Financial Section
Annual Report 2008 Year ended March 31, 2008

Contents
Report of Independent Auditors ・・・・・・・・・ 01

Consolidated Balance Sheets ・・・・・・・・・・ 02

Consolidated Statements of Operations ・・・・・・ 04

Consolidated Statements of Net Assets ・・・・・・ 05

Consolidated Statements of Cash Flows ・・・・・・06

Notes to Consolidated Financial Statements ・・・・ 08

Supplemental Information ・・・・・・・・・・・・ 22

Report of Independent Auditors

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

01

Consolidated Balance Sheets
Shibaura Mechatronics Corporation and Subsidiaries

March 31,2008

March 31,
2007

(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)

AssetsCurrent assets :Cash and bank deposits (Note 10)
Short-term investments
Notes and accounts receivable, trade
Allowance for doubtful accounts
Inventories (Note 4)
Deferred tax assets (Note 7)
Other current assets
Total current assets¥ 9,060
286
21,933(55)
11,8482,204
596
45,845

Property, plant and equipment :Land
Buildings and structures (Note 10)
Machinery and equipment
Construction in progress
Total
Accumulated depreciation
Property, plant and equipment, net

Investments and other assets :Investments in securities (Note 3)
Deferred tax assets (Note 7)
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

02

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATIONMarch 31,
2008

8,211
388
25,532(46)
15,9191,581
1,182
52,767$ 90,428
2,858
218,910(547)
118,258
21,996
5,684
457,587

198
29,2811,173
232
30,884(15,378)
15,506

197
29,3391,184
192
30,912(14,448)
16,464

1,981
292,258
11,702
2,313
308,254(153,492)
154,762

295
2,308
1,046
(5)
3,644

371
2,793
807
(5)
3,966

2,945
23,037
10,434(50)
36,366¥ 64,995¥ 73,197$ 648,715¥

Consolidated Balance Sheets

March 31,2008

March 31,
2007

(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

Liabilities and net assets
Current liabilities :Short-term bank loans (Note 5)
Current portion of long-term debt (Note 5)
Notes and accounts payable, trade
Allowance for bonuses to directors and statutory auditors
Provision for contract losses
Accrued expenses
Accrued income taxes (Note 7)
Accrued consumption taxes
Other current liabilities
Total current liabilities
Long-term liabilities :Long-term debt (Note 5)
Retirement benefits (Note 8)
Directors' retirement benefits
Reserve for repair and maintenance
Negative goodwill
Other long-term liabilities
Total long-term liabilities

¥

861
6,415
14,097
32
398
3,529
711
0
1,695
27,738¥March 31,
2008

1,146
0
21,683
13
373
3,321
354
97
2,433
29,420$8,593
64,030140,699316
3,973
35,226
7,093
0
16,919276,849

3,804
4,715
188
303
179
3,023
12,212

10,220
4,779
159
296
239
3,000
18,69337,97147,061
1,881
3,021
1,789
30,170121,893

6,762
10,7398,871(1,718)24,654

6,762
10,7398,769(1,715)24,55567,487
107,186
88,540(17,140)
246,073

77
54
131
260
25,045¥ 64,995

129
99
228
301
25,084¥ 73,197

766
542
1,308
2,592
249,973$ 648,715

Contingent liabilities (Note 11)
Net assets :Shareholders' equity :Common stock :Authorized : 100,000,000 shares
Issued: 51,926,194 shares at March 31, 2008 and 2007
Additional paid-in capital
Retained earnings
Less treasury stock, at cost
Total shareholders' equity
Valuation and translation adjustments :Net unrealized holding gains on other securities
Foreign currency translation adjustments
Total valuation and translation adjustments
Minority interest in consolidated subsidiaries
Total net assets
Total liabilities and net assets

The accompanying notes are an integral part of the consolidated financial statements.
Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

03

Consolidated Statements of Operations
Shibaura Mechatronics Corporation and Subsidiaries
Year ended
March 31,2008

Year ended
March 31,
2007

(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

¥ 66,441
52,07014,371¥ 74,663
65,322
9,341$ 663,153
519,714
143,439

Selling, general and administrative expenses
Operating income (loss)

12,724
1,647

10,971(1,630)127,003
16,436

Other income (expenses) :Interest and dividend income
Interest expense
Foreign exchange gain (loss) , net
Amortization of negative goodwill
Loss on disposal of inventory
Other, net
Income (loss) before income taxes and minority interest

34
(147)
(65)
60
(57)
10
1,482

43
(121)
118
60
(196)
(1)
(1,727)338(1,468)
(648)
597
(571)
104
14,788

1,138
59
(118)
1,079
403

540
(1,202)(662)(1,065)

11,354591(1,177)
10,768
4,020

(23)
426

(18)
¥ (1,047)

Net sales
Cost of sales
Gross profit

Income taxes (Note 7) :Current
Prior years
DeferredIncome (loss) before minority interest

Minority interest in losses of consolidated subsidiaries
Net income (loss)

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

04

Year ended
March 31,2008

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

¥

$

(232)
4,252

Consolidated Statements of Net Assets
Shibaura Mechatronics Corporation and Subsidiaries
Shareholders' equity

