Annual Report

2011
Year ended December 31, 2011

RZ-735VA
Reduced to three-fourths the size andweight of the previous model

Small Motors =Innovation and Reliability
for the Future

Profile

Small DirectCurrent
Electric Motor

MarketingResearch and Development

We engage in marketing to rapidly, sufficiently

Continuing to respond to a variety of needs

and appropriately ascertain market andwith regard to motors, primarily the ability totechnology trends around the world andbe highly efficient and low in noise, Mabuchi

the motor functions that customers require.

Motor has always been leading the market of

We provide our customers with low-cost,small motors.

high-quality products and excellent delivery

From basic research, product development,

response times while analyzing information we

product design, and production technology

collect on diverse customer needs to discover

to motor-applied technology in these small

commonalities that permit standardization.

machine parts, Mabuchi has collected every
wide range of technical capability that has
been acquired over many years.

1

MABUCHI MOTOR CO., LTD.

Annual Report 2011

Small Motors = Innovation and Reliability
for the FutureEver since its founding, Mabuchi Motor Co., Ltd. has been a specialist manufacturer of small motors that deliver consistently
high quality and efficiency at low prices in line with our basic policy “Bringing better and more reasonably priced goods tothe market.” Small motors from Mabuchi contribute to convenient, comfortable living for people the world over as functional
components in a wide variety of applications in many industries, including automotive products, audio and visual equipment,
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
1,535 billion units (2011 results) is testimony to the excellent reputation and trust we have built with our customers and asource of great pride for us. In the coming years, we will continue to aspire to create new value through product development
adaptable to market needs and a flexible supply system.

Production

Quality Assurance

Mabuchi is establishing production bases

Small motors from Mabuchi
hi play an important

across Asia with the aim of developing atings in everyday life,role in many different settingscompetitive motor production system ande products industry.
mainly in the automotive

providing employment opportunities in hoste our motors with
To enable people to use

countries. Furthermore, we strive to combine

emanding environments,
confidence even in demanding

high quality and low cost in our production

us quality testing of every
we conduct rigorous

process by seeking an optimal balance

aspect of productt performance, including

between people and machines.

ality and processing accuracy
the material qualitye, change in temperature andof parts, noise,nd vibration.
humidity, and2

Table ofContents

Our Business1

ProfilePresident’s Message
4

To Our Shareholders

How We’re Doing
9
11

Segment Information by Motor Application
Research and Development Activities

Activities for Sustainable Management
12
13
15
16

Mabuchi’s Management VisionCorporate Governance
Board of Directors, Statutory Auditors, and Executive Officers
Corporate Social Responsibility

Financial Section
17
19
21
23
25
25
26
27
28
36

Financial Summary
Management’s Discussion and Analysis
Business and Other Risks
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ ReportCompany Information
37
38

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 not historical facts. These statements are based on current expectations,forecasts, estimates, and projections about the industry in which Mabuchi operates and the beliefs andassumptions 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 those projected. Mabuchi therefore cautions readers not to place undue reliance on
forward-looking statements. Furthermore, the Company undertakes no obligation to update any
forward-looking statements as a result of new information, future events, or other developments.
Risks, uncertainties, and assumptions mentioned above include, but are not limited to, exchange rates
and economic conditions; the outcome of pending and future litigation; commodity prices; and the continuing status of financing, financial instruments, and financial resources.

3

MABUCHI MOTOR CO., LTD.

Annual Report 2011

To Our Shareholders
In fiscal 2012, the Company will steadily proceed with establishing new growth axes
and cost rationalization in preparation for the next breakthrough.

Shinji Kamei
Representative Director and President

Overview of Sales during Fiscal 2011

recovery and higher production in the second half. At thesame time, many key products in other markets depend

During fiscal 2011, the year ended December 31, 2011, theheavily on demand in developed countries, and on theoverall sense of uncertainty in the global economy height-

whole, demand declined owing to factors including sluggish

ened. The fiscal problems in Europe further increased indemand in preparation for the peak year-end sales period.

severity, their impact spread to the real economy, and theeconomic recovery trend weakened in both the United

Under these business conditions, the Mabuchi GroupStates and Europe. In emerging countries as well, while aaddressed several issues: continued strengthening of thecertain level of economic growth potential was sustained,

automotive products business, sales expansion in China,

the pace of growth showed a slowing trend.

reorganization of production bases, and plant efficiency
improvements.

Although the Japanese economy recovered from a slump in
production activities following the Great East Japan Earthquake at a pace that exceeded initial expectations, theflooding in Thailand caused yet another supply chain disruption crisis, and the pace of recovery slowed markedly.
The small motor industry, to which the Mabuchi Groupbelongs, experienced large fluctuations in demand as aresult of the impact of these changes in the business environment. In particular, the circumstances surrounding
products for the automotive products market changed ata bewildering pace as the earthquake disaster brought a
steep decline in demand, and as the floods in Thailand
brought a decrease for certain regions, followed by overall

Financial Highlights
Millions of yen

2010
Net sales ¥ 82,752
Operating
6,624
incomeNet
income5,260(loss)
Total
185,408
assetsNet assets 174,570

Thousands of
U.S. dollars

Rate ofchange

2011

2011

YoY

¥ 78,886$1,024,493

-4.7%

3,066

39,818-53.7%(466)(6,051)—

181,351

2,355,207-2.2%

168,538

2,188,805

-3.5%

4

In fiscal 2011, the Mabuchi Group actively devised
measures to achieve sales and market share expansion
as well as increases in profitability and productivity.

As a result, consolidated net sales for the period were¥78,886 million (a 4.7% decrease on a year-on-year basis).
Sales of motors, which account for the majority of consolidated net sales, were ¥78,760 million (a 4.7% decrease).
Operating income for the year was ¥3,066 million (a 53.7%
decrease on a year-on-year basis) as a result of factors

5

Specifically, the Group actively devised measures to achieve

including higher materials costs triggered by soaring prices

sales and market share expansion, stable product supply

of copper, steel materials, and rare earths—key productand quality improvements, and increases in profitability andcomponents. Although non-operating income versus

productivity. These measures included 1) the introduction

expenses improved due to factors including an increase in

in China of motors for power window lifters for emerging

income from the sale of scrap materials and a decrease inmarkets (new products); 2) expansion of the compact,

the foreign exchange loss, ordinary income was ¥4,926

high-output motor line (new product market introduction);

million (a 35.1% decrease on a year-on-year basis) as a3) the strengthening of cross-regional and cross-organiza-

result of the decrease in operating income. Income before

tional activities in China (integrated development, produc-

income taxes was ¥3,248 million (a 55.4% decrease on ation, and sales systems); 4) the establishment of MABUCHI

year-on-year basis) as a result of the recording of a loss on

MOTOR (JIANGXI) CO., LTD. for the purpose of strengthen-reversal of foreign currency translation adjustments ining cost competitiveness and increasing sales in China; 5)connection with the liquidation of an overseas subsidiary as

production capacity expansion at production bases inan extraordinary loss. Net loss was ¥466 million (net income

Vietnam; 6) personnel efficiency improvements throughfor the prior year was ¥5,260 million) as a result of thethe introduction and expansion of facilities to rationalize

recording at year-end of a reversal of deferred tax assets as

production; and 7) the start of activities to realize smart

deferred income taxes following a careful review of thefactories (centralized management of manufacturing sitecollectability of deferred tax assets in light of the Company’s

information).

operating results and outlook.

MABUCHI MOTOR CO., LTD.

Implementation of Growth and Cost
Strategies in Preparation for New
Breakthroughs

Annual Report 2011

Next, we will promote our expanded line of compact,
high-output motors for door mirrors and air conditioner
dampers, key existing applications, and leverage theseproducts to increase sales, including in market sectors

In fiscal 2012, the Company will focus on continued

where our share is comparatively low.

strengthening of the automotive products business, sales
expansion in China, reorganization of production bases,

Sales Expansion in China

and manufacturing process innovation necessary for the

In China, a market that holds promise for future growth,establishment of new growth axes and cost rationalization

the market environment changes rapidly, and a timelyaligned with the business environment.

response is required. For this reason, the development oflocal self-contained processes is essential, and the Mabuchi

Continued Strengthening of the Automotive

Group will proceed with the implementation of an integrated

Products Businessdevelopment, production, and sales system in China.

The Mabuchi Group will continue to strengthen the automotive products business, from which growth is expected.

In addition, we will seek to avoid unhealthy price competition and simultaneously tap latent demand by optimizing

First, in response to a steady increase in new inquiries

the performance and structure of our products, establish-

based on customer evaluation after market introduction of

ing quality standards, and reviewing parts and materials

motors for power window lifters and motors for power

procurement methods to adapt them to the market, whoseseats, we will focus further efforts on these products andcompetitive environment and characteristics vary according

solidify our market position.

to product and/or application.

We have recently completed development of next-generation

Reorganization of Production Basesmodels of motors for power window lifters. Since demand

The Mabuchi Group will pursue global cost competitivenessis expected to rise in proportion to increased awareness ofby continuing to reorganize its production bases.

these motors as a solution for achieving size, weight, andcost reductions, we will further pursue the acquisition andTo that end, we will increase the production ratio of high-development of customers that will constitute a foundation

end products at our coastal production bases in China. We

for sales of these products.

aim to increase our competitive advantage and boost
added value by realizing high-quality, high-efficiency manu-

To attain further growth from motors for power seats, we

facturing through means including the construction of awill strive to boost product competitiveness and profitability

new plant building optimized for production of high-end

by rigorously implementing measures to maintain andautomotive products and the practice of integrated opera-

increase quality and lower costs.

tion of processes from development to production.

