##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THESECURITIES EXCHANGE ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) THE SECURITIESEXCHANGE ACT OF 1934
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) THESECURITIES EXCHANGE ACT OF 1934
 
  
 KABUSHIKI KAISHA MAKITA
  MAKITA CORPORATION
  JAPAN
  
 
  Title of Class
    
    Name of each exchange on which registered* American Depositary Shares
** Common Stock
    
    Nasdaq Global Select Market
 *
    
    American Depositary Receipts evidence American Depositary Shares, each
American Depositary Share representing one share of the registrants
Common Stock.
 **
    
    No par value. Not for trading, but only in connection with the
registration of American Depositary Shares, pursuant to the
requirements of the Securities and Exchange Commission.
     Outstanding as ofMarch 31, 2009
    
    
    March 31, 2009Title of Class
    
    (Tokyo time)
    
    
    (New York time)Common Stock,
excluding 2,244,755
shares of Treasury
Stock
    
    
    137,764,005American Depositary
Shares, each
representing one
share of Common
Stock
    
    
    
    
    
    
    3,620,303
  þYes
    
    o No
  o Yes
    
    þ No
   þ Yes
    
    o No
  o Yes
    
    oNo (Not Applicable)
  þ o o
  U.S.GAAP þ
    
    International Financial Reporting Standards as issued o
    
    Otheroby the International Accounting Standards Board
  oItem 17
    
    oItem 18
  o Yes
    
    þ No




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##### Table of Contents



Table of Contents
 PagePART IItem 1. Identity of Directors, Senior Management and Advisers
    
    
    1Item 2. Offer Statistics and Expected Timetable
    
    
    1Item 3. Key Information
    
    
    1A.
Selected financial data
    
    
    1B.
Capitalization and indebtedness
    
    
    2C.
Reasons for the offer and use of proceeds
    
    
    2D.
Risk factors
    
    
    3Item 4. Information on the Company
    
    
    7A.
History and development of the Company
    
    
    7B.
Business overview
    
    
    8C.
Organizational structure
    
    
    14D.
Property, plants and equipment
    
    
    14Item 4A. Unresolved Staff Comments
    
    
    15Item 5. Operating and Financial Review and Prospects
    
    
    16A.
Operating results
    
    
    16B.
Liquidity and capital resources
    
    
    31C.
Research and development, patents and licenses, etc.
    
    
    35D.
Trend information
    
    
    36E.
Off-balance sheet arrangements
    
    
    36F.
Tabular disclosure of contractual obligations
    
    
    37G.
Safe harbor
    
    
    37Item 6. Directors, Senior Management and Employees
    
    
    38A.
Directors and senior management
    
    
    38B.
Compensation
    
    
    41C.
Board practices
    
    
    41D.
Employees
    
    
    42E.
Share ownership
    
    
    42Item 7. Major Shareholders and Related Party Transactions
    
    
    43A.
Major shareholders
    
    
    43B.
Related party transactions
    
    
    44C.
Interests of experts and counsel
    
    
    44Item 8. Financial Information
    
    
    45A.
Consolidated statements and other financial information
    
    
    45B.
Significant changes
    
    
    45Item 9. The Offer and Listing
    
    
    46A.
Offer and listing details
    
    
    46B.
Plan of distribution
    
    
    46C.
Markets
    
    
    46D.
Selling shareholders
    
    
    46E.
Dilution
    
    
    46F.
Expenses of the issue
    
    
    46Item 10. Additional Information
    
    
    47A.
Share capital
    
    
    47B.
Memorandum and articles of association
    
    
    47C.
Material contracts
    
    
    54D.
Exchange controls
    
    
    54E.
Taxation
    
    
    55F.
Dividends and paying agents
    
    
    59G.
Statement by experts
    
    
    59H.
Documents on display
    
    
    59I.
Subsidiary information
    
    
    59Item 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    60Item 12. Description of Securities Other than Equity Securities
    
    
    62PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    62Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    62
 i




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PageItem 15. Controls and Procedures
    