Valuation and translation adjustments

Additional
paid-in capital

Net
Foreign
Minority
unrealized
currency interest in
holding
gains on translation consolidated
other secu- adjustments subsidiaries
ritiesNumber ofshares of common stock

Commonstock

51,926,194
51,926,194-¥ 6,762
6,762-¥ 10,739 ¥ 10,224 ¥ (215)(1,047)(363)(45)(1,500)(0)
010,7398,769(1,715)
426
(371)
-

¥ 125
4
129
-

51,926,194¥ 6,76247(0)¥ 10,739 ¥ 8,871

47
(52)
(45)
(41)
(138)
(3)
0
¥ 77 ¥ 54 ¥ 260 ¥ 25,045

Retainedearnings

Treasurystock(Millions of yen)

Balance as of March 31, 2006
Net loss
Cash dividends
Bonuses to directors and statutory auditors
Net change during the year
Net increase in treasury stock
Net decrease in treasury stock
Balance as of March 31, 2007
Net income
Cash dividends
Increase due to inclusion of additional
subsidiary in the consolidation
Net change during the year
Net increase in treasury stock
Net decrease in treasury stock
Balance as of March 31, 2008

Total

(Millions of yen)(3)0
¥ (1,718)

Shareholders' equity
Additional
paid-in capital

Commonstock

Retainedearnings(Thousands of U.S. dollars) (Note 1)

Balance as of March 31, 2007
Net income
Cash dividends
Increase due to inclusion of additional
subsidiary in the consolidation
Net change during the year
Net increase in treasury stock
Net decrease in treasury stock
Balance as of March 31, 2008

$ 67,487$67,487$107,187
-

35
64
99
-

(Millions of yen)

¥ 328
(27)
301
-

Valuation and translation adjustments
Treasurystock¥ 27,998(1,047)
(363)
(45)
41
(1,500)025,084
426
(371)

Total

Net
Foreign
Minority
unrealized
currency interest in
holding
gains on translation consolidated
other secu- adjustments subsidiaries
rities(Thousands of U.S. dollars) (Note 1)$ 87,526 $(17,115) $ 1,290
4,252(3,700)-462(1)$107,186 $ 88,540¥$ 981 $ 3,007-(Thousands of
U.S. dollars)(Note 1)

$ 250,363
4,252(3,700)

462
(524)
(439)
(415)
(1,378)
(29)
(29)
4
3
$(17,140) $ 766 $ 542 $ 2,592 $ 249,973

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

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

05

Consolidated Statements of Cash Flows
Shibaura Mechatronics Corporation and Subsidiaries
Year ended
March 31,2008

Year ended
March 31,
2007

(Millions of yen)

Operating activities :Income (loss) before income taxes and minority interest
Depreciation and amortization
Amortization of negative goodwill
Allowance for doubtful accounts
Decrease provision for retirement benefits
Interest and dividend income
Interest expense
Loss on disposal of property, plant and equipment
Gain on sale of land
Gains (losses) on sale of investment securities, net
Foreign exchange gain (loss), net
Increase (decrease) in advances received
Decrease (increase) in notes and accounts receivable, trade
Decrease (increase) in inventories
Decrease in notes and accounts payable, trade
Increase in accrued consumption taxes
Bonuses paid to directors and statutory auditors
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

06

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION¥ 1,482
1,245
(60)
9
(263)
(35)
147
54
3
6
111
3,596
4,065
(7,289)
71
641
3,783
37
(147)
(755)
¥ 2,918

Year ended
March 31,
2008
(Thousands of
U.S. dollars)(Note 1)¥ (1,727)
1,165
(60)
(17)
(58)
(43)
121
38
(9)
(7)
(902)
(700)
(174)
(80)
19
(45)
(712)
(3,191)41(123)(1,100)¥ (4,373)$ 14,788
12,427(597)
88(2,626)
(346)
1,468
541
31
58
1,103
35,89540,576(72,756)705
6,404
37,759369(1,472)(7,535)$ 29,121

Consolidated Statements of Cash Flows

Year ended
March 31,2008

Year ended
March 31,
2007

(Millions of yen)

Investment activities :Payments for time deposits
Proceeds from time deposits
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for acquisition of business, net of cash acquired
Proceeds from sale of investment securities
Collection of long-term loans receivable
Other, net
Net cash used in investing activities

Financing activities:(Decrease) increase in short-term bank loans, net
Proceeds from long-term debt
Repayment of long-term debt
Purchases of treasury stock
Proceeds from sale of treasury stock
Cash dividends paid
Cash dividends paid to minority interest
Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase arising from inclusion of subsidiaries in consolidation
Cash and cash equivalents at end of year

Year ended
March 31,
2008
(Thousands of
U.S. dollars)(Note 1)(308)
150
(1,646)
474
10
1
(43)
(1,362)$ (1,130)2,019(22,723)
8,087
(587)
2
(1,766)(16,098)

(256)
(3)
0
(371)
(7)
(637)

340
3,800
(2,670)(1,500)
0
(363)
(22)
(415)

(2,567)(29)
4(3,700)(68)(6,360)

(7)
661
8,211
188
¥ 9,060

24(6,126)
14,337¥ 8,211(68)
6,595
81,954
1,879$ 90,428

¥

(113)
202
(2,276)
810
(59)
0
(177)
(1,613)¥

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

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

07

Notes to Consolidated Financial Statements
Shibaura Mechatronics Corporation and Subsidiaries March 31, 2008