Power Window Motor
Sales Results and Projections

Power Seat Motor
Sales Results and Projections

Compact, High-Output Motor
Sales Results and Projections(100 millions of yen)(%)(100 millions of yen)(%)(100 millions of yen)

(%)

140

160

50

1,400

60

35,000

120

140

1,200

30,000

100

120

50

100

80

80

60

60

40

40

20

20

0

0

2008

2009

2010

2011

Sales amount
Sales volume (2008=100%)

2012
Projection

40

1,000

30

800

20

600
400

10
0

2008

2009

2010

2011

Sales amount
Sales volume (2008=100%)

2012
Projection

25,00040

20,00030

15,000

20

200

10

0

0

10,000
5,000
2008

2009

2010

2011

2012
Projection

0

Sales amount
Sales volume (2008=100%)

6

The Pursuit of Global Cost Competitiveness Through Optimal Location of Production Bases

Production base in Jiangsu Province, China (Jiangsu Mabuchi)
Improvement in productivity and quality from the construction of a
new facility optimized for production of high-end products
Production base in Jiangxi Province, China (Jiangxi Mabuchi)
Increase in cost competitiveness through production site relocationfrom China’s coastal areas to a new inland production baseProduction base in Guangdong Province, China (Dongguan Mabuchi)
Quality and efficiency improvements and an increase in competitive
advantage via an integrated development and production system
Production bases in Vietnam (Vietnam Mabuchi, Danang Mabuchi)
Increased production of automotive motors and expansion of
production volume at the two plants in Vietnam to around 600
million pieces (including motors for non-automotive applications)

We will also increase production capacity at our inland

In addition, we will continue with optimization of indirect

production bases in China. We will strive to increase costpersonnel. We will achieve a reduction of about 30% fromcompetitiveness by completing construction of a plant at athe 2009 level by the end of 2013 by proceeding withnew production base established in fiscal 2011, commenc-

consolidation of organizational functions, optimization ofing mass production according to plan, and shifting pro-management personnel, rigorous man-hour control, andduction from coastal production bases in China to theother measures, while at the same time making necessary

cost-competitive new production base.

investments in information technology after carefully examining cost effectiveness.

Furthermore, we will increase production of automotive
motors at our production bases in Vietnam. In this way, weFinally, we are implementing activities to realize the smart

will put in place a system for producing 600 million pieces

factory concept (centralized management of manufacturing

at our two production bases in Vietnam, including motors

site information). At a time when greater relative impor-for non-automotive applications.

tance of automotive applications brings more stringent
quality assurance requirements, a framework based on

Manufacturing Process Innovation

visualization of the overall manufacturing process has

The Mabuchi Group will take maximum advantage of cost

become essential. Accordingly, we will connect production

competitiveness achieved through production base reorga-

facilities and backbone systems using a network and intro-

nization and at the same time accelerate manufacturing

duce in stages the smart factory approach of clarifying

process innovation and increase competitiveness in bothcause-and-effect relationships between data in production

quality and cost.

processes. After conducting demonstration trials on model
production lines during 2012, we will systematically imple-

First, we will accelerate the reduction of manufacturing line

ment the concept in order to create benefits throughout

workers, which we have been implementing as a medium-our plants.

term initiative. Since upward pressure on costs is increasingthese days, we will accelerate the previous plan by two
years and realize production processes that will enable
personnel reduction of 30% or higher compared to the2010 level by the end of 2013.

7

MABUCHI MOTOR CO., LTD.

Annual Report 2011

We will take advantage of cost competitiveness achieved through production
base reorganization and at the same time accelerate manufacturing process
innovation, increasing competitiveness in both quality and cost.

Basic Policy on Returning Profit to Shareholders and Dividends for the YearThe remaining surplus will be used for measures aimed atfurther strengthening our existing businesses and investingin areas of future growth, with a view to further increasing

Our basic policy on the appropriation of retained earnings

corporate value.

is to retain necessary earnings for sound business activities,
to maintain healthy financial strength, and to ensure adequate dividends to our shareholders based on perfor-

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

The outlook for fiscal 2012 is for business conditions toordinary dividend of ¥60 per share on an annual basis plus

follow a recovery path despite a sense of uncertainty witha special dividend equivalent to 20% (paid out on a per

regard to the future. In emerging countries, economic

share basis) of the annual consolidated net income. In

growth is expected to continue and remain firm, althoughaddition, the actual full-year dividend amount shall be

the pace of growth is likely to slow. In developed countries,

based in principle on the above calculation standards andon the other hand, economic recovery remains anemic, andcalculated in consideration of dividend payout ratio, divi-

credit uncertainty and other concerns in Europe continue.

dend levels prior to the previous period, internal reserves,

In addition, trends in resource prices will continue to re-cash flows, and other situations. The amount shall not bequire careful scrutiny. It appears that additional time will beless than the expected full-year dividend amount announced

necessary for the global economy to attain some degree ofduring the full-year period.

stability.

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 as well. The only market that

dend of ¥30 and a special dividend of ¥20). Since theseems to be on a clear recovery path is the Automotive

Company has already paid an interim dividend of ¥50 per

Products market, where demand is expected to recover inshare (an ordinary dividend of ¥30 and a special dividend

developed countries and emerging countries alike. Weof ¥20), the annual dividend for fiscal 2011 will be ¥100

expect little change and demand on a par with fiscal 2011

per share (an ordinary dividend of ¥60 and a special divi-in the Audio & Visual Equipment market, the Optical &dend of ¥40), as planned and announced during the term.

Precision Instruments market, and the Home Appliances,Power Tools & Toys market.

The Company purchased a total of 12 million shares of treasury stock through public tender offers or market purchases
and purchases of fractional shares from fiscal 2002 to fiscal
2011 and has canceled 7.2 million of these shares. The
Company will continue to consider purchases of treasury
stock as appropriate as a flexible response to changes inthe share price or management environment and capital
policy and as a method of returning profits to shareholders.

8Segment Information by
Motor Application
In fiscal 2011, the overall sense of uncertainty in the world economy heightened owing
to a number of developments, including the fiscal problems in Europe, the Great East
Japan Earthquake, and the flooding in Thailand. Under these conditions, demand in themarkets in which the Mabuchi Group operates was adversely affected. As a result, sales
in the Group’s mainstay motor business declined 4.7% year on year, to ¥78,760 million,
with sales volumes showing a decrease from the previous fiscal year.

Automotive Products
Major Applications
Car mirrors, door locks, air conditioner damper
actuators, power window lifters, steering locks, etc.

Net sales(Millions of yen)

42,82038,63340,06340,651

2010

2011

30,346

Automotive Products Market
Net sales in this market increased to ¥40,651 million (a1.5% increase on a year-on-year basis). Although demand
temporarily declined due to the impact of the earthquake
disaster and flooding in Thailand, it recovered sharply in thesecond half. Despite rapid yen appreciation, a sales increase
was achieved thanks to higher market share for motors formirrors and other applications, higher sales of motors for
power window lifters, and continued strong sales of motors
for power seats.

2007

2008

2009

Net sales by principal item
(100 millions of yen)

(Year-on-year change)

42
15
31

49
24
30

117.5%

107

108

101.0%

81

81

100.1%

121

111

91.6%

2010

2011

154.5%
96.2%
Door locks
Mirrors (including folding)Power window lifters
Air conditioner dampers
Power seats
OthersAudio & Visual Equipment
Major Applications
DVD players/recorders, CD players,
car component systems, video games, etc.

Net sales(Millions of yen)

21,30815,908

Audio & Visual Equipment Market
Net sales in this market decreased sharply to ¥9,725 million (a15.0% decrease on a year-on-year basis). Although shipments
of motors for car CD players were at the prior-year level due
to recovery in automobile production, sales of motors for
DVD players fell sharply due to lower demand in emerging
markets, a sales decrease resulting from a slump in demandin preparation for the peak year-end sales period, and theimpact of yen appreciation.

2007

2008

10,67911,435

2009

2010

9,725

2011

Net sales by principal item
(100 millions of yen)

(Year-on-year change)

9
31

7

77.0%

23

74.8%

CD players
DVD players/recorders

9

Others

72

66

2010

2011

90.6%

MABUCHI MOTOR CO., LTD.

Annual Report 2011

Optical & Precision Instruments
Net sales
Major Applications
Inkjet printers, PC drives, digital cameras, etc.

(Millions of yen)

18,13915,896
13,024

13,821

12,589Optical & Precision Instruments Market
Net sales in this market decreased to ¥12,589 million (an8.9% decrease on a year-on-year basis). Sales declined asa result of placing priority on profitability amid fierce pricecompetition for motors for digital cameras. Sales of motors
for inkjet printers and motors for PC drives decreased dueto the impact of yen appreciation even though overall sales
volumes were maintained at the prior-year level despite theimpact of supply chain disruption resulting from the floodingin Thailand.

2007

2008

2009

2010

2011

Net sales by principal item
(100 millions of yen)

(Year-on-year change)

9
10
14

97.4%
83.0%
94.8%

9
8
13

Inkjet printers
PC drives
Digital cameras

104

90.8%

94

2010

Others2011

Home Appliances, Power Tools & Toys
Major Applications
Personal care products, power tools, toys, health andwellness products, etc.

Net sales(Millions of yen)

25,17822,071
16,23017,337

15,792Home Appliances, Power Tools & Toys Market
Net sales in this market decreased to ¥15,792 million (an8.9% decrease on a year-on-year basis). Although strong
sales of motors for tooth brushes compensated for a slump
in demand for motors for hair dryers, shavers, and beautyand healthcare-related products for the peak year-end sales
period, and sales volumes of motors for power tools roseslightly year on year, sales decreased due to the impact of yen
appreciation.

2007

2008

2009

2010

2011

Net sales by principal item
(100 millions of yen)

10
7
30
55

(Year-on-year change)

9
7
28

88.8%
97.9%

49

90.2%

95.7%

Beauty-related equipment
OthersPower tools
Toys
Health-related equipment

69

62

2010

2011

89.4%

10

Research andDevelopment Activities
Mabuchi’s R&D System
The Mabuchi Group conducts its research and development activities
at Mabuchi Motor Co., Ltd. and MABUCHI MOTOR (DONGGUAN) CO.,LTD. (in the Asia segment). In this section, we provide an overview of theGroup’s R&D activities.
The R&D organization consists of the Research and Development
Headquarters and its subordinate organizations: Research and Development Dept. 1, Research and Development Dept. 2, the Production
Engineering Dept., and the Production Engineering Innovation Center.
The R&D units pursue in-depth technical development in their respective
areas of specialization within a collaborative framework. In the interestof efficiency, the Research and Development Headquarters, which
performs a cross-departmental role, directly controls and engages in
activities pertaining to fundamental technology, intellectual property,
testing and evaluation, and technology research. With regard to theongoing strategy for transferring design improvement activities to China,
further expansion of the scope of transferred work has made it possible
to more effectively allocate headquarters R&D resources to focus on
high-value-added work.
Strategic R&D Fields
To realize timely product development and new product market
introduction, Mabuchi has prepared a technology roadmap based on
information obtained from various market studies and is engaged in
the development of groundbreaking elemental technologies based on
the roadmap. Among these development projects, we are considering
examination of the following issues and the implementation of measures
to address such issues as an urgent task, in our efforts to cope with therecent soaring prices of neodymium and other rare earths and the rapid,
steep rise in labor costs overseas, in countries where Mabuchi operates
plants, and we are proceeding accordingly with these efforts.
(1) Continuous research into technologies for the maximally effective useof inexpensive, readily available ferrite magnets(2) Innovative planning and implementation of a substantial reduction in
the number of production line workers(3) New product development techniques using the project management
methodIn the automotive products business, a high-priority business sector,
the line of motors for power window lifters, which has developed into
a core business for the Group, is now complete, and demand from
customers in Japan and abroad is steadily increasing. In addition, theintroduction of new products in the line of motors for power seats,from which future growth is expected, has led to increased adoptions bylarge customers. Mabuchi has also solidified its position in the automotive products market for compact motors through continued market
introduction of products in a new line of small, high-torque models andreinforcement of customer response capabilities.
We are also engaging in R&D to modify basic performance specifications of existing models for other applications, such as improving motor
properties and lowering product costs. In the year under review, we
introduced a new product for power tools.
Through R&D based on the technology roadmap and growth in coretechnologies, we will continue to aspire to develop and manufacture
motors that will become industry standards in the markets in which
Mabuchi products are used.
A summary of our technical achievements in the year under review
is as follows: R&D expenses for the year were ¥3,493 million. The total
number of intellectual properties held by the Company stood at 624(108 domestic and 516 overseas), and the total number of domestic andoverseas new intellectual property applications during the year was 27.