    
    62A.
Disclosure controls and procedures
    
    
    62B.
Managements annual report on internal control over financial reporting
    
    
    62C.
Attestation report of the registered public accounting firm
    
    
    63D.
Changes in internal control over financial reporting
    
    
    63Report of Independent Registered Public Accounting Firm
    
    
    64Item 16A. Audit Committee Financial Expert
    
    
    65Item 16B. Code of Ethics
    
    
    65Item 16C. Principal Accountant Fees and Services
    
    
    65Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    66Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    67Item 16G. Corporate Governance
    
    
    67PART IIIItem 17. Financial Statements
    
    
    70Item 18. Financial Statements
    
    
    70Item 19. Exhibits
    
    
    70Ex-1.1 Articles of Incorporation, as amended and effective as of June 25, 2009 (English translation)Ex-1.2 Regulations of Board of Directors, as amended and effective as of June 25, 2009 (English translation)Ex-1.3 The Share Handling Regulations, as amended and effective as of January 5, 2009 (English translation)Ex-12.1 302 Certification of Chief Executive Officer, President and Representative DirectorEx-12.2 302 Certification of Chief Financial Officer, Director and General Manager of Administration HeadquartersEx-13.1 906 Certifications of Chief Executive Officer and Chief Financial Officer
  ii




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Cautionary Statement with Respect to Forward-Looking Statements
      
    
    The levels of construction activities and capital investments in Makitas markets
    
    Fluctuations in currency exchange rates
    
    Intense competition in global power tools market for professional use
    
    Makitas overseas activities and entry into overseas markets
    
    Makitas inability to develop attractive products
    
    Geographic concentration of Makitas main offices and facilities
    
    Failure to maintain cooperative relationships with significant customers and reduction of
purchase and sale of Makitas products by significant customers
    
    Failure of Makitas suppliers to deliver materials or parts required for production as scheduled
    
    Failure to protect Makitas intellectual property rights or infringing intellectual property
rights of third parties
    
    Procurement of raw materials or sharp rise in prices of raw materials
    
    Product liability litigation or recalls
    
    Fluctuations in stock market prices
    
    Environmental or other government regulations
    
    The effectiveness of Makitas internal control over financial reporting and the related
attestation provided by Makitas auditors
    
    Halts or malfunctioning of Makitas operational network
    
    Makitas ability to retain talented personnel
   iii




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##### Table of Contents



PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 A. Selected financial data
  Japanese yen
    
    
    U.S. dollars(In millions)
    
    
    (In thousands)Fiscal year ended March 31,Income Statement Data:
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009Net sales
    
    ¥
    194,737
    
    
    ¥
    229,075
    
    
    ¥
    279,933
    
    
    ¥
    342,577
    
    
    ¥
    294,034
    
    
    $
    2,970,040Operating income
    
    ¥
    31,398
    
    
    ¥
    45,778
    
    
    ¥
    48,176
    
    
    ¥
    67,031
    
    
    ¥
    50,075
    
    
    $
    505,808Net income
    
    ¥
    22,136
    
    
    ¥
    40,411
    
    
    ¥
    36,971
    
    
    ¥
    46,043
    
    
    ¥
    33,286
    
    
    $
    336,222
 Net income per share of Common stock and per ADS:
    
    Japanese yen
    
    
    U.S.dollarsBasic
    
    
    153.9
    
    
    
    281.1
    
    
    
    257.3
    
    
    
    320.3
    
    
    
    236.9
    
    
    
    2.39Diluted
    
    
    148.8
    
    
    
    281.1
    
    
    
    257.3
    
    
    
    320.3
    
    
    
    236.9
    
    
    
    2.39
 Japanese yen
    
    
    U.S. dollars(In millions)
    
    
    (In thousands)Fiscal year ended March 31,Balance Sheet Data:
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009Total assets
    
    ¥
    289,904
    
    
    ¥
    326,038
    
    
    ¥
    368,494
    
    
    ¥
    386,467
    
    
    ¥
    336,644
    
    
    $
    3,400,444Cash and cash
equivalents, time
deposits and
marketable
securities
    