1. Basis of Presentation
Shibaura Mechatronics Corporation (the “Company”) and its
consolidated subsidiaries (collectively, the “Companies”) maintain their accounting records and prepare their financial statements in accordance with accounting principles generally
accepted in Japan. The accompanying consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in Japan, which differ in certain
respects from the application and disclosure requirements ofInternational Financial Reporting Standards, and have been
compiled from the consolidated financial statements prepared by
the Company as required by the Financial Instruments andExchange Act of Japan. Certain reclassifications have been
made to present the accompanying consolidated financial statements in a format that is familiar to readers outside Japan. In
addition, the notes to the consolidated financial statements
include non-consolidated financial statements as supplemental
information.
The accompanying consolidated financial statements are statedin yen, the currency of the country in which the Company isincorporated and operates. The translation of yen amounts into
U.S. dollar amounts has been included solely for the convenience of readers outside Japan. The translation has been madeat the rate of ¥100.19 = U.S.$1.00, the approximate rate ofexchange in effect on March 31, 2008. This translation should
not be construed as a representation that yen could be converted into U.S. dollars at the above or any other rate.

2. Summary of Significant Accounting Policies(a) Basis of consolidation
The accompanying consolidated financial statements include
the accounts of Shibaura Mechatronics Corporation andeight subsidiaries over which the Company exerts substantial control, either through majority ownership of voting stock
and/or by other means. All assets and liabilities of the subsidiaries are revalued at fair value on acquisition, if applicable. All significant intercompany balances and transactions
have been eliminated in consolidation.

08

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

Investments in unconsolidated subsidiaries that are notdeemed material to the consolidated financial statements arestated at cost.
Shibaura Mechatronics (Shanghai) CO., LTD was newly
consolidated in the fiscal year ended March 31, 2008 due toincrease in its significance.
Investments in the unconsolidated subsidiary are stated at
cost.
Certain subsidiaries have year end which differs from that of
the Company. As a result, adjustments have been made forany significant transactions which took place during the period between the year end of the subsidiaries and the year
end of the Company.
(b) Foreign currency translation
The revenue and expense accounts of the overseas consolidated subsidiaries are translated into yen at the rates of
exchange in effect at the average exchange rate during theyen. The balance sheet accounts, except for the components of net assets, are also translated into yen at the rate ofexchange in effect at the balance sheet date. The components of net assets are translated at their historical exchange
rates. Differences arising from translations where two
exchange rates have been used are presented as “Foreign
currency translation adjustments”, a component of net
assets in the accompanying consolidated financial statements.
Foreign currency monetary assets and liabilities are translated into Japanese yen at the exchange rates in effect at eachbalance sheet date and the resulting translation gains orlosses are credited or charged currently to income.
(c) Cash and cash equivalents
The Company and its subsidiaries substantially consider all
highly liquid investments with a maturity of three months orless from their purchase dates to be cash equivalents.
(d) Securities
Marketable securities categorized as other securities arecarried at fair value with unrealized holding gain and loss,

Notes to Consolidated Financial Statements

net of applicable income taxes, accounted for as a separate
component of net assets. Non-marketable securities classified as other securities are stated at cost. Cost of securities
sold is computed based on the moving average method.
(e) Derivatives
All derivatives are carried at fair value.
(f) Inventories
Inventories are stated at cost, determined principally by thefollowing methods:
Finished goods and raw materials- moving average method
Semi-finished goods and work in process- individual cost method(g) Depreciation and amortization
Depreciation of property, plant and equipment is generally
computed by the declining-balance method, based on theestimated useful lives of the respective assets. The straightline method is applied to a certain research facility acquired
during the year ended March 31, 1995, and buildings
acquired after April 1, 1998. Foreign consolidated subsidiaries compute depreciation primarily using the straightline method. The following summarizes the estimated useful
lives of property, plant and equipment by major category:
Buildings and structures
Machinery and equipment

3 - 60 years
2 - 17 years

With effect from the year ended March 31, 2008, theCompany and its domestic consolidated subsidiaries havechanged their method of accounting for depreciation of property, plant and equipment acquired on or after April 1, 2007.
This change was made based on an amendment to the
Statutory Tax Law. The effect of this change on the financial
result is immaterial.
In addition, with effect from the year ended March 31, 2008,
depreciation expense for tangible fixed assets acquired
before April 1, 2007 is computed on the basis of the salvage
value of 5 percent of acquisition cost, and the amountbetween the salvage value and memorandum value isdepreciated from the year following the year in which thebook value of an asset reaches 5 percent of its acquisition
cost by the straight-line method over a period of five years.
This change was made based on an amendment to the
Statutory Tax Law. The effect of this change on the financial
result is immaterial.
Intangible assets are amortized by the straight-line method.
Capitalized software for internal use is amortized by thestraight-line method over a period of 5 years, based on theestimated useful life of the software.
The Company amortizes negative goodwill over an estimated useful life of 5 years by the straight-line method.
(h) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an
amount sufficient to cover possible losses on the collectionof receivables. The amount of the allowance is determinedbased on their historical experience with write-offs, plus anestimate of specific probable doubtful accounts based on areview of the collectibility of individual receivables.
(i) Allowance for bonuses to directors and statutory auditors
To provide for the payment of bonuses to directors andstatutory auditors, an allowance is made based on projectedamount.
(j) Provision for contract losses
Provision for contract losses is provided at an amount considered to cover the estimated possible losses involved inorders for which loss occurrence is highly anticipated where
the loss amount can be reasonably estimated at the balance
sheet date for all orders.
(k) Retirement benefits and pension plans
An allowance for employees’ retirement benefits has been
provided, based on the projected retirement benefit obligation and the pension fund assets. Actuarial gain or loss isamortized effective the year subsequent to the year in which
they arise by the straight-line method over a period of 10
years, which is shorter than the average remaining years ofservice of the employees.