R&D expenses/R&D expenses ratio

R&D personnel(Millions of yen)
4.2
3.9

(Persons)

4,187

4.7

4.0

4.0

3,337

3,493

335

3,892
3,298

A total of 386 employees engaged in R&D activities (237 at our headquarters and 149 at MABUCHI MOTOR (DONGGUAN) CO., LTD. Motor
Research & Development Center).
(1) The SZ-446WB motor for automobile power seats and recliners
This addition to Mabuchi’s small, high-torque motor line realizes weightsaving of approximately 38% compared to previous Mabuchi products.
Based on the SZ-466WB developed last year, the SZ-446WB delivers the
product performance and quiet operation required for power seats. Thismodel completes Mabuchi’s development of the line of compact, hightorque products that make possible dramatic weight saving in power
seat and recliner applications.
(2) The SF-136SA low-noise motor for automobile mirrors
This motor realizes a torque increase of approximately 35%, a weight
reduction of approximately 28%, and a volume reduction of approximately 32% compared to previous Mabuchi products. It has satisfied an
important market requirement by solving problems of operating noise
by reducing vibration during operation by approximately two-thirds
compared to previous Mabuchi products. When combined with theSE266SA, developed as a motor for automobile power folding mirrors
and now in mass production, the SF-136SA completes a line of productsthat reduce noise in the operation of rearview mirrors.
(3) The GB-558LA/RA and GA-558LN/RN motors for power
window lifters
The GB-558LA/RA, a motor for rear windows developed based on the
GB-558LB/RM, which was introduced in the market in 2008, is equippedwith slots that enable connection of direct connectors and ECUs. The
GA-558LN/RN, based on the GA-558LP/RP, which was released in 2007,
is a product remodeled to meet needs in emerging countries. The twomodels, equipped with a noise-reduction device to meet increasingly
stringent electrical noise requirements, satisfy diversifying customer
needs.
(4) The RF-300EZ/FZ motor for home DVD players
Based on the RF-300EA/FA, a highly reliable existing product for car
audio equipment, the RF-300EZ/FZ provides appropriate reliability andenhances price competitiveness for use in home DVD players in emerging countries.
(5) The RZ-735VA rare earth-free compact, lightweight motor for
power tools
The RZ-735VA realizes reductions of approximately 25% in both size andweight compared to previous Mabuchi products, and this product also
complies with the electrical noise standard applied to power tools for
the European market beginning in 2012 (CISPR 14-1, ed. 5). By achieving further advances in the optimal design of magnetic circuits, at which
it has long excelled, Mabuchi has realized high output from ordinary
ferrite magnets without using neodymium or other rare earths, which
are subject to price instability. The need for compact, lightweight, andhigh-output products that emphasize usability is increasing in the power
tools market, and Mabuchi will continue to pursue reductions in the useof rare earths and in motor size and weight.

Number of intellectual properties(Intellectual properties)

338

348

368

386
497
132

365

2007

2008

2009

2010

R&D expenses ratio (%)

11

2011

2007

2008

2009

2010

2011

2007

536

545

129

126

407

419

2008

2009

Overseas

591
118

624
108

473

516

2010

2011

Domestic

MABUCHI MOTOR CO., LTD.

Annual Report 2011

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 aprominent entity the world cannot do without. This principle is not only a guide forrunning our corporation but a gene to be carried down to subsequent generations of
the Mabuchi enterprise.

Mabuchi’s Management Vision
Our Missions

MANAGEMENTGUIDELINES
MAN

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

AGEMENT POLICIESMANAGEMENT GUIDELINESMAN

AGEMENT SCHEME

Our Management Vision

MANAGEMENT PRINCIPLE

Contributing to International 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 at the
management helm.

Mabuchi’s management guidelines, whichflow from our management principle, spellout specifically how we “contribute.” These
guidelines outline the mission of Mabuchi’sbusiness activities.

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

MANAGEMENT SCHEME
Based on Mabuchi’s business policy of maximizing the potential of small DC brush motors as ourcore 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 tosociety, namely, diversification only to expand
sales. We generate revenues and profits as aresult of our contributions to markets in which
we are truly welcome. We plan to continue
reflecting this management philosophy, which
has served us well in the past, into the future.

12

Corporate Governance
Basic 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 a listedcompany.
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 social
impartiality and are fundamental to living up to the trust andexpectations of all stakeholders; and5. To disclose corporate information to shareholders and otherstakeholders in an appropriate, fair, timely and clear manner andto ensure accountability through the Board of Directors, the Boardof Statutory Auditors and other bodies.
The Mabuchi Group employs a simple corporate
management structure by establishing a corporate groupconsisting of Mabuchi Motor Co., Ltd., and its wholly owned
subsidiaries as well as focusing and specializing its businessresources on and in the small DC motor business. The Mabuchi
Group employs the Corporate Auditor System as the bestsuited organizational design after considering such matters as
directors’ duties, management efficiency and the maintenanceof a management supervisory system that is appropriate to theabove business contents and corporate 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 seven directors (including six
resident in Japan) familiar with the Company’s management
environment and business, and an Executive Committee, primarily
composed of an executive director. The Board of Directors
quintessentially serves the function of supervising management
decision-making and the execution of directors’ duties and,as required by laws and ordinances, reporting on important
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

General Meeting of Shareholders
Appoint/Dismiss
LiaiseReportIndependent
Auditors

Board of Statutory Auditors
Advise(Including three outside auditors/
independent outside officers) Audit

ReportStatutory Auditors

DirectInternal Reporting
SystemAdviseGroup Ethical Standards
Other Supervisory Frameworks

Consult
Executive Committee(Executive Managing Officers)
Company Departments(Responsible for Compliance)

13

Basic Policy on Internal Control

Supervise

ExecuteInternal
Audit

Group Management Vision

Subsidiaries(Internal Audit Committee)

Meeting of Head of Group Offices(Risk Management Committee)

ReportManagement Principle

ReportRepresentative Directors

Internal Audit Department

Accounting
Audit

Board of Directors(Director Responsible forInternal Control)

s %NVIRONMENTAL -ANAGEMENT
Committee (Audit of the Environmental
Management System)s 1UALITY -ANAGEMENT #OMMITTEE !UDIT
OF THE 1UALITY -ANAGEMENT 3YSTEM
s $ESIGN 2EVIEWS
s $IVISION OF $UTIES#OMPANY 2ULES AND
Regulationss 2INGI 3YSTEM AND /THER 2EGULATIONSs 3UBSIDIARIES 2EGULATIONS ON 0OWERS OF
Approval

MABUCHI MOTOR CO., LTD.

officers. The Board of Directors convenes regularly once a monthand at other times as required.
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 once 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.
Board of Statutory Auditors

Annual Report 2011

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, andauditors’ audits. In this way, inadequacies in internal controls andother issues discovered in risk management activities, complianceactivities, auditors’ audits, and internal audit activities are reported
to the directors and statutory auditors on a periodic or nonperiodic
basis, and appropriate corrective measures are taken in a timely
manner. Moreover, the Company is developing a framework
for continuously enhancing the functioning and effectivenessof the internal control system. By establishing and ensuring theappropriate application of internal regulations governing theapproval system, job authority and division of responsibilities,
and other matters, the Company seeks to further ensure theappropriate conduct of business. These various internal mechanisms
serve to support the directors and statutory auditors in theirmonitoring and supervision of the conduct of business by directors.
Risk Management System

Mabuchi has appointed four statutory auditors, three of whom
are outside auditors with a high degree of independence.
Mabuchi has also established a department for statutory auditors,
with one employee assigned to the department to assist thestatutory auditors with their audits, and has made it possible forthe statutory auditors to request audit-related assistance from
employees of the Internal Audit Department and other departments
where appropriate.
The statutory auditors (three of whom are outside auditors)
carry out audits of the execution of duties by directors and otherbodies in accordance with legal stipulations and the auditing
standards, policies, plans and apportioned duties determined by
the Board of Statutory Auditors. Specifically, statutory auditors
attend meetings of the Board of Directors and the Executive
Committee and other important meetings, oversee major businessexecution decisions and documentation related to their execution,
if necessary, requesting directors and employees to provide such
documents or to submit reports, in order to audit and supervise
the execution of duties by the directors. The Board of Statutory
Auditors convenes every second month and holds regular monthly
meetings for the exchange of opinions between statutory auditorsand essential deliberations regarding the execution of duties bydirectors.

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 Board of Statutory Auditors. The Board of
Directors reviews the report and takes any necessary measures.
In this way, Mabuchi pursues continuous improvement of the risk
management system.

Internal Audit Department

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.

Mabuchi has established an Internal Audit Department, with one
full-time member, under the direct control of the president. Thisbody liaises with the Board of Statutory Auditors and the Director
Responsible for Internal Control on a timely basis and conducts
ongoing supervision of the upgrading, running and effectivenessof the internal control framework for Mabuchi and its Group
companies. The Internal Audit Department reports its findings to
the president, directors and statutory auditors.

