within ¥15 million(excluding salaries for service as the Company’s employees) as monthly fixed payments, and within 0.7% of consolidated net income
for each year (computed without remuneration for directors based on the consolidated operating results) as variable payments ofwhich the amount is capped at ¥200 million. Statutory auditors of the Company are not subject to the stock-compensation-type stock
options system concerned.
2. 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 share
Matters relating to the distribution of the subscription rights to shares following
a reorganization

March 28, 2013
Six directors of the Company (excluding outside directors)
Common stock capped at 25,000 shares per year
Maximum number of shares shall be 25,000 shares. Total number of thesubscription rights to shares shall be capped at 2,500 units per year. The
Company determined the number of subscription rights to be 5,970 shares.
The number of shares for each subscription right to shares (hereinafter the“Number of Granted Shares”) shall be 10 shares. Note 4¥1 per share
Note 8Note 9Note 11
Note 13Annual Report 201236

Notes:(1) Designation of the subscription rights to shares
Mabuchi Motor Co., Ltd. 1st Subscription Rights to Shares (Stock-compensation Type)(2) E ligible persons to whom the subscription rights to shares are allotted and the number thereofSix (6) directors of the Company(3) Total number of the subscription rights to shares: 597 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 value calculation 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
May 20, 2013(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 May 21, 2013 to May 20, 2033.
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.
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) M atters 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) T reatment 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

37

MABUCHI MOTOR CO., LTD.

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) P lace 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(Introduction of ESOP Trust)On February 15, 2013, the Board of Directors resolved to introduce an employee incentive plan called the ESOP Trust Utilizing
Employee Shareholding Association (hereinafter the “ESOP Trust”), with the aim of raising corporate value over the medium to longterm, as described below.
1. Purpose
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.
2. Outline
The ESOP Trust is a trust-type employee incentive plan that uses the mechanism of an employee shareholding association, and is basedon the Employee Stock Ownership Plan (ESOP) system of the United States, 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).
The Company will establish a trust in which certain employee members of Mabuchi Motor Employee Shareholding Association(hereinafter “Our Shareholding Association”) who meet certain requirements are its beneficiaries. 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 increase in stock prices when the term of the ESOP Trust ends.
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 result from a loss caused by a drop in stock
prices.
In the ESOP Trust, the case in which the Company might dispose of its treasury stock to the Trustee is also considered. However,whether to conduct such a disposition and specific details of such disposition, if any, are undetermined at this time because they will
be decided at a later date in view of the scale and possible impact of the ESOP Trust.
(Cancellation of repurchased shares)
On February 15, 2013, the Board of Directors resolved to cancel certain treasury shares of common stock to further improve capitalefficiency and shareholders’ return on investment. Accordingly, on February 22, 2013, 2 million shares were cancelled. The number ofissued shares outstanding after the cancellation was 37,875,881.

Annual Report 201238

Independent Auditor’s Report

39

MABUCHI MOTOR CO., LTD.

Investor Information(As of December 31, 2012)

Stock Data

Composition of Shareholders

Number of Shares Authorized...................... 100,000,000
Number of Shares Issued.................................. 39,875,881

Treasury Shares

Number of Shareholders......................................... 12,867

12.1%

Financial Institutions
17.9%
Financial Instruments
Firms
0.8%

Major Shareholders
By type ofshareholders

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

Major Shareholders
Takaichi Mabuchi

2,500

7.1

Northern Trust Co. (AVFC) Sub-account
American Clients

2,428

6.9

Mabuchi International ScholarshipFoundation

1,500

4.3

Japan Trustee Services Bank, Ltd.
(Trust Account)

1,151

3.3

1,130
1,130

3.2
3.2

1,060

3.0

1,034
1,028
1,028

3.0
2.9
2.9

Takashi Mabuchi
Tamotsu Mabuchi
The Master Trust Bank of Japan, Ltd.
(Trust Account)Premiere Corporation
Taka Corporation Co., Ltd.
TEXAS Inc.