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

09

Notes to Consolidated Financial Statements

The Companies also provide for retirement benefits to directors and statutory auditors, based on the Companies’ internal rules, at the amount that would be required to be paid if
all directors and statutory auditors retired or resigned at thebalance sheet date.

Hedging instruments and hedged items are summarized asfollows :(l) Reserve for repair and maintenanceA certain research facility acquired during the year ended
March 31, 1995 requires periodic repairs and maintenance.
An accrual for these repair expenses is recorded based on
the current portion of the total expenses estimated for such
repairs.

The Company uses financial instruments to hedge interest
rate fluctuation risks.

(m) Leases
Finance leases other than those deemed to transfer the titleof the leased assets to the lessee are not capitalized, but are
accounted for by a method similar to that applicable to operating leases.
(n) Hedging accounting
Interest rate swaps which meet specific hedge criteria andqualify for special hedge accounting treatment are notremeasured at fair value.

Hedging instruments
Interest rate swap agreements･･･

Hedged items
Interest on loans

For interest rate swaps meeting the criteria for special treatment, assessment is omitted.
(o) Research and development costs
Research and development costs are expensed as incurredand included in cost of sales and selling, general and administrative expenses.
(p) Income taxes
Deferred tax assets and liabilities are determined based on
the differences between financial reporting and tax-based
reporting of the assets and liabilities, and are measured
using the statutory tax rates which will be in effect when the
differences are expected to be realized.

3. Securities
At March 31, 2008 and 2007, marketable securities classified as other (available-for-sale) securities are summarized as follows :Other securities whose market
value recorded in
the balance sheet exceed
their acquisition costs :Equity securities
Debt securities
Other
Total

10

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATIONMarch 31,2008

March 31,2007

March 31,
2008

AmountAcquisition recorded incosts
the balance Difference
sheet

AmountAcquisition recorded incosts
the balance Difference
sheet

AmountAcquisition recorded incosts
the balance Difference
sheet(Millions of yen)

(Millions of yen)(Thousands of U.S. dollars)

¥

¥

70
70

¥ 178
¥ 178

¥ 108
¥ 108

¥ 138
¥ 138

¥ 318
¥ 318

¥ 180
¥ 180

$ 703
$ 703

$1,778$1,778$1,075$1,075

Notes to Consolidated Financial Statements

Other securities whose market
value recorded in the balance
sheet do not exceed
their acquisition costs:
Equity securities
Debt securities
Other
Total

March 31,2008

March 31,2007

March 31,
2008

AmountAcquisition recorded incosts
the balance Difference
sheet

AmountAcquisition recorded incosts
the balance Difference
sheet

AmountAcquisition recorded incosts
the balance Difference
sheet(Millions of yen)

(Millions of yen)(Thousands of U.S. dollars)

¥

¥

68
68

¥

¥

64
64

¥

¥

(4)
(4)

¥

-

-

¥

-

¥

$ 676
$ 676

$ 641
$ 641

$ (35)$ (35)At March 31, 2008 and 2007, non-marketable securities carried at cost are summarized as follows :March 31,2008

March 31,
2007

¥

52
1

¥

2008
(Thousands of
U.S. dollars)(Millions of yen)

Investments in affiliates:
Unlisted equity securities other than those traded on the over-the-counter market
Other unlisted securities other than those traded on the over-the-counter market

March 31,

52
1

$

520
6

4. Inventories
Inventories at March 31, 2008 and 2007 are summarized as follows :March 31,2008

March 31,2007

¥ 3,997
171
7,680¥ 11,848¥

2008(Thousands of
U.S. dollars)(Millions of yen)Finished products
Raw materials
Work in process
Total

March 31,

6,455
149
9,315
¥ 15,919$ 39,895
1,707
76,656$ 118,258

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

11

Notes to Consolidated Financial Statements

5.Short-Term Bank Loans and Long-Term Debt
The weighted average interest rate per annum on the short-term bank loans outstanding at March 31, 2008 and 2007, were 4.7% and2.4%, respectively.
Long-term debt at March 31, 2008 and 2007 are summarized as follows :March 31,2008

March 31,2007

Loans from the Pension Welfare Service Public Corporation represent financing for housing loans to the Company’s employees,
and the same amount is stated as a portion of other assets(loans to employees). The Company pays the interest on suchloans to the lender and collects the same amount from theemployees as the borrowers.