Disclosure of Corporate Management Data

14

Board of Directors, Statutory Auditors, andExecutive Officers(As of March 29, 2012)

Directors

Takaichi Mabuchi

Shinji Kamei

Nobuyo Habuchi

Akira Okuma

Kaoru Kato

Hiroo Okoshi

Keiichi Horii

Nobutaka Motohashi

Representative Director
and Chairman

Director
Executive Officer and General
Manager of Research andDevelopment Headquarters

Representative Director and President
President and CEO

Director
Executive Officer and General
Manager of Sales Headquarters

Executive Managing Director
Senior Managing Executive Officer

Takashi Kamei

Managing Director
Managing Executive Officer
and General Manager
of Operations Control
Headquarters

Director
Executive Officer and General Manager
of Administration Headquarters

Statutory Auditors

Masahiro Gennaka
Full-time Statutory Auditor

Statutory Auditor

Executive Officers (excluding those also serving as directors)

Masato Itokawa

Executive Officer and General Manager
of Quality Assurance Dept.

15

Chin Tai Yen

Executive Officer, Chairman of the Board
and General Manager
MABUCHI TAIWAN CO., LTD.

Statutory Auditor

Toru Masuda
Statutory Auditor

MABUCHI MOTOR CO., LTD.

Annual Report 2011

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

Summer Vacation Handicraft Workshops

Mabuchi conducts corporate activities in line with its
management principle, which expresses the Company’s aim of“contributing to international society and continuously increasing
our contribution.” In other words, Mabuchi’s business objective is
not the pursuit of profit for its own sake, but is rather to place ahigh priority on sustainability and development, which areachieved by continued increases in its contribution to society. The
ultimate objectives of the Company’s corporate activities are toraise the level of its social contributions through the business of
small DC motors and to remain an enterprise that society
considers essential.

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 in themagnificence of making
things and in the
mysteries of science, thus
stimulating their interestin manufacturing.
Every Friday during
the summer holidays, we
invited 24 parent–childduos who used motors as
power generators tocreate handicrafts using
Parents working with their children
to build their own engineering
readily available materials
masterpieces
such as discarded CDs
and PET bottle caps.

Science Lessons for Fifth- and Sixth-year Elementary
School Students 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 that what theylearn in the science lessons
will be useful in theireveryday lives. Based on
this principle, Mabuchi
dispatched employees toteach science classes for
fifth- and sixth-year
elementary school students
at four schools in Matsudo
City and at the Science
Children working in groups to carryMuseum in Tokyo.
out investigations by dismantling
The sessions took place
motors and experiments under the
direction of an assistant instructor
as a group activity, with alead instructor facilitating
the overall progress of the lesson, while assistant instructors tookcharge of five or six pupils each. Lessons primarily comprised
dismantling equipment and experiments, using the Company’s
motors as educational aids. During the classes, the pupils also
learned how the rotational 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 display of products that contain motors.

Provision of Learning Materials
Each year Mabuchi provides a large amount of learning materials,
principally motors, to support science education. In 2011,
Mabuchi provided approximately 15,000 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 over Japan.

Robot Contest SponsorshipTo 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. Mabuchi agrees with theoverarching objective of these contests, which is to share withyoung people the importance of creativity and the fun ofmanufacturing through the building of robots.

Providing Educational Opportunities
Since 1996, Dalian Mabuchi has been supporting the establishmentof schools and carrying out other activities with the objective ofproviding children with the opportunity of gaining an education. To
date, the company has helped to establish three Mabuchi HopePrimary Schools in three cities in the north of Dalian. In 2007, Dalian
Mabuchi assisted in the foundation of a Mabuchi Hope Junior HighSchool in Liaoning Province. Subsequently, the company has
continued to furnish the school’s students with invitations to tour its
factories and to provide 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. This program
helps reduce the economic burden of poor families, enabling theirchildren to focus on their studies so that they can grow into adults
who will benefit society.

16Financial SummaryMarket Environment

Net Sales and Operating Income Margin

In fiscal 2011, the small motor industry, to which
the Mabuchi Group belongs, experienced large
fluctuations in demand owing to a number ofdevelopments that greatly impacted the businessenvironment, including the fiscal problems in Europe,
the Great East Japan Earthquake, and the flooding in
Thailand. Despite an overall decline in demand in themarkets in which the Group operates, the automotive
products market saw a sharp recovery in demand in
the second half of the fiscal year.

(Millions of yen)

120,000(%)

Net sales
Operating income margin 12

10.9%

100,000

10
8.0%

80,0008

6.1%
60,000107,640

3.9%

92,60240,0002007

482,75270,36920,000
0

6

4.3%

2008

78,88620092010

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

2
0

2011

Thousands of
U.S. dollars

2007

2008

2009

2010

2011

2011

¥107,640¥92,602¥70,369¥82,752¥78,886$1,024,493

Cost of sales

77,207

68,79951,80560,062

59,838777,116

Selling, general and administrative expenses

18,747

18,15015,544

16,064

15,981

207,545

11,685

5,652

3,019

6,624

3,066

39,818

16,530

5,330

3,013

7,291

3,248

42,181For the year:
Net sales

Operating income
Income before income taxes

10,914

3,565

5,450

5,260

(466)

(6,051)

Capital expenditures

3,700

3,777

3,659

3,210

6,524

84,727

Depreciation and amortization

4,913

4,408

4,031

3,603

3,326

43,194R&D expenses

4,187

3,892

3,298

3,337

3,493

45,363

Net cash provided by operating activities¥ 15,447¥ 6,542¥10,708¥ 5,457696$ 9,038

Net cash (used in) provided by investing
activities

3,687

45

(1,630)8,601(2,874)(37,324)(13,531)(18,641)(3,927)(3,507)(3,507)(45,545)

Total assets¥230,960¥188,691¥192,362¥185,408¥181,351$2,355,207

Net assets

213,314

178,291

180,311

174,570

168,538

2,188,805

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)¥ 280.90¥

94.77¥ 155.54¥ 150.14(13.31)$ (0.17)

Net assets

5,577.84

5,088.18

5,146.04

4,982.43

4,810.36

62.47

123.00123.00100.00100.00100.001.29

Dividends payable¥

Other data:
Operating income margin (%)

10.9

6.1

4.3

8.0

3.9

—

ROE (%)

5.0

1.8

3.0

3.0

(0.3)

—

Shareholders’ equity ratio (%)

92.4

94.5

93.7

94.2

92.9

—

Number of shares outstanding(Thousands of shares)

38,24335,04035,03835,03735,036—

Number of employees (Persons)45,601

41,32838,251

37,46633,918—Notes
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥77=U.S.$1, the approximate exchange rate on December 31, 2011.
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

Annual Report 2011

Net Loss¥78,886 million¥3,066 million¥466 million

Consolidated net sales in fiscal 2011
declined 4.7% from the previous fiscal
year to ¥78,886 million (US$1,024,493
thousand).

Operating income declined 53.7% to¥3,066 million (US$39,818 thousand).

The Mabuchi Group recorded a net lossof ¥466 million (US$6,051 thousand).

Net Sales by Application

Net Sales by Geographic Area

2010

40,063

11,435

13,821

2011

40,651

9,725

12,5890

20,00040,000Automotive Products
Audio & Visual Equipment
Optical & Precision Instruments

60,00017,337

15,79293

126

2010 10,069 7,438 11,793

34,4772011 8,773 7,461 12,362

80,0000(Millions of yen)

20,000Home Appliances, Power Tools & Toys
Other

18,88032,13540,00018,02760,00093

12680,000(Millions of yen)

China & Hong Kong
Asia Pacific
Other

Japan
North & Latin America
EuropeAnalysis of Operating Income

Volume increase¥0.0 billion

Increase in
selling prices
and improvement
in model mix¥0.5 billion

Other¥0.8 billion
Rise inmaterials andcommodities prices(copper, steel,precious metals)-¥2.9 billion

Higherrare earth
prices-¥0.8 billion

Cost increase-¥0.3 billion

Foreign exchange-¥0.9 billion

Fiscal 2010 Results¥6.6 billion

Fiscal 2011 Results¥3.0 billion

Factors Affecting FY2007–FY2011 Consolidated Operating Income
Selling, General and Administrative Expenses(Millions of yen)

SG&A

20,00015,00010,00017.4%

Foreign Exchange Gains/Losses(%)

SG&A ratio
19.6%

22.1%
19.4%

20.3%

20
15

18,747

18,15015,544

16,064

15,981

5,000
0

25

10
5

2007

2008

2009

2010

2011

0

(Millions of yen)

2,000
1,000
0

500
100
2007

2008

-1,000-2,000

2009

2010

2011
-200

-1,000-1,50018

Management’s
Discussion and Analysis
Market Conditions

Net sales /Gross profit margin(Millions of yen)

During the fiscal year ended December 31, 2011 (fiscal 2011), the overall sense of uncertainty in the global
economy heightened. The fiscal problems in Europe further increased in severity, their impact spread to the real
economy, and the economic recovery trend weakened in both the United States and Europe. In emerging
countries as well, while a certain level of economic growth potential was sustained, the pace of growth showeda slowing trend.
Although the Japanese economy recovered from a slump in production activities following the Great East
Japan Earthquake at a pace that exceeded initial expectations, the flooding in Thailand caused yet anothersupply chain disruption crisis, and the pace of recovery slowed markedly.
The small motor industry, to which the Mabuchi Group belongs, experienced large fluctuations in demand
as a result of the impact of these changes in the business environment. In particular, the circumstances surrounding products for the automotive products market changed at a bewildering pace as the earthquake disasterbrought a steep decline in demand, and as the floods in Thailand brought a decrease for certain regions,followed by overall recovery and higher production in the second half. At the same time, many key products inother markets depend heavily on demand in developed countries, and on the whole demand declined owing tofactors including sluggish demand in preparation for the peak year-end sales period.

2007

2008

2010

2011

2009

Operating income/Operating income margin(Millions of yen)
10.9
6.1

3.9

6,624

3,066

3,019

2007

2008

2009

2010

2011

Operating income margin (%)

Operating income fell 53.7% to ¥3,066 million (US$39 million) due to the impact of soaring prices for commodities such as copper and steel, which are key raw materials, and for precious metals and rare earths, which
are used in some models, as well as higher fixed costs resulting from lower production volumes, despite such
positive factors as an improvement in selling prices and in the model mix.