    ¥
    91,189
    
    
    ¥
    88,672
    
    
    ¥
    102,211
    
    
    ¥
    98,142
    
    
    ¥
    66,308
    
    
    $
    669,778Net working capital
    
    ¥
    149,666
    
    
    ¥
    181,808
    
    
    ¥
    212,183
    
    
    ¥
    230,699
    
    
    ¥
    199,586
    
    
    $
    2,016,020Short-term borrowings
    
    ¥
    9,060
    
    
    ¥
    1,728
    
    
    ¥
    1,892
    
    
    ¥
    1,724
    
    
    ¥
    239
    
    
    $
    2,414Long-term
indebtedness
    
    ¥
    88
    
    
    ¥
    104
    
    
    ¥
    53
    
    
    ¥
    908
    
    
    ¥
    818
    
    
    $
    8,263Common stock
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    $
    240,455Treasury stock
    
    ¥
    (3,517
    )
    
    ¥
    (258
    )
    
    ¥
    (298
    )
    
    ¥
    (263
    )
    
    ¥
    (6,435
    )
    
    $
    (65,000
    )Shareholders equity
    
    ¥
    219,640
    
    
    ¥
    266,584
    
    
    ¥
    302,675
    
    
    ¥
    316,498
    
    
    ¥
    283,485
    
    
    $
    2,863,485Total number of
shares outstanding
    
    
    143,777,607
    
    
    
    143,711,766
    
    
    
    143,701,279
    
    
    
    143,773,625
    
    
    
    137,764,005
    
    
    
    137,764,005
 Note: 1.
    
    Net income per share equals net income divided by the number of average outstanding
shares of common stock.2.
    
    Net working capital equals current assets less current liabilities.
 1




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Exchange
rates
 (Japanese yen per U.S. $1.00)Fiscal year ended March 31,
    
    High
    
    
    Low
    
    
    Average
    
    
    Year-end2005
    
    
    102.26
    
    
    
    114.30
    
    
    
    107.47
    
    
    
    107.222006
    
    
    104.41
    
    
    
    120.93
    
    
    
    113.15
    
    
    
    117.482007
    
    
    110.07
    
    
    
    121.81
    
    
    
    116.92
    
    
    
    117.562008
    
    
    96.88
    
    
    
    124.09
    
    
    
    114.31
    
    
    
    99.852009
    
    
    87.80
    
    
    
    110.48
    
    
    
    100.85
    
    
    
    99.152010 (through June 30, 2009)
    
    94.45
    
    
100.71
    
    
96.91
    
    
    96.42
 (Japanese yen per U.S. $1.00)2009
    
    January
    
    
    February
    
    
    March
    
    
    April
    
    
    May
    
    
    JuneHigh
    
    
    87.80
    
    
    
    89.09
    
    
    
    93.85
    
    
    
    96.49
    
    
    
    94.45
    
    
    
    95.19Low
    
    
    94.20
    
    
    
    98.55
    
    
    
    99.34
    
    
    
    100.71
    
    
    
    99.24
    
    
    
    98.56
  Cash
dividends declared per share of common stock and per ADS:
 Japanese yen
    
    
    U.S. dollarsFiscal year ended March 31,
    
    Interim
    
    
    Year-end
    
    
    Interim
    
    
    Year-end2005
    
    
    11
    
    
    
    36
    
    
    
    0.10
    
    
    
    0.342006
    
    
    19
    
    
    
    38
    
    
    
    0.16
    
    
    
    0.322007
    
    
    19
    
    
    
    55
    
    
    
    0.16
    
    
    
    0.472008
    
    
    30
    
    
    
    67
    
    
    
    0.30
    
    
    
    0.672009
    
    
    30
    
    
    
    50
    
    
    
    0.31
    
    
    

    0.53
  Note:
    
    Cash dividends in U.S. dollars are based on the exchange rates as of
the respective payment date, using the noon buying rates for cable
transfers in Japanese yen in New York City as certified for customs
purposes by the Federal Reserve Bank of New York.
 