¥ 3,2157,000
410,2196,415¥ 3,804

2008(Thousands of
U.S. dollars)(Millions of yen)Unsecured :Zero coupon Japanese yen convertible notes(notes with stock acquisition rights)
1.30 percent to 1.69 percent loans from banks due 2008 – 2010
Loans from Pension Welfare Service Public Corporation due 2008 – 2034
Total
Less current portionLong-term debt ,net

March 31,

¥ 3,2157,000
410,219¥ 10,219$ 32,089
69,86745
102,001
64,030$ 37,971

On March 8, 2004, the Company issued ¥5,000 million zero
coupon Japanese yen convertible notes (notes with stock acquisition rights) due March 8, 2009. These notes are convertible
during the period from March 22, 2004 to February 20, 2009, atthe option of the holder, into shares of common stock at a priceof ¥943 per share, subject to adjustment in specific circumstances.

Aggregate annual maturities of long-term debt at March 31, 2008 are summarized as follows :March 31, 2008

2009
2010
2011
2012 and thereafter
Total(Millions of yen)(Thousands of
U.S. dollars)¥$ 64,030
37,9302
39$ 102,001

6,415
3,800
0
4
¥ 10,219

At March 31, 2008, the Company had unused committed lines of credit with seven banks for efficient financial arrangements for operating
funds aggregating ¥10,000 million ($99,810 thousand). These lines of credit have fee commitment requirements.

12

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

Notes to Consolidated Financial Statements

6.Research and Development Expenses
Research and development expenses charged to income for the years ended March 31,2008 and 2007, respectively, are as follows :Year ended
March 31,2008

Year ended
March 31,
2007

(Millions of yen)

¥ 3,184

Year ended
March 31,

2008
(Thousands of
U.S. dollars)¥ 2,713$ 31,781

7.Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporation, inhabitants’ and enterprise taxes
which, in the aggregate, resulted in a statutory tax rate of 40.6%

for the years ended March 31, 2008 and 2007. Income taxes ofthe overseas subsidiaries are based on the tax rates applicablein their countries of incorporation.

The major components of deferred tax assets and liabilities as of March 31, 2008 and 2007 are summarized as follows :March 31,2008

March 31,
2007

2008
(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets:
Employees’ retirement benefits
Accrued employees’ bonuses
Provision for contract losses
Accrual for periodic repairsEnterprise tax payable
Tax loss carried forward
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrecognized holding gain on other securities
Other
Total deferred tax liabilities
Net deferred tax assets

March 31,

¥ 1,852
598
142
123
73
1,341
813
4,942
(375)
4,567

¥ 1,887
542
151
120
43
1,360
414
4,517
(91)
4,426

$ 18,486
5,963
1,418
1,226
733
13,383
8,117
49,326(3,744)45,582

(28)
(27)
(55)
¥ 4,512(52)(52)¥ 4,374

(282)
(267)
(549)
$ 45,033

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

13

Notes to Consolidated Financial Statements

The effective tax rates reflected in the consolidated statements of income for the years ended March 31, 2008 differ from the statutory tax
rate for the following reasons :Year ended
March 31,2008

Statutory tax rate
Effect of:Tax non-deductible expenses such as entertainment expenses
Per capita levy of inhabitants’ taxes and other
Prior years’ income taxes
Changes in valuation allowance
Dividends from foreign subsidiaries
Tax loss carried forward
Tax-deductible R&D credits
Other, net
Effective tax rates

40.6 %
3.2
1.4
1.3
19.2
12.9
(1.0)
(3.4)
(1.4)
72.8 %The reconciliation in 2007 is omitted since loss before income taxes and minority interests was recorded for the year ended March 31,
2007.

14

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

Notes to Consolidated Financial Statements

8.Retirement Benefits
The Companies have defined benefit pension plans and lump-sum retirement payment plans which cover substantially all employees who
retire from the Companies. Eligible employees may also receive additional payments under the plans.
The following is a summary of the plans
March 31,2008

March 31,
2007

(Millions of yen)

Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized actuarial loss
Prepaid pension cost
Allowance for retirement benefits¥ (9,714)
3,312(6,402)
1,894(207)¥ (4,715)

March 31,

2008
(Thousands of
U.S. dollars)¥ (9,997)
3,630(6,367)
1,588¥ (4,779)$(96,957)
33,055(63,902)
18,905(2,064)$(47,061)

The consolidated subsidiaries have adopted a simplified method, as permitted, to calculate the projected benefit obligation.

Components of net periodic pension cost for the years ended March 31, 2008 and 2007 are summarized as follows :Year ended
March 31,2008

Year ended
March 31,
2007

(Millions of yen)

Service cost
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial loss
Net periodic pension cost

¥ 535
187
(127)
293
¥ 888

Year ended
March 31,

2008
(Thousands of
U.S. dollars)

¥ 464
182
(117)
345
¥ 874

$ 5,345
1,868(1,268)2,923$ 8,868

The allowance for retirement benefits was determined by the simplified method by the consolidated subsidiaries and has been included inservice cost.