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

Other Income (Expenses), Income before Income Taxes, and Net Income (Loss)

5.0

Other income was ¥182 million (US$2 million), ¥484 million (US$6 million) below the previous period. The
reason for the decrease was the recording of a loss on reversal of foreign currency translation adjustments inconnection with the liquidation of an overseas subsidiary, which offset an increase in income from the sales ofscrap materials and fixed assets and a decrease in the foreign exchange loss.
Consequently, income before income taxes in fiscal 2011 was ¥3,248 million (US$42 million), down 55.4%
from the previous period. Income taxes were ¥3,714 million (US$48 million), up ¥1,683 million (US$22 million),a change attributable to the recording at year-end of a reversal of deferred tax assets as deferred income taxes
following a careful review of the collectability of deferred tax assets in light of the Company’s operating results
and outlook.
As a result of the above factors, the Company posted a net loss of ¥466 million (US$6 million) in fiscal 2011.

Net Sales by Application

10,914

3.0

3.0

5,450

5,260

2009

2010

1.8

3,565

-466

2007

2008

2011

ROE (%)Net Sales by Geographic Area
Thousands of
U.S. dollars

Millions of yen

2008

2009

2010

2011

¥ 42,820 ¥38,633 ¥30,346 ¥40,063 ¥40,651

2011$ 527,935

Thousands of
U.S. dollars

Millions of yen

2007
Japan

2008

2009

2010

2011

¥ 10,980 ¥10,663 ¥ 8,056 ¥10,069 ¥ 8,773

2011$ 113,935

North & Latin
America

11,697

8,487

5,995

7,438

7,461

96,896

Europe16,912

13,914

10,476

11,79312,362

160,545

China & HongKong

41,29036,68629,423

34,47732,135417,337

Asia Pacific

26,56422,75816,327

18,88018,027234,116

194

92

88

93

126

1,636

¥107,640 ¥92,602 ¥70,369 ¥82,752 ¥78,886$1,024,493

Audio & Visual
Equipment

21,30815,908

10,67911,435

9,725

126,298

Optical & Precision
Instruments

18,13915,896

13,024

13,821

12,589163,493Home Appliances,Power Tools & Toys

25,17822,071

16,23017,337

15,792205,090

194

92

88

93

126

1,636

Other

¥107,640 ¥92,602 ¥70,369 ¥82,752 ¥78,886$1,024,493

Total

Note: Other includes parts and equipment sales.

8.0
4.3

5,652

Cost, Expenses, and Operating Income

19

78,886Gross profit margin (%)

Consolidated net sales in fiscal 2011 fell 4.7% from the previous fiscal year to ¥78,886 million (US$1,024
million). Sales of motors, which account for the majority of consolidated net sales, decreased 4.7% to ¥78,760
million (US$1,022 million). Although sales of products for the Automotive Products market were favorable,
achieving a year-on-year increase, sales in other markets were stagnant. This, coupled with the impact of the
supply chain disruption due to the earthquake and flooding disasters and appreciation of the yen to record-highlevels, resulted in a year-on-year sales decline.

Total

82,75270,369Net Sales

Other

24.1

92,602

11,685

2007

27.4

26.4

107,640

Operating Results

Automotive
Products

25.7

28.3

Note: Other includes parts and equipment sales.

MABUCHI MOTOR CO., LTD.

Annual Report 2011

Financial Position
AssetsTotal assets as of December 31, 2011 were ¥181,351 million (US$2,355 million), down ¥4,056 million (US$52
million), or 2.2%, from a year earlier. The most noticeable changes included increases of ¥1,589 million (US$20
million) in short-term investments, ¥2,517 million (US$32 million) in inventories, and ¥1,536 million (US$19 million)in construction in progress, and decreases of ¥8,845 million (US$114 million) in cash and bank deposits and¥3,502 million (US$45 million) in investment securities.

Liabilities

Total assets

Total liabilities as of December 31, 2011 were ¥12,813 million (US$166 million), up ¥1,974 million (US$25 million).
The increase was mainly attributable to an increase of ¥1,377 million (US$17 million) in deferred tax liabilities–noncurrent.

(Millions of yen)

Net Assets
Total net assets at fiscal year-end were ¥168,538 million (US$2,188 million), down ¥6,031 million (US$78 million)
from a year earlier. The most noticeable changes were a decrease of ¥14,360 million (US$186 million) in both
retained earnings and treasury stock due to treasury stock cancellation and increases of ¥1,200 million (US$15
million) in net unrealized holding losses on securities and ¥859 million (US$11 million) in foreign currency translation adjustments.
Net assets per share were ¥4,810.36, ¥172.07 lower than at the previous year-end. The shareholders’ equity
ratio was 92.9%, down 1.3 percentage points.

230,960

2007

188,691

192,362 185,408

181,351

2008

2009

2011

2010

Cash FlowsNet Cash Provided by Operating Activities
Net cash provided by operating activities amounted to ¥696 million (US$9 million), a decrease of ¥4,760 million(US$61 million) compared with the previous fiscal year. The change was mainly attributable to a decrease inincome before income taxes.

Net Cash Used in Investing Activities

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

92.4
208,671

Net cash used in investing activities amounted to ¥2,874 million (US$37 million). Principal factors were decreases
in proceeds from sales of short-term investments and investment securities and an increase in purchases ofproperty, plant and equipment in connection with investment in facilities.

94.2

93.7

92.9

193,597

193,895 195,644

191,671

2008

2009

2011

Net Cash Used in Financing Activities
Net cash used in financing activities amounted to ¥3,507 million (US$45 million), unchanged from the previous
fiscal year.
As a result of the above factors, the balance of cash and cash equivalents decreased ¥6,273 million (US$81 million)
from ¥67,540 million at the end of fiscal 2010 to ¥61,266 million (US$795 million) on December 31, 2011.

Capital Investments, Depreciation and Amortization
Capital investments increased ¥3,314 million (US$43 million) year on year to ¥6,524 million (US$84 million).
Major components were ¥1,225 million (US$15 million) for building construction costs at MABUCHI MOTOR(JIANGSU) CO., LTD., MABUCHI MOTOR VIETNAM LTD., and MABUCHI MOTOR (YINGTAN) CO., LTD.; ¥233
million (US$3 million) for facilities and equipment for research and development; and ¥5,066 million (US$65
million) for other facilities for expanding and updating motor production capacity.
Depreciation and amortization decreased ¥277 million (US$3 million) year on year to ¥3,326 million (US$43
million).

Outlook
The outlook for fiscal 2012 is for business conditions to follow a recovery path despite a sense of uncertainty withregard to the future. In emerging countries, economic growth is expected to continue and remain firm, although
the pace of growth is likely to slow. In developed countries, on the other hand, economic recovery remains anemic,
and credit uncertainty and other concerns in Europe continue. In addition, trends in resource prices will continue torequire careful scrutiny. It appears that additional time will be necessary for the global economy to attain somedegree of stability.
The situation in the markets in which the Mabuchi Group’s products are sold is mixed as well. The only market
that seems to be on a clear recovery path is the Automotive Products market, where demand is expected torecover in developed countries and emerging countries alike. We expect little change and demand on a par withfiscal 2011 in the Audio & Visual Equipment market, the Optical & Precision Instruments market, and the Home
Appliances, Power Tools & Toys market. As a result, we expect to record net sales of ¥86,000 million (US$1,116
million), a 9.0% increase on a year-on-year basis.
In terms of our business results, despite apprehension concerning the negative impact of yen appreciation andincreases in labor and other costs, we expect the impact of profit growth to accompany increases in sales volumes.
Consequently, we expect to record operating income of ¥4,500 million (US$58 million), a 46.8% increase on a
year-on-year basis. We also anticipate ordinary income of ¥6,400 million (US$83 million), a 29.9% increase, andnet income of ¥4,800 million (US$62 million).

2007

2010

Shareholders’ equity ratio (%)

Working capital/Current ratio(Millions of yen)

13.9
11.3

10.2
114,520
94,621

2007

2008

12.4

11.5

103,186 105,935

102,980

2009

2011

2010

Current ratio (Times)

Capital expenditures/
Depreciation and amortization(Millions of yen)
6,524
4,913
3,700

2007

4,408
4,031
3,777
3,659

2008

2009

3,603
3,210

2010

3,326

2011

Capital expenditures
Depreciation and amortization

20

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 operates. Consequently, our group’s business results and financial position may
be adversely affected by economic recessions and corresponding contractions 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 to
prepare the consolidated financial statements. Consequently, amounts that 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 has a negative effect on our group’s consolidated business results, and conversely, any depreciation of the Japanese yen
has a positive effect. Appreciation of local currencies in regions where the Mabuchi Group carries out production pushes up
manufacturing and procurement costs, which are denominated in those local currencies. Such increased costs lower our group’s
profit margins and price competitiveness, and negatively affect our business results.

Development of New Products and New Technologies
The new product development and sales processes, by their very natures involve both complexities and uncertainties, and include
a broad array of risks. In the event our group cannot fully predict changes in market needs, is unable to develop appealing new
products in a timely fashion, or a technological innovation or the like emerges that causes our products to become obsolete could
have a significant adverse effect on our group’s business results and financial position.

Price Competition
Our customers are businesses in a diverse range of sectors that belong to the electrical/electronic equipment and machinery
manufacturing industries, and price competition in these industries is extremely severe. In these environments, prices are a major
contributing factor to competition in all sectors, and with the rise of rival Chinese manufacturers, competition is becoming evenmore intense. The inability of our cost-reduction activities to keep up with falling prices over the long term could have a significant
adverse effect on our group’s business results and financial position.

Potential Risks in International Economic Transactions andExpanding Business Overseas
The majority of our group’s business activities are conducted in various countries in Europe, North America and Asia. These
overseas business activities involve certain intrinsic risks, including changes in political and economic environments, inadequate
infrastructures, changes in laws, tax affairs and various other systems, and social upheaval. For example, much of our group’s
production takes place in China and Vietnam. The occurrence of an unexpected event (such as a change in the political or legal
environment, a change in economic conditions, or a change in the social environment, including the employment environment)
may lead to significant problems for our production and/or sales activities, and these may have a significant adverse effect on ourgroup’s business results and financial position.

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 claim, recall or product liability compensation may trigger an
accrual of a large amount of costs or downturn in sales due to a loss of credibility, and may have significant adverse effects on ourgroup’s business results and financial position.

21

MABUCHI MOTOR CO., LTD.