 B. Capitalization and indebtedness
  
 C. Reasons for the offer and use of proceeds
  2




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D. Risk factors
   Makitas sales are affected by the levels of construction activities and capital investments in its markets.
      Currency exchange rate fluctuations may affect Makitas financial results.
     3




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Makita faces intense competition
in the global market for its power tools for professional
use.
 Makitas overseas activities and entry into overseas markets entail risks, which may have a
material adverse effect on Makitas business activities.
 (1)
    
    Unexpected changes in laws and regulations;(2)
    
    Disadvantageous political and economic factors;(3)
    
    The outflow of technical know-how and knowledge due to increased personnel turnover enabling Makitas competitors to strengthen their position;(4)
    
    Potentially unfavorable tax systems and tariffs;(5)
    
    Terrorism, war, and other factors that lead to social turbulence; and(6)
    
    The interruption of or disruption to Makitas operation due to labor disputes.
  If Makita is not able to develop attractive products, Makitas sales activities may be
adversely affected.
 Geographic concentration of Makitas main offices and facilities may have adverse effects on
Makitas business activities.
  If Makita fails to maintain cooperative relationships with its significant customers or if such
significant customers reduce their purchase and sale of Makitas products, Makitas sales may be
seriously affected.
  4




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If any of Makitas suppliers fail to deliver materials or parts required for production as
scheduled, Makitas production activities may be adversely affected.
  Makita may not be able to protect its intellectual property rights and could incur significant
liabilities, litigation costs or licensing expenses or be prevented from selling its products if it
is determined to be infringing the intellectual property of third parties.
  If the procurement of raw materials used by Makita becomes difficult or prices of these raw
materials rise sharply, this may have an adverse effect on Makitas performance.
 Product liability litigation or recalls may harm Makitas financial statements and
reputation.
  5




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Fluctuations in stock market prices may adversely affect Makitas financial statements.
 Environmental or other government regulations may have a material adverse impact on Makitas
business activities.
  Investor confidence and the value of Makitas ADRs and ordinary shares may be adversely
impacted if Makitas management concludes that Makitas internal control over financial reporting
is not effective or if Makitas independent registered public accounting firm is unable to provide
adequate attestation over the effectiveness of the internal control over Makitas financial
reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.
 If Makitas operational network halts or malfunctions, Makitas production and shipment
schedule may be adversely affected.
 If Makita is unable to retain talented personnel, this may have an adverse affect on Makitas
competitiveness and results of operations.
  6




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Item 4. Information on the Company
 
 A. History and development of the Company
              7




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B.
Business overview
        8




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Products
   Consolidated Net Sales by Product CategoriesJapanese yen
    
    
    U.S. dollars(In millions, except for percentage amounts)
    
    
    (thousands)Fiscal year ended March 31,2007
    
    
    2008
    
    
    2009
    
    
    2009Power Tools
    
    ¥
    210,894
    
    
    
    75.3
    %
    
    ¥
    255,869
    
    
    
    74.7
    %
    
    ¥
    214,703
    
    
    
    73.0
    %
    
    $
    2,168,717Gardening and
Household Products
    
    
    28,123
    
    
    
    10.0
    
    
    
    40,410
    
    
    
    11.8
    
    
    
    36,916
    
    
    
    12.6
    
    
    
    372,889Parts, repairs and
accessories
    
    
    40,916
    
    
    
    14.7
    
    
    
    46,298
    
    
    
    13.5
    
    
    
    42,415
    
    
    
    14.4
    
    
    
    428,434Total
    
    ¥
    279,933
    
    
    
    100.0
    %
    
    ¥
    342,577
    
    
    
    100.0
    %
    
    ¥
    294,034
    
    
    
    100.0
    %
    
    $
    2,970,040
  a) Power Tools
     9




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b) Gardening and Household Products
   c) Parts, Repairs and Accessories
  10




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Principal Markets, Distribution and After-Sale Services
 Consolidated Net Sales by Geographic AreaJapanese yen
    
    
    U.S. dollars(In millions, except for percentage amounts)
    
    
    (thousands)Fiscal year ended March 31,2007
    
    
    2008
    
    
    2009
    
    
    2009Japan
    
    ¥
    46,860
    
    
    
    16.7
    %
    
    ¥
    52,193
    
    
    
    15.2
    %
    
    ¥
    46,222
    
    
    
    15.7
    %
    
    $
    466,889Europe
    
    
    124,020
    
    
    
    44.3
    
    
    
    160,360
    
    
    
    46.8
    
    
    
    137,113
    
    
    
    46.6
    
    
    
    1,384,980North America
    
    
    51,472
    
    
    
    18.4
    
    
    
    56,422
    
    
    