Other Corporations
13.6%

Individuals andOthers25.0%

Foreign Corporations
30.6%

Less than 100 0.1%

100-499 3.9%
500-999 1.6%
1,000-9,999 5.6%

1,000,000 and above
47.2%

10,000-99,999 10.3%

By number ofshares held

Notes: 1. In addition to the above, Mabuchi Motor Co., Ltd. retains
4,840,007 treasury shares.
2. The number of shares of treasury stock is excluded from “Ratioof Shareholders.” The percentages are rounded to one decimal
place.

Cash Dividends per Share/Payout Ratio

Total Dividend/Amount for Repurchase of Own
Stocks/Total Dividend Payout Ratio

64.3

43.8

516.8

(%)

129.8
42.5

100,000-999,999 31.3%

66.6

54.9

122.7
42.5

(Yen)

123.0

123.0

62.0

62.0

51.0

61.0

2006

2007

114.0
63.0

Interim

100.0

100.0

100.0

50.0

50.0

50.0

50.0

61.0

50.0

50.0

50.0

50.0

2008

2009

2010

2011

2012

8,682

Changes in Standards for Calculating Dividends
Ordinary Dividendper Share

Standard Value for Calculating
Special Dividend

2007

60 yen20% of consolidated net income

2005

60 yen20% of consolidated net income

2003

50 yen1999

50 yen

4,509

4,703

2006

2007

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.

Year

64.3

66.6

54.9

3,503

3,503

3,503

2009

2010

2011

(Millions of yen)
100.0Year-end(%)

13,957
4,468

2008

Amount for Repurchase of Own Stocks

3,503

2012
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
2008

2009

2010

2011

2012

High (Yen)

6,740

5,010

5,520

4,305

3,930

Low (Yen)

2,845

3,230

3,920

3,075

2,931

20% of consolidated net income

At Year-end (Yen)

3,690

4,580

4,185

3,205

3,655

5% of consolidated net income

PER

38.9

31.2

27.8

−

20.1

(* Additional policy) 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 asignificant profit warning is issued.

PBR

0.7

0.9

0.8

0.7

0.7

(*)

Annual Report 201240

Corporate Data
(As of December 31, 2012)

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

Number of Employees
732 (Non-consolidated)
29,058 (Consolidated)
Ordinary General Meeting of
Shareholders
The Ordinary General Meeting of Shareholders
will be held at the end of March in Matsudo.
Independent Accountants
Ernst & Young ShinNihon LLC
Tokyo, Japan

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

Corporate Directory
Consolidated Subsidiaries[North America]
MABUCHI MOTOR AMERICA CORP.
3001, West Big Beaver Road, Suite 328,
Troy, MI 48084, U.S.A.
[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 andTechnological 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[Asia Pacific]

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

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

MABUCHI MOTOR TRADING(SHENZHEN) CO., LTD.
Room 1704-05 Great China International
Exchange Square, Jintian Road,
Futian District, Shenzhen City,
Guangdong Province 518034, China

MABUCHI MOTOR CO., LTD.

MABUCHI MOTOR (SINGAPORE) PTE. LTD.
111, North Bridge Road, #12-05
Peninsula Plaza, Singapore, 179098
MABUCHI MOTOR VIETNAM LTD.
No. 2 5A Street, Bien Hoa II Industrial Zone,
Bienhoa, Dong Nai, Vietnam

MABUCHI MOTOR (YINGTAN) CO., LTD.
Yingtan Economic and Technological
Development Zone, Yingtan City,
Jiangxi Province 335000, China

MABUCHI MOTOR DANANG LTD.
Lot A2, No. 3 Street, Hoa Khanh Industrial
Zone, Lien Chieu District, Da Nang City,
Vietnam

MABUCHI PRECISION (DONGGUAN) CO.,LTD.
Ludong Industrial Area, Humen Town,
Dongguan City, Guangdong Province
523935, China

MABUCHI MOTOR KOREA CO., LTD.
G-five Central Plaza 328, 27,
Seochojungang-Ro 24-Gil, Seocho-Gu,
Seoul, 137-882 Korea

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

Non-consolidated Subsidiary

MABUCHI MOTOR (JIANGXI) CO., LTD.
Jinlong Road, Ganzhou Development Zone,
Jiangxi 341000, China

41

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

MABUCHI REAL ESTATE CO., LTD.

Annual Report 201242