Assumptions used in the actuarial calculation for the years ended March 31, 2008 and 2007 are summarized as follows :March 31,

Actuarial cost method
Discount rate
Expected rate of return on plan assets
Amortization period for actuarial loss

March 31,

2008
2007
Projected unit credit method
2.0% per annum 2.0% per annum
3.5% per annum 3.5% per annum
10 years (within the employees'
average remaining years of service)

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

15

Notes to Consolidated Financial Statements

9.Leases(1) Finance leases
Leased property under finance leases that do not transfer the title of the leased property to the lessee on an as-if-capitalized-basis for theyears ended March 31, 2008 and 2007 are as follows :March 31,2008

March 31,2007

Non-cancelable lease transactions are primarily accounted for
as operating leases (regardless of whether such leases are classified as operating or finance leases) except that lease agreements which stipulate the transfer of the title of the leased asset
to the lessee are accounted for as finance leases. Lease¥ 3,861
1,557¥ 2,304

2008(Thousands of
U.S. dollars)(Millions of yen)

Machinery, equipment and other assets :Acquisition cost
Accumulated depreciation
Net leased property

March 31,

¥ 3,966
1,826¥ 2,140$ 38,538
15,538$ 23,000

expenses relating to finance leases accounted for as operatingleases amounted to ¥987 million ($9,855 thousand) and ¥1,012
million for the years ended March 31, 2008 and 2007, respectively.

Future minimum lease payments subsequent to March 31, 2008 for finance lease transactions accounted for as operating leases are
summarized as follows :March 31, 2008
(Millions of yen)

Due within one year
Due after one year
Total

¥

807
1,557
¥ 2,364(Thousands of
U.S. dollars)

$

8,057
15,542$ 23,599(2) Operating leases:

March 31, 2008

Due within one year
Due after one year
Total

16

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION(Millions of yen)(Thousands of
U.S. dollars)

¥ 4
2
¥ 6

$ 40
21
$ 61

Notes to Consolidated Financial Statements

10.Pledged assets
Assets pledged as collateral as of March 31, 2008 are summarized as follows :March 31, 2008
(Millions of yen)

Bank deposits
Buildings and structures
Total

¥

28
1,021
¥ 1,049(Thousands of
U.S. dollars)$273
10,193$ 10,466

11.Contingent Liabilities
The Company had the following contingent liability :March 31, 2008

As guarantor for housing loans of employees(Millions of yen)(Thousands of
U.S. dollars)

¥ 52

$ 515

12. Derivatives and Hedging Activities
The Company has entered into interest-rate swap contracts to
reduce the cost of borrowing. The Company uses these contracts to manage its exposure to interest-rate risk for hedge purposes. As a matter of policy, the Company does not enter into
derivative transactions for trading purposes. The Company
does not anticipate nonperformance by any of the counterparties
to the above transactions, all of whom are domestic financial
institutions with high credit ratings.
In accordance with the Company’s policy, derivative transactions
are entered into under the decision-making rules approved by

In accordance with the special hedge accounting under the
Accounting Standard for Financial Instruments, the Company
does not record certain interest swap arrangements at fair value
but charges or credits the net cash flows from the swap arrangements to the interest arising from the hedged borrowing, as longas these arrangements meet the specific criteria under the standard.
At March 31, 2008 and 2007, the fair value information for derivatives was not presented, since all derivatives were accounted
for as hedges.

the Management Strategy Committee of the Company. The
department which has the responsibility to enter into such contracts monitors and controls the inherent risk and performanceon a daily basis and reports these to management of theCompany, if and when necessary.

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

17

Notes to Consolidated Financial Statements

13.Segment Information
The business segment information of the Companies for the years ended March 31, 2008 and 2007 is summarized as follows :Business segments
Year ended March 31, 2008
Fine
mechatronics

Electronic&
vacuumsystems

Vending
machines&
systems

Real estateleasing

Total

Eliminations
orunallocatedamounts

Consolidated(Millions of yen)

I. Sales and operating income
Sales to external customers
Intersegment sales or transfers
Total sales
Operating expenses
Operating income¥ 47,559
136
47,695
47,107¥588

II. Total assets, depreciation and capital expenditures
Total assets¥ 34,634
Depreciation
520
Capital expenditures
470

¥

¥

¥

9,589
78
9,667
9,519
148

7,923
88
163

¥

¥

¥

7,470
7,470
6,585
885

4,122
65
42

¥

¥

¥

1,823
1,823
1,215
608

66,441
214
66,65564,426¥ 2,229

8,678
572
19

¥ 55,357
1,245
694

¥

¥

¥

- ¥ 66,441
(214)
(214)
66,441368
64,794(582) ¥ 1,647

9,638
-

¥ 64,995
1,245
694

Eliminations
orunallocatedamounts

Consolidated

Year ended March 31, 2007
Fine
mechatronics

Electronic&
vacuumsystems

Vending
machines&
systems

Real estateleasing

Total(Millions of yen)

I. Sales and operating income
Sales to external customers
Intersegment sales or transfers
Total sales
Operating expenses
Operating income (loss)¥¥

59,118 ¥131
59,24961,629(2,380) ¥II. Total assets, depreciation and capital expenditures
Total assets¥ 44,567
Depreciation
423
Capital expenditures
2,439

18

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

¥

9,528
131
9,659
9,339
320

8,124
93
15

¥

¥

¥

4,193
4,193
4,090
103

3,435
85
88

¥

¥

¥

1,824
1,824
1,102
722

¥ 74,663 ¥
262
74,92576,160¥ (1,235) ¥- ¥ 74,663
(262)
(262)
74,663
133
76,293(395) ¥ (1,630)