    16.5
    
    
    
    42,289
    
    
    
    14.4
    
    
    
    427,162Asia (excluding Japan)
    
    
    19,469
    
    
    
    7.0
    
    
    
    22,629
    
    
    
    6.6
    
    
    
    21,995
    
    
    
    7.5
    
    
    
    222,172Other
    
    
    38,112
    
    
    
    13.6
    
    
    
    50,973
    
    
    
    14.9
    
    
    
    46,415
    
    
    
    15.8
    
    
    
    468,837Total
    
    ¥
    279,933
    
    
    
    100.0
    %
    
    ¥
    342,577
    
    
    
    100.0
    %
    
    ¥
    294,034
    
    
    
    100.0
    %
    
    $
    2,970,040
 Japan
         11




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Overseas
        Seasonality
 Competition
    12




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Raw Materials and Sources of Supply
    Government Regulations
      Intellectual Property Rights
    13




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C. Organizational structure
  Proportion ofCountry of
    
    Ownership andCompany Name
    
    Incorporation
    
    Voting InterestMakita Numazu Corporation
    
    Japan
    
    
    100.0
    %Makita U.S.A., Inc.
    
    U.S.A.
    
    
    100.0Makita Corporation of America
    
    U.S.A.
    
    
    100.0Makita Canada Inc.
    
    Canada
    
    
    100.0Makita International Europe Ltd.
    
    U.K.
    
    
    100.0Makita (U.K.) Ltd.
    
    U.K.
    
    
    100.0Makita Manufacturing Europe Ltd.
    
    U.K.
    
    
    100.0Makita France S.A.
    
    France
    
    
    55.0Makita Benelux B.V.
    
    The Netherlands
    
    
    100.0S.A. Makita N.V.
    
    Belgium
    
    
    100.0Makita S.p.A.
    
    Italy
    
    
    100.0Makita Werkzeug GmbH
    
    Germany
    
    
    100.0Dolmar GmbH
    
    Germany
    
    
    100.0Makita Werkzeug Gesellschaft m.b.H.
    
    Austria
    
    
    100.0Makita Sp. z o. o.
    
    Poland
    
    
    100.0Makita SA
    
    Switzerland
    
    
    100.0Makita Oy
    
    Finland
    
    
    100.0Makita (China) Co., Ltd.
    
    China
    
    
    100.0Makita (Kunshan) Co., Ltd.
    
    China
    
    
    100.0Makita (Australia) Pty. Ltd.
    
    Australia
    
    
    100.0Makita Gulf FZE
    
    U.A.E.
    
    
    100.0
 
 D. Property, plants and equipment
   Floor spaceLocation
    
    (Square meters)
    
    
    Principal products manufacturedJapan;Makita Corp. Okazaki Plants
    
    
    135,029
    
    
    Electric power tools, etc.Makita Numazu Corporation
    
    
    21,199
    
    
    Engine powered agricultural and gardening equipmentsOverseas;Makita (China) Co., Ltd.
    
    
    61,302
    
    
    Electric power tools, etc.Makita Corporation of America
    
    
    24,053
    
    
    Electric power tools, etc.Makita (Kunshan) Co., Ltd.
    
    
    17,969
    
    
    Electric power tools, etc.Dolmar GmbH
    
    
    17,747
    
    
    Engine powered forestry equipmentsMakita Manufacturing Europe Ltd.
    
    
    11,520
    
    
    Electric power tools, etc.Makita EU S.R.L.(Romania)
    
    
    13,788
    
    
    Electric power tools, etc.
   14




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
    
    Head offices and certain branch offices of Makita U.S.A., Makita Canada and Makita Australia;
and
    
    Head offices of Makita Germany, Makita France, Makita Benelux (the Netherlands), Makita
Belgium, Makita Italy, Makita Brazil, Makita Taiwan and Makita Singapore.
   