Annual Report 2011

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, any third party may use our group’s intellectual property without permission to manufacture similar products, and wemay suffer damage as a result. In addition, our competitive superiority may suffer from outflows of other of our technologies orexpertise, which was then exploited by other companies. Furthermore, the Mabuchi Group could face claims of infringing on theintellectual property of another company. The failure of protection by or the violation of intellectual property rights, or the outflow
of intellectual property could have significant adverse effects on our group’s business results and financial position.

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. The failure to recruit andcultivate 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 the supply of a raw material may be suspended due to an accident befalling a supplier or forsome other reason, or that a shortage of supply may transpire due to a sudden upsurge in demand. If such conditions continue
over a long period of time and it is difficult to obtain alternative materials, our group’s production activities could be affected
dramatically, which in turn would undermine the assurance of delivery and quality of products to our customers. Also possible are
sharp increases in the prices of such materials, which would trigger a rise in manufacturing costs. If such an event were to occur,
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 specialized international system. We conduct business activities in various countries
throughout the world, and at each of our bases we own facilities and equipment, including factories and offices. Our group has
implemented measures to prevent our exposure to risks associated with the occurrence of disasters and accidents at these bases,
and we have implemented measures to reduce damage from disasters and accidents, including insurance. However, there is no
guarantee that such measures will completely protect us against, or can reduce as planned, the effects of disruptions to ourbusiness activities caused by disasters or accidents at our Head Office or individual bases. In the event these kinds of unforeseeable
events occur, our group’s business results and financial position may be subject to significant adverse effects.

22Consolidated Balance Sheets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2010 and 2011

Yen
(Millions)

U.S. Dollars(Thousands)

2010

2011

2011

¥ 63,765¥ 54,920$ 713,246

11,44911,977

155,545

(224)

(107)

(1,389)

Short-term investments

21,48823,078299,714Merchandise and finished goods

10,574

12,762

165,740

940

886

11,506

Raw materials and supplies

4,574

4,958

64,389

Income taxes refundable

206

84

1,090

Deferred tax assets – current

796

294

3,818

1,650

3,909

50,766115,221112,764

1,464,467

Land

6,022

6,020

78,181

Buildings

38,76437,375

485,389

Machinery and equipment

45,131

36,100468,831

821

2,357

30,61090,73981,854

1,063,038(58,963)(47,623)(618,480)

31,77534,231

444,558

36,14632,644423,948

Long-term loans receivable

59

45

584

Deferred tax assets – non-current

869

221

2,870

Other investments and other assets

1,335

1,445

18,766

38,41034,355446,168¥185,408¥181,351$2,355,207

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

Work in process

Other current assets
Total current assets

Property, Plant and Equipment:

Construction in progress
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)

2010

LIABILITIES AND NET ASSETS

Annual Report 2011

U.S. Dollars(Thousands)

2011

2011

3,854

$

Current Liabilities:
Trade notes and accounts payable

¥

3,739

¥

50,051

Accrued income taxes

424

615

7,987

Accrued bonuses due to employees

214

226

2,935

Accrued bonuses due to directors

37

–

–

Allowance for the restructuring of production bases

381

–

–

0

0

0

4,490

5,087

66,064

9,286

9,784

127,064

387

416

5,402

Asset retirement obligations

–

15

194

Deferred tax liabilities – non-current

5

1,382

17,948

1,158

1,214

15,766

Total long-term liabilities

1,551

3,029

39,337

Total liabilities

10,83812,813

166,402

Net Assets:
Shareholders’ Equity
Common stock, no par value:
Authorized: 100,000,000 shares
Issued: 41,875,881 shares in 2010 and 39,875,881
shares in 2011
Additional paid-in capital

20,704
20,41920,704
20,419268,883
265,181

Retained earnings

203,625

185,294

2,406,415

Treasury stock, at cost: 6,838,777 shares in 2010 and
4,839,419 shares in 2011

(49,105)(34,747)(451,259)

195,644

191,6712,489,233

Net unrealized holding losses on securities(257)(1,457)(18,922)

Foreign currency translation adjustments(20,817)(21,676)(281,506)

Total accumulated other comprehensive income(21,074)(23,133)(300,428)

Total net assets

174,570

168,538

2,188,805

Total Liabilities and Net Assets¥185,408¥181,351$2,355,207

Deferred tax liabilities – current
Other current liabilities
Total current liabilities
Long-term Liabilities:
Allowance for retirement benefits for employees

Other long-term liabilities – non-current

Total shareholders’ equity
Accumulated other comprehensive income

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

24Consolidated Statements of Operations
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2010 and 2011
Yen
(Millions)
Net Sales
Cost of Sales
Gross profit
Selling, General and Administrative Expenses
Operating income
Other Income (Expenses):
Interest and dividend income
Exchange losses, net
Gain on sale of raw material scrap(Loss) gain on disposal of fixed assets
Loss on realized foreign currency translation
adjustments due to liquidation of foreign subsidiary
Loss on adoption of the changes the accounting
standard for asset retirement obligations
Impairment loss
Loss on cancellation of lease transactions
Loss on revaluation of investment securities
Other, net
Income before Income Taxes
Income Taxes:
Current
DeferredIncome (Loss) before Minority Interests
Net Income (Loss)

U.S. Dollars(Thousands)

2010¥82,752
60,062
22,68916,064
6,624

2011¥78,886
59,83819,047
15,981
3,066

2011$1,024,493
777,116
247,363
207,545
39,818786(1,036)
995
(98)

680
(272)
1,155
309

8,831
(3,532)
15,0004,012–(1,502)(19,506)

–
–
–
(217)
236
666
7,291

(16)
(84)
(20)
(55)
(10)
182
3,248

(207)
(1,090)
(259)
(714)
(129)
2,363
42,181

1,366
664
2,030
–
¥ 5,260

1,576
2,138
3,714
(466)
¥ (466)$

20,467
27,76648,233(6,051)(6,051)

2010

2011

U.S. Dollars
2011¥150.14100.00¥ (13.31)
100.00Yen
Per Share Data:
Net income (loss)
Dividends applicable to current year earnings$(0.17)
1.30

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

Consolidated Statement of Comprehensive Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2010 and 2011
Yen
(Millions)

2010
Loss before Minority Interests
Other Comprehensive Income
Net unrealized holding losses on securities
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Shareholders of the parent
Minority interests

25

U.S. Dollars(Thousands)–2011¥ (466)2011$ (6,051)––––(1,200)(859)(2,059)¥(2,525)(15,584)(11,155)(26,740)$(32,792)––¥(2,525)–$(32,792)–

MABUCHI MOTOR CO., LTD.

Annual Report 2011

Consolidated Statements of Changes in Net Assets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2010 and 2011

Number of Shares(Thousands)

Yen(Millions)

U.S. Dollars(Thousands)

2010

2011

2010

2011

2011

Beginning balance

43,87541,875¥ 20,704¥ 20,704$ 268,883

Treasury stock cancellation(2,000)(2,000)–––Ending balance

41,87539,875¥ 20,704¥ 20,704$ 268,883

Beginning balance¥ 20,419¥ 20,419$ 265,181

Ending balance¥ 20,419¥ 20,419$ 265,181

Beginning balance¥216,230¥203,625$2,644,480

Net income (loss)

5,260

(466)

(6,051)Dividends paid

(3,502)(3,502)(45,480)

Treasury stock cancellation(14,362)(14,360)(186,493)¥203,625¥185,294$2,406,415¥ (63,459)¥ (49,105)$(637,727)

14,353

14,358

186,467¥ (49,105)¥ (34,747)$(451,259)

¥

¥

$

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(257)(3,337)(224)(1,200)(257)¥ (1,457)$¥ (13,551)¥ (20,817)$ (270,350)(7,265)(859)(11,155)¥ (20,817)¥ (21,676)$ (281,506)¥ (13,584)¥ (21,074)$ (273,688)(7,489)(2,059)(26,740)¥ (21,074)¥ (23,133)$ (300,428)

Net change during the year
Ending balance

(32)

¥

(15,584)(18,922)

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.

26

Consolidated Statements of Cash Flows
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2010 and 2011

Yen
(Millions)

2010

2011

2011

Cash Flows from Operating Activities:
Income before income taxes¥
Depreciation and amortization
Impairment loss
(Decrease) increase in allowance for retirement benefits, net of payments
Interest and dividend income
Exchange losses
Loss on realized foreign currency translation adjustment due toliquidation of foreign subsidiaries
Gain 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 in inventories
Increase in trade notes and accounts payable
Decrease in the allowance for the restructuring of production bases
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refunded
Net cash provided by operating activities

–
(82)
93
217
(1,009)(4,548)897(1,333)
171
5,186
785
–
(1,069)
554
5,457

1,502
(10)
(309)
55
(977)
(3,473)912(373)(2,012)
1,385
674–(1,363)–696

19,506(129)(4,012)714(12,688)(45,103)
11,844(4,844)(26,129)
17,987
8,753–(17,701)–
9,038

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 provided by (used in) investing activities(13,229)
13,756(13,771)
25,159(3,398)29(8,697)
8,886
(134)
8,601

(13,137)
12,301(12,713)
20,264(6,253)630(6,394)
2,589(162)(2,874)(170,610)
159,753(165,103)
263,168(81,207)
8,181(83,038)
33,623(2,103)(37,324)

Cash Flows from Financing Activities:
Cash dividends paid
Purchases of treasury stock
Net cash used in financing activities(3,499)(8)(3,507)(3,505)(2)(3,507)(45,519)(25)(45,545)(4,650)5,900
61,639¥ 67,540(588)(6,273)67,540¥ 61,266(7,636)(81,467)
877,142$ 795,662

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of Year
Cash and Cash Equivalents at the End of Year

7,291
3,603
–
(483)
(786)
1,156

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

27

U.S. Dollars(Thousands)

¥

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

$

42,181
43,1941,090
701(8,831)493

MABUCHI MOTOR CO., LTD.