9,235
564
5

¥ 65,361
1,165
2,547

7,836
-

¥

¥ 73,197
1,165
2,547

Notes to Consolidated Financial Statements

Year ended March 31, 2008
Fine
mechatronics

Electronic&
vacuumsystems

Vending
machines&
systems

Real estateleasing

Eliminations
orunallocatedamounts

Total

Consolidated(Thousands of U.S. dollars)

I. Sales and operating income
Sales to external customers
Intersegment sales or transfers
Total sales
Operating expenses
Operating income$ 474,689
1,357
476,046
470,180$ 5,866$ 95,704
774
96,47895,013$ 1,465$ 74,559
74,55965,725$ 8,834$ 18,201
18,201
12,126$ 6,075$ 663,153
2,131
665,284
643,044$ 22,240$- $ 663,153(2,131)(2,131)
663,153
3,673
646,717$ (5,804) $ 16,436

II. Total assets, depreciation and capital expenditures
Total assets$ 345,685
Depreciation
5,186
Capital expenditures
4,686$ 79,083
877
1,627$ 41,145
654
420$ 86,611
5,710
191$ 552,524
12,427
6,924$ 96,191-$ 648,715
12,427
6,924

Notes:a) Basis of segmentation
Business segments are divided into product categories by
the same criteria as applied for internal control purposes.
b) Major products in each business segment(1) Fine mechatronics
FPD manufacturing equipment (wet cleaning equipment,
stripping equipment, etching equipment, developing
equipment, PI ink jet coater, cell assembly equipment,
outer lead bonders), semiconductor manufacturing
equipment (wet cleaning equipment, etching equipment,
ashing equipment, die bonders, inner lead bonders, flip
chip bonders, wafer inspection equipment), railroad
maintenance equipment, non-destructive inspections,and other items.
(2) Electronic & vacuum systems
Laser equipment, microwave equipment, media device
manufacturing equipment (sputtering equipment, vacuum
bonding equipment), industrial vacuum evaporationequipment, rechargeable battery manufacturing equipment, precision parts manufacturing equipment, otherautomation equipment, vacuum pumps, and other items.

(3) Vending machines & systems
Vending machines, ticket vending machines, and others.
(4) Real estate leasing
Real estate leasing and management, and other businesses.
c) Included in eliminations or unallocated amounts of operating
expenses are unallocable amounts relating to research anddevelopment expenses incurred over the entire Group aspart of the Company’s research and development activities.
d) Included in the eliminations or unallocated amounts of total
assets were unallocable amounts totaling ¥9,638 million ($96,191 thousand) and ¥7,836 million for the years ended
March 31, 2008 and 2007, respectively, which primarily consisted of surplus funds (cash and bank deposits), investment
funds (investment securities) of the Company and deferred
tax assets.

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

19

Notes to Consolidated Financial Statements

Geographical segments
No information by geographical segment for the years ended March 31, 2008 and 2007 has been presented, due to the fact that the net
sales and total assets of the operations in Japan constituted more than 90% of the respective totals for all segments.

Overseas sales
Year ended March 31, 2008
Other

Northeastern Asia

Total

(Millions of yen)

I. Overseas sales
II. Consolidated net sales
III. % of consolidated net sales¥

16,136

¥

24.3%

6,625

¥

10.0%

22,761
66,441
34.3%

Year ended March 31, 2007
Other

Northeastern Asia

Total

(Millions of yen)

I. Overseas sales
II. Consolidated net sales
III. % of consolidated net sales¥

27,954

¥

37.4%

4,333

¥

5.8%

32,28774,663
43.2%

Year ended March 31, 2008
Northeastern Asia

Other

Total

(Millions of yen)

I. Overseas sales
II. Consolidated net sales
III. % of consolidated net sales$ 161,051$ 66,128

24.3%

10.0%

$ 227,179
663,153
34.3%

Notes:a) Overseas sales are sales recorded by the Company and its
consolidated subsidiaries in countries or regions other thanJapan.

(2) Major countries or regions included in each geographicalarea:
Northeastern Asia - Taiwan, Korea, China
Otherb) The division of overseas sales into countries or regions isdetermined as follows:(1) Overseas sales by country or region:
Geographical areas are defined based on geographicalproximity.

20

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION-

Mexico, U.S.A.

Notes to Consolidated Financial Statements

14. Related Party Transactions
Toshiba Corporation held 39.1% of the Company’s voting rights
as of March 31, 2008

¥2,518 million ($25,135 thousand) and ¥3,981 million for theyears ended March 31, 2008 and 2007, respectively.

The Company sold semiconductor manufacturing equipment toToshiba Corporation and received rent revenue from Toshiba
Corporation. The aggregate amounts of these transactions were

The Company purchased material from Toshiba Corporation
totaling ¥56 million ($555 thousand) and ¥65 million for the years
ended March 31, 2008 and 2007, respectively.