 Item 4A. Unresolved Staff Comments
  15




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Item 5. Operating and Financial Review and Prospects
 
 A. Operating results
  U.S. dollars(Japanese
yen in millions, except for percentage amounts)
    
    (thousands)2007
    
    2008
    
    2009
    
    2009ChangeNET SALES
    
    ¥
    279,933
    
    
    
    100.0
    %
    
    ¥
    342,577
    
    
    
    100.0
    %
    
    ¥
    294,034
    
    
    
    100.0
    %
    
    
    (14.2
    )%
    
    $
    2,970,040Cost of sales
    
    
    163,909
    
    
    
    58.6
    
    
    
    199,220
    
    
    
    58.2
    
    
    
    170,894
    
    
    
    58.1
    
    
    
    (14.2
    )
    
    
    1,726,202GROSS PROFIT
    
    
    116,024
    
    
    
    41.4
    
    
    
    143,357
    
    
    
    41.8
    
    
    
    123,140
    
    
    
    41.9
    
    
    
    (14.1
    )
    
    
    1,243,838Selling, general and
administrative expenses
    
    
    66,802
    
    
    
    23.9
    
    
    
    76,198
    
    
    
    22.2
    
    
    
    72,635
    
    
    
    24.7
    
    
    
    (4.7
    )
    
    
    733,687Losses (gains) on disposals or
sales of property, plant and
equipment, net
    
    
    (249
    )
    
    
    (0.1
    )
    
    
    128
    
    
    
    0.0
    
    
    
    430
    
    
    
    0.2
    
    
    
    235.9
    
    
    
    4,343Impairment of long-lived assets
    
    
    1,295
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OPERATING INCOME
    
    
    48,176
    
    
    
    17.2
    
    
    
    67,031
    
    
    
    19.6
    
    
    
    50,075
    
    
    
    17.0
    
    
    
    (25.3
    )
    
    
    505,808OTHER INCOME(EXPENSES)Interest and dividend income
    
    
    1,364
    
    
    
    0.5
    
    
    
    2,092
    
    
    
    0.6
    
    
    
    1,562
    
    
    
    0.5
    
    
    
    (25.3
    )
    
    
    15,778Interest expense
    
    
    (316
    )
    
    
    (0.1
    )
    
    
    (269
    )
    
    
    (0.1
    )
    
    
    (236
    )
    
    
    (0.1
    )
    
    
    (12.3
    )
    
    
    (2,384
    )Exchange gains (losses) on
foreign currency transactions,
net
    
    
    (418
    )
    
    
    (0.2
    )
    
    
    (1,233
    )
    
    
    (0.4
    )
    
    
    (3,408
    )
    
    
    (1.1
    )
    
    
    176.4
    
    
    
    (34,424
    )Realized gains (losses) on
securities, net
    
    
    918
    
    
    
    0.3
    
    
    
    (1,384
    )
    
    
    (0.4
    )
    
    
    (3,548
    )
    
    
    (1.2
    )
    
    
    156.4
    
    
    
    (35,838
    )Other, net
    
    
    (401
    )
    
    
    (0.1
    )
    
    
    (466
    )
    
    
    (0.1
    )
    
    
    (428
    )
    
    
    (0.1
    )
    
    
    (8.2
    )
    
    
    (4,324
    )Total
    
    
    1,147
    
    
    
    0.4
    
    
    
    (1,260
    )
    
    
    (0.4
    )
    
    
    (6,058
    )
    
    
    (2.0
    )
    
    
    380.8
    
    
    
    (61,192
    )INCOME BEFORE INCOME TAXES
    
    
    49,323
    
    
    
    17.6
    
    
    
    65,771
    
    
    
    19.2
    
    
    
    44,017
    
    
    
    15.0
    
    
    
    (33.1
    )
    
    
    444,616PROVISION FOR INCOME TAXES
    
    
    12,352
    
    
    
    4.4
    
    
    
    19,728
    
    
    
    5.8
    
    
    
    10,731
    
    
    
    3.7
    
    
    
    (45.6
    )
    
    
    108,394NET INCOME
    
    ¥
    36,971
    
    
    
    13.2
    %
    
    ¥
    46,043
    
    
    
    13.4
    %
    
    ¥
    33,286
    
    
    
    11.3
    %
    
    
    (27.7
    )%
    
    $
    336,222
 General Overview
      16




---



##### Table of Contents



Currency Fluctuations
    17




---



##### Table of Contents



FY 2009 compared to FY 2008
 Net
Sales
    Sales by region
  ,
 ,
      18




---



##### Table of Contents



Review of Performance by Product Group
 Power Tools
    Gardening and Household Products
    Parts, Repairs and Accessories
   Cost
of Sales
   Gross Profit
 ¥20,217
  19