Annual Report 2011

Notes to Consolidated Financial Statements
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2010 and 2011

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, 2011 have been translated into United States dollars at a rate of ¥77 = U.S.$1, the approximate
exchange rate prevailing on December 31, 2011. 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 tax.
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.
The Company changed the useful lives of machinery and equipment from 4–11 years to 4–7 years from the year ended December 31,
2009 after having reviewed these useful lives in accordance with the 2008 amendment to the Corporate Tax Law. The effect of thischange on income was immaterial.
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.
Finance leases, which existed at January 1, 2009 and which do not transfer ownership of the leased assets to the lessee, continue tobe accounted for as operating lease transactions as permitted by the standard.
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

28

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 thehedged items are recognized.
l Allowance for the restructuring of production bases
On January 28, 2010, the Board of Directors made a resolution, and, as a result, one of the commission-based processing contracts
entered into between Mabuchi Industry Co., Ltd., a wholly owned subsidiary, and a Chinese company, was terminated at its expiry
date in December 2010. In connection with this, the Company accrued certain expenses and losses as at December 31, 2009, which
are expected to be incurred from the gradual reduction or discontinuation of operations of the processing plants. Impairment losses inrespect of buildings intended to be disposed of, which had a book value of ¥68 million, are included in the related loss in 2009. At
December 31, 2011, there were no accrued expenses for certain costs such as termination benefits and assets disposal.
m Additional Information
Effective from the current fiscal year, the Company adopted “Accounting Standard for Disclosure of Comprehensive Income”. However,“Accumulated Other Comprehensive Income and Total Accumulated Other Comprehensive Income” for the fiscal year ended December 31,
2011 is equivalent to “Revaluation and Translation Adjustments” and “Total Revaluation and Translation Adjustments”. In addition, theCompany has prepared the consolidated statement of comprehensive income for the fiscal year ended December 31, 2011.
n Change in accounting policies(Accounting standard for retirement benefits)
Effective for the year ended December 31 2010, the Company adopted “Partial Amendments to Accounting Standard for Retirement
Benefits (Part 3)”. The adoption of this accounting standard had no effect on operating income and income before income taxes in thecurrent fiscal year.
(Accounting standard for asset retirement obligations)
Effective from the current fiscal year, the Company adopted “Accounting Standard for Asset Retirement Obligations” and “Guidanceon Accounting Standard for Asset Retirement Obligations”. The adoption of this accounting standard had little effect on operating
income and income before income tax in the current fiscal year.
(Changes in accounting presentation)
Effective from the current fiscal year, the Company adopted the revised “Accounting Standard for Consolidated Financial Statements”.
As a result, “Income (Loss) before minority interests” was added to the Consolidated Statements of Operations.

2. Cash and Cash Equivalents

Cash and cash equivalents as of the years ended December 31, 2010 and 2011 are reconciled to the accounts reported in the
consolidated balance sheets as follows:
Yen (Millions)
U.S. Dollars (Thousands)

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

3. Financial Instruments

2010¥ 63,7652011¥ 54,920

2011$ 713,246(3,733)
21,488(13,981)¥ 67,540(4,282)
23,078(12,450)¥ 61,266(55,610)
299,714(161,688)$ 795,662

Effective from the year ended December 31 2010, the Company applied “Accounting Standards for Financial Instruments” and“Implementation Guidance on Disclosures about Fair Value of 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 currencydenominated 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.

29

MABUCHI MOTOR CO., LTD.

Annual Report 2011

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 notindicative of the market risk associated with derivatives transactions.
(2) Fair value of financial instruments
The fair values of financial instruments held, and the variances with the carrying values presented on the balance sheets as ofDecember 31, 2010 and 2011, are as follows. Fair values that are not readily determinable are not included in the following table.

Assets:(1) Cash and bank deposits(2) Trade notes and accounts receivable(3) Short-term investments and investment securities
Total
Liabilities:(1) Trade notes and accounts payable
Total
Derivative instruments (forward exchange contracts)

Yen (Millions)
2010
Fair value¥ 63,765
11,44956,395¥131,610

Carrying value¥ 63,765
11,44957,514¥132,729

¥
¥

3,739
3,739
(4)

¥(1,118)¥(1,118)

3,739
3,739
(4)

¥
¥

Yen (Millions)

Variance

U.S. Dollars (Thousands)
2011

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

Carrying value¥ 54,920
11,977

Fair value¥ 54,920
11,977

Variance

55,601

53,615¥(1,986)¥122,499¥120,513¥(1,986)

¥

3,854
3,854

¥

3,854
3,854

Carrying value$ 713,246
155,545

Fair value$ 713,246
155,545

Variance

722,090696,298$(25,792)$1,590,896$1,565,103$(25,792)$

50,05150,051$50,05150,051

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)
2010
¥121

Yen (Millions)
2011
¥120

U.S. Dollars (Thousands)
2011$1,558

These items are not included in“(3) Short-term investments and investment securities” because market prices do not exist for these
items and their fair values are not readily determinable.
3. Redemption schedule for receivables and marketable securities with maturities at December 31, 2010 and 2011
Yen (Millions)2010

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

Within1 year¥63,765
11,449

1–5
years

5–10
years

Over 10
years

1,000
2,000

¥2,300¥15,500¥6,00011,994
2,000
2,000

6,100

¥15,500¥6,000¥94,210180¥8,58030

Yen (Millions)

U.S. Dollars (Thousands)
2011

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

Within1 year¥54,920

1–5
years

5–10
years

Over 10years

11,977

1–5
years

5–10
years

Over 10
years

6,493
53,480$ 36,363$199,675$38,961

155,818
25,97425,974

81,818$199,675$38,961

155,545500
4,118¥2,80011,998
2,000
2,000

6,300

¥87,514

Within1 year$ 713,246

180¥9,280¥15,375¥15,375¥3,000¥3,000$1,136,545

2,337$120,519

4. Investment Securities

The carrying value, fair value and variance for securities classified as either held-to-maturity securities or other securities as ofDecember 31, 2010 and 2011 were as follows:(1) Held-to-maturity securities

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

Carrying value

Yen (Millions)
2010
Fair value¥ 2,875¥ 2,875¥ 3,428¥ 3,428¥¥

23,282¥23,282¥26,157

21,610¥21,610¥25,039(1,671)¥ (1,671)¥ (1,118)

Yen (Millions)

Variance553
553

U.S. Dollars (Thousands)
2011

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

Carrying value

Fair value

Variance

Carrying value

Fair value

Variance¥ 1,375¥ 1,375¥ 1,889¥ 1,889

¥
¥

514
514

$ 17,857$ 17,857$ 24,532$ 24,532$ 6,675$ 6,675

24,418¥24,418¥25,793

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

317,116$317,116$334,974

284,636$284,636$309,181(32,467)$(32,467)$(25,792)(2) Other securities

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

Carrying value

Yen (Millions)
2010
Fair value¥ 1,240
8,985¥10,226¥ 2,143
9,005¥11,149

¥

2,161
9,468
9,933
¥21,562¥31,788

1,699
9,072
9,435
¥20,207¥31,356

(461)
(396)
(497)
¥ (1,354)¥ (432)

Variance

¥

902
20
922

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

31

MABUCHI MOTOR CO., LTD.

Yen (Millions)

Annual Report 2011

U.S. Dollars (Thousands)
2011

Carrying value
Securities whose fair value
exceeds their carrying value
Stock
Corporate bonds
Subtotal
Securities whose carrying
value exceeds their fair value
Stock
Corporate bonds
Other
Subtotal
Total¥

Fair value

Variance

¥

¥

430
1,198
¥ 1,628965
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

Carrying value

Fair value

Variance$

5,584
15,558$ 21,142$ 12,532
15,571$ 28,116$ 6,94812$ 6,961

37,857222,077
122,480$382,415$403,571

25,974
220,259
112,740$358,987$387,116(11,870)(1,805)(9,727)$(23,415)$(16,454)

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, derivatives are not used for speculative trading purposes. As a result,
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, 2010 and2011 were ¥118 million and ¥4,342 million ($56,389 thousand), respectively.
The estimated fair values at December 31, 2010 and 2011 were ¥193 million and ¥4,070 million ($52,857 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.
Gains and losses deferred, arising from contracts related to future trade transactions, are insignificant at December 31, 2010. The
currency option contracts outstanding at December 31, 2010 were ¥973 million. The estimated fair values at December 31, 2010 were
¥4 million. There are no currency option contracts outstanding at December 31, 2011.

6. Retirement Benefit Plans

The table below sets forth the plans’ statuses and amounts recognized in the balance sheets at December 31, 2010 and 2011.
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

2010¥(8,717)
8,663
(54)
148
(331)
(236)
150
¥ (387)

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

U.S. Dollars (Thousands)
2011$(113,831)
113,259(558)
1,649(4,792)(3,701)
1,688$ (5,402)

Effective as of April 1, 2008, the Company amended its retirement benefit plan to introduce a “point” based retirement benefit plan.
Under the amended plan, the estimated amount of all retirement benefits to be paid upon retirement is allocated to each service year
based on the points earned.
Effective for the year ended December 31, 2009, the Company adopted the new accounting standard “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” to align the accounting
policies of overseas subsidiaries with those of the Company. The effect of this change was to increase the projected benefit obligationin Mabuchi Taiwan Co., Ltd. and Mabuchi Motor Taiwan Ltd.
The components of net periodic pension cost for the years ended December 31, 2010 and 2011 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

2010
¥ 427
168
20
(104)
(30)
¥ 481

2011
¥ 456
164
20
(109)
(35)
¥497

U.S. Dollars (Thousands)
2011$5,922
2,129
259(1,415)(454)$6,454

Other than the above pension cost, temporary severance benefit costs of ¥84 million in 2010 and ¥423 million ($5,493 thousand) in2011 were incurred, respectively.
The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on plan assets

2010
mainly 2.0%
mainly 1.0%

2011
mainly 2.0%
mainly 1.0%

32

7. Income Taxes

The Company and its domestic consolidated subsidiaries are 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. 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, 2010 and 2011.
As a result of a revision of the Corporate Tax law in Japan in 2009, dividends received from overseas subsidiaries are no longer
subject to Japanese income tax. Accordingly, part of the deferred tax liability that had previously been recorded in respect of theundistributed earnings in foreign subsidiaries has been reversed.
2010
%
40.4
(1.5)
(16.9)(1.7)

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

2011
%
40.4
(33.5)
(9.8)
6.7
7.7
78.1

2.7

18.7
4.9
27.9

6.1
114.4

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, 2010 and 2011 are 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 securities available for sale
Net operating loss carry forwards
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

U.S. Dollars (Thousands)
2011

2010

2011

¥ 815
1,035
81
78
175

¥

800
(11)
¥2,975

601
907
61
95
643
511
706
(2,827)¥ 699$ 7,805
11,779
792
1,233
8,350
6,636
15,805(36,714)$ 9,077¥ 987
327¥1,315¥ 1,236330¥ 1,567$ 16,051
4,285$ 20,350¥1,665¥6¥ 515¥ 1,383$ 6,688$ 17,961(Additional information)(Tax amendment)
Due to the amendment of Japanese corporation tax law in 2011, the income tax rate will be changed and a special taxation measures law
will be adopted. As a result, the existing effective tax rate of 40.4% will be changed to 37.8% from January 1, 2013 to December 31,
2015 and 35.4% from January 1, 2016, respectively. The effect of this change was immaterial.