Amounts due from and to Toshiba Corporation at March 31, 2008 and 2007 were as follows :March 31,

March 31,
2007

2008

¥

239
3,195

2008
(Thousands of
U.S. dollars)(Millions of yen)Due from Toshiba Corporation
Due to Toshiba Corporation

March 31,

¥

104
3,229

$ 2,383
31,888

15. Per Share Information
Basic net income per share is computed based on the net
income available for distribution to shareholders of common
stock and the weighted-average number of shares of common
stock outstanding during each year. Diluted net income pershare is computed based on the net income available for distri-shares of common stock outstanding during each year, assuming full dilution of common stock equivalents. Net assets per
share is computed based on the weighted-average number ofshares of common stock outstanding at each balance sheet
date.

bution to the shareholders and the weighted-average number ofYear ended
March 31,

Year ended
March 31,
2007

2008
(Yen)

Net income (loss) :- Basic- Diluted
Net assets

¥

8.62
8.06
501.50Year ended
March 31,2008
(U.S. dollars)¥ (20.60)
501.41

$

0.09
0.08
5.01

Notes:The information regarding diluted net income per share in 2007 is omitted because of net loss for the year ended March 31, 2007.

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

21

Supplemental Information

Non-Consolidated Balance Sheets

March 31,
2008

AssetsCurrent assets :Cash and bank deposits
Notes and accounts receivable, trade:
Notes
Accounts
Allowance for doubtful accounts
Inventories
Deferred tax assets
Other current assets
Total current assets

Property, plant and equipment :Land
Buildings and structures
Machinery and equipment
Construction in progress
Total
Accumulated depreciation
Property, plant and equipment, net

Investments and other assets :Investments in securities
Investments in subsidiaries and affiliates
Deferred tax assets
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

22

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATIONMarch 31,
2007

(Millions of yen)March 31,
2008
(Thousands of
U.S. dollars)

3,806$ 56,435

80
16,066
(21)
9,421
1,788
936
33,924106
21,189(21)
12,823
1,229
1,068
40,200802
160,357(209)
94,025
17,842
9,347
338,599

74
27,547608
231
28,460(14,655)
13,80568
27,556590
183
28,397(13,802)
14,595739
274,949
6,065
2,308
284,061(146,270)
137,791

218
1,474
2,098
956
(5)
4,741

290
1,416
2,565
886
(6)
5,151

2,176
14,71420,9399,540(50)
47,319¥ 52,470¥ 59,946$ 523,709¥ 5,654¥

Non-Consolidated Balance Sheets

March 31,2008

Liabilities and net assets
Current liabilities :Current portion of long-term debt
Notes and accounts payable:
Notes
Accounts
Advances from customers
Allowance for bonuses to directors and statutory auditors
Provision for contract losses
Accrued expenses
Accrued income taxes
Other current liabilities
Total current liabilities

Long-term liabilities :Long-term debt
Allowance for retirement benefits
Directors’ retirement benefits
Reserve for repair and maintenance
Other long-term liabilities
Total long-term liabilities
Net assets :Shareholders’ equity :Common stock :Authorized : 100,000,000 shares
Issued: 51,926,194 shares at March 31, 2008 and 2007
Additional paid-in capital
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Valuation and translation adjustments:
Net unrealized holding gain on other securities
Total net assets
Total liabilities and net assets

March 31,
2007

(Millions of yen)March 31,
2008
(Thousands of
U.S. dollars)-$ 64,030

1,584
8,211
453
22
214
2,879
55
129
19,962

3,565
12,780
219
10
373
3,895
46
240
21,12815,812
81,954
4,519
223
2,135
28,734549
1,284
199,240

3,804
4,072
150
302
3,023
11,351

10,219
4,139
123
296
3,000
17,77737,97140,6401,500
3,021
30,170113,302

6,762
10,7395,307(1,718)21,090

6,762
10,7395,139(1,715)20,92567,487
107,186
52,972(17,140)
210,505

67
21,157¥ 52,470

116
21,041¥ 59,946

662
211,167$ 523,709¥ 6,415¥

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION

23

Supplemental Information

Non-Consolidated Statements of Income

Year ended
March 31,2008

Year ended
March 31,
2007

(Millions of yen)(Thousands of
U.S. dollars)¥ 47,077
39,082
7,995¥ 58,144
54,1164,028$ 469,877
390,082
79,795

Selling, general and administrative expenses
Operating income (loss)

8,475
(480)

7,435
(3,407)

84,587(4,792)Other income (expenses) :Interest and dividend income
Interest expense
Other, net
Income (loss) before income taxes

1,395
(120)
(90)
705

805
(105)
(57)
(2,764)

13,923(1,202)
(894)
7,035

176
59
(69)
166
539

25
(1,369)(1,344)¥ (1,420)

1,754
591
(688)
1,657
5,378

Net sales
Cost of sales
Gross profit

Income taxes :Current
Prior years
Deferred
Net income (loss)

¥

(Yen)

Per share of common stock :Net income (loss)
Cash dividends applicable to the year

24

Year ended
March 31,2008

Annual Report 2008 Financial Section
SHIBAURA MECHATRONICS CORPORATION¥ 10.90
8.00$(U.S. dollars)¥ (27.93)
7.00

$

0.11
0.08

5-1, Kasama 2-chome, Sakae-ku, Yokohama,
Kanagawa Pref. 247-8610, Japan
TEL : +81-45-897-2421
FAX : +81-45-897-2470
http://www.shibaura.co.jp/

SEA0309A 00 0811
08023