---



##### Table of Contents



Selling,
General and Administrative Expenses
   Losses
(Gains) on Disposal or Sales of Property, Plant and Equipment
  Operating
Income
  Other
Income (Expense)
      Income
before Income taxes
  Provision
for Income taxes
  Net
Income
  Earnings
per Share
  20




---



##### Table of Contents



Regional
Segments
  Japan
Segment
  Europe
Segment
  North
America Segment
  Asia
Segment (excluding Japan)
  Other
Segment
  21




---



##### Table of Contents



FY 2008 compared to FY 2007
 Net
Sales
    Sales
by region
       22




---



##### Table of Contents



Review of Performance by Product Group
 Power
Tools
   Gardening
and Household Products
  Parts,
Repairs and Accessories
  Cost
of Sales
   Gross
Profit
 ¥27,333
 Selling,
General and Administrative Expenses
   Losses
(Gains) on Disposal or Sales of Property, Plant and Equipment
  Operating
Income
  Other
Income (Expense)
   
 23




---



##### Table of Contents



Income before Income taxes
  Provision for Income taxes
  Net Income
  Earnings per Share
  Regional Segments
  Japan Segment
  Europe Segment
  North America Segment
  Asia Segment (excluding Japan)
  Other Segment
   24




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  Revenue Recognition
       25




---



##### Table of Contents



Japanese yen
    
    
    U.S. dollars(In millions)
    
    
    (In thousands)For the year ended March 31,2007
    
    
    2008
    
    
    2009
    
    
    2009Volume-based rebates:Actual payment for the year
    
    ¥
    (6,139
    )
    
    ¥
    (9,626
    )
    
    ¥
    (10,343
    )
    
    $
    (104,475
    )Charged to earnings for the year
    
    
    7,477
    
    
    
    9,897
    
    
    
    7,866
    
    
    
    79,455Translation adjustments
    
    
    (203
    )
    
    
    346
    
    
    
    662
    
    
    
    6,687Accrued expenses or deduction of account
receivables (BS) as of March 31
    
    
    3,859
    
    
    
    4,476
    
    
    
    2,661
    
    
    
    26,879Cooperative advertisings:Actual payment for the year
    
    
    (2,576
    )
    
    
    (3,585
    )
    
    
    (3,981
    )
    
    
    (40,212
    )Charged to earnings for the year
    
    
    3,026
    
    
    
    3,517
    
    
    
    3,435
    
    
    
    34,697Translation adjustments
    
    
    (70
    )
    
    
    64
    
    
    
    185
    
    
    
    1,869Accrued expenses or deduction of account
receivables (BS) as of March 31
    
    
    957
    
    
    
    953
    
    
    
    592
    
    
    
    5,980Cash discounts:Actual payment for the year
    
    
    (5,439
    )
    
    
    (5,891
    )
    
    
    (5,514
    )
    
    
    (55,697
    )Charged to earnings for the year
    
    
    5,315
    
    
    
    5,881
    
    
    
    5,444
    
    
    
    54,990Translation adjustments
    
    
    (19
    )
    
    
    58
    
    
    
    14
    
    
    
    141Accrued expenses or deduction of account
receivables (BS) as of March 31
    
    
    348
    
    
    
    396
    
    
    
    340
    
    
    
    3,434
 Inventory Valuation and Reserve
  Impairment Losses on Securities
  Allowance for Doubtful Receivables
  26




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##### Table of Contents



Impairment of Long-Lived Assets
     27




---



##### Table of Contents



Retirement and Termination Benefit Plans
          Change in
    
    Change inprojected benefit
    
    pre-tax pensionChange in assumption
    
    obligation
    
    expensesJapanese yen (In millions)50 basis point increase / decrease in discount rate
    
    
    (2,135)/2,384
    
    
    
    (2)/ 150 basis point increase / decrease in expected return on assets
    
    
    
    
    
    
    (188)/ 188
   28




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##### Table of Contents



Realizability of Deferred Income Tax Assets
   New Accounting