8. Consolidated Statement of Comprehensive Income

Comprehensive income for the year ended December 31, 2010 is as follows:(1) Comprehensive income
Comprehensive income attributable to shareholders of the parent
Comprehensive income attributable to minority interests
Total(2) Other comprehensive income
Net unrealized holding losses on securities
Foreign currency translation adjustments
Total

9. Shareholders’ Equity

Yen (Millions)2010(2,229)−(2,229)Yen (Millions)
2010
(224)
(7,265)(7,489)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

33

MABUCHI MOTOR CO., LTD.

Annual Report 2011

consolidated balance sheets.
As of December 31, 2011, the total amount of additional paid-in capital and the legal earnings reserve exceeded 25% of thecommon stock; therefore, no additional transfer is required.
Additional paid-in capital and the legal earnings reserve may not be distributed as dividends. However, by a resolution at ashareholders’ meeting, additional paid-in capital and the legal earnings reserve may be transferred to other retained earnings andcapital surplus, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statementsof the Company in accordance with the Law.
Year-end dividends are approved by the shareholders after the end of each fiscal year, and semiannual interim cash dividends are
declared by the Board of Directors after the end of each interim six-month period.
On September 16, 2011, interim dividends (¥50 or $0.64 per share) of ¥1,751 million ($22,740 thousand) were paid to shareholders
based on the shareholder’s records at June 30, 2011. On March 29, 2012, the shareholders approved the declaration of dividends (¥50
or $0.64 per share) totaling ¥1,751 million ($22,740 thousand).

10. Per Share Data

Net income (loss) per share was computed based on the net income (loss) reported in the consolidated statements of income and theweighted average number of shares of common stock outstanding during each year. In accordance with the accounting standard forearnings per share, basic net income per share was computed based on the net income (loss) available for distribution to shareholdersof common stock and the weighted average number of shares of common stock outstanding during the year.

11. Contingent Liabilities

As of December 31, 2011, the Company is contingently liable principally for forward precious metal contracts in the amount of ¥4,342
million ($56,389 thousand).

12. Research and Development Expenses

Expenditures relating to research and development activities are charged to income as incurred and amounted to ¥3,337 million and¥3,493 million ($45,363 thousand) for the years ended December 31, 2010 and 2011, respectively.

13. Impairment of Fixed Assets

Impairment losses relating to fixed assets of ¥84 million ($1,090 thousand) were incurred in 2011. Accumulated losses on impairments
are directly deducted from the related assets. There were no impairment losses relating to fixed assets in 2010.

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 reported segment profit or loss, segment assets and other material items
The accounting policies and methods for the Group’s reported business segments are the same as described in “1. Summary of
Significant Accounting Policies”.
3. Information concerning net sales, income or loss, assets, liabilities and other items by reporting segment

34

Yen (Millions)2010
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¥ 12,327
44,03256,359¥U.S. Dollars (Thousands)
2011

9,765
44,87754,643$

126,818
582,818
709,649

51,29542,73594,03149,36645,752
95,119641,116594,1811,235,311

7,396
(0)
7,396

7,468
–
7,468

96,987–
96,987

11,732–
11,732(86,768)¥ 82,752

12,285–
12,285(90,629)¥ 78,886

159,545–
159,545(1,177,000)$ 1,024,493

¥

1,574
4,334
296
231
188
6,624

¥ (2,048)
3,395
356
394
968
¥ 3,066$¥ 64,788
89,6793,183
5,362
22,394¥185,408¥ 66,468
96,645
3,272
5,901
9,063
¥181,351$

863,220
1,255,129
42,493
76,636
117,701$ 2,355,207

¥

¥

$

¥

¥
¥

¥

1,033
2,704
2
5
(143)
3,603

¥

163
3,939
11
6
(972)
3,148

953
2,559
3
5
(194)
3,326

¥

472
6,914
0
7
(1,250)¥ 6,145$$$$(26,597)
44,0904,623
5,116
12,571
39,81812,37633,23338
64(2,519)43,1946,129
89,7920
90(16,233)
79,805

1. (1) The reported “segment income (loss) corporate and elimination” of ¥188 million in fiscal 2010 and ¥968 million ($12,571
thousand) in fiscal 2011 represent intersegment transaction eliminations.
(2) The reported “segment assets corporate and elimination” include: corporate assets of ¥87,338 million in fiscal 2010 and ¥78,240
million ($1,016,103 thousand) in fiscal 2011, not allocated to each segment; intersegment debt and credit eliminations of¥64,944 million in fiscal 2010 and ¥69,176 million ($898,389 thousand) in fiscal 2011.
(3) The reported “depreciation and amortization corporate and elimination” of ¥143 million in fiscal 2010 and ¥194 million ($2,519
thousand) in fiscal 2011 represent intersegment transaction eliminations.
(4) The reported “increase in property, plant and equipment, and intangible assets, corporate and elimination” of ¥972 million in
fiscal 2010 and ¥1,250 million ($16,233 thousand) in fiscal 2011 represent intersegment transaction eliminations.
2. Segment income (loss) is adjusted for operating income reported in the consolidated statements of operations.
Related Information
Information on net sales, tangible fixed assets and impairment losses by geographic area is summarized as follows. There is no
information on each client because each sales ratio for main clients is lower than 10% of total net sales.
Geographical information
Yen (Millions) U.S. Dollars (Thousands)
2011
2011
Net sales:
Japan
Asia
U.S.A.
EuropeTotal¥ 8,776
50,277
7,469
12,362¥78,886$ 113,974
652,948
97,000160,545$1,024,493

Yen (Millions) U.S. Dollars (Thousands)
2011
2011
Tangible fixed assets:
Japan
Asia
U.S.A.
EuropeTotal¥17,205
16,9879
27¥34,231$223,441
220,610116350$444,558

Yen (Millions) U.S. Dollars (Thousands)
2011
2011
Impairment loss:
Japan
Asia
U.S.A.
Europe
Total

¥20
64

$ 259
831

¥84

$1,090(Additional information)
Effective from the fiscal year ended December 31, 2011, the Company adopted the “Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” and “Guidance on Accounting Standard for Disclosures about Segments of anEnterprise and Related Information”.
In addition, the Company restates segment information as of and for the fiscal years ended December 31, 2010 and 2011 in
conformity with the requirements of the Standard and the Guidance.

35

MABUCHI MOTOR CO., LTD.

Annual Report 2011

Independent Auditors’ Report36Investor Information(As of December 31, 2011)

Stock Data

Composition of Shareholders

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

Treasury Shares

Number of Shareholders ........................................ 13,227

12.2%

Financial Institutions
18.4%
Financial Instruments
Firms
0.6%

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

2,463

7.0

Mabuchi International ScholarshipFoundation

1,500

4.3

1,130
1,130
1,034
1,028
1,028

3.2
3.2
3.0
2.9
2.9

The Nomura Trust and Banking Co., Ltd.
(Trust Account)

956

2.7

Japan Trustee Services Bank, Ltd.
(Trust Account)

945

2.7

Takashi Mabuchi
Tamotsu Mabuchi
Premiere Corporation
Taka Corporation Co., Ltd.
TEXAS Inc.

Other Corporations
13.9%

Individuals andOthers25.2%

Foreign Corporations
29.7%

Less than 100 0.1%

100-499 4.0%
500-999 1.7%
1,000-9,999 5.6%

More than 1,000,000
41.8%

10,000-99,999 9.8%

By number ofshares held

Notes: 1. In addition to the above, Mabuchi Motor Co., Ltd. retains
4,839,419 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
123.0

123.0

62.0

62.0

42.0

51.0

61.0

2005

2006

2007

(Yen)
92.0
50.0

Interim

114.0
63.0

Year-end

66.6

139.3

42.5

122.7

(%)

66.6

64.3

(Millions of yen)
100.0

100.0

100.0

50.0

50.0

50.0

61.0

50.0

50.0

50.0

2008

2009

2010

2011

6,559
3,681

2005

8,682
4,509

2006

Total Dividend

Payout Ratio

4,703

2007

13,957
4,468

2008

3,503

3,503

3,503

2009

2010

2011

Amount for Repurchase of Own Stocks

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.

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

Changes in Standards for Calculating Dividends

Trend of Stock Price and Related Indicators

Ordinary Dividendper Share

Standard Value for Calculating
Special Dividend

2007

60 yen20% of consolidated net income

High (Yen)2005

60 yen20% of consolidated net income

Low (Yen)

6,610

2,845

3,230

3,920

3,075

2003

50 yen20% of consolidated net income

At Year-end (Yen)

6,740

3,690

4,580

4,185

3,205

1999

50 yen5% of consolidated net income

PER

24.0

38.9

31.2

27.8

(* 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

1.2

0.7

0.9

0.8

−
0.7

Year
(*)

37

42.5

516.8

(%)

129.8
50.9

100,000-999,999 37.0%

2007

2008

2009

2010

2011

7,990

6,740

5,010

5,520

4,305

MABUCHI MOTOR CO., LTD.

Annual Report 2011

Corporate Data
(As of December 31, 2011)

Company Name
MABUCHI MOTOR CO., LTD.
Corporate Headquarters
430 Matsuhidai, Matsudo-City,
Chiba 270-2280, Japan
Tel: 81-47-710-1111
Fax: 81-47-710-1141
Established
January 18, 1954

Number of Employees
750 (Non-consolidated)
33,918 (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 Shin Nihon 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

Paid-in Capital¥20,704,818,800

Corporate Directory

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

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

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

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

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

MABUCHI MOTOR DONGGUAN DAOJIAO
CO., LTD.
No.9 Industrial Main Road, Daojiao Town,
Dongguan City, Guangdong Province
523179, China

MABUCHI MOTOR (EUROPE) GmbH
Herriotstrasse 1, 60528 Frankfurt am Main,
Germany

MABUCHI MOTOR (JIANGSU) CO., LTD.
No. 1 Liuxu Road, Wujiang City Economic
Development Zone, Jiangsu Province
215200, China

MABUCHI MOTOR VIETNAM LTD.
No. 2-5A Street, Bienhoa II Industrial Zone,
Bienhoa, Dongnai, Vietnam

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

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

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

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

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

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

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

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

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

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

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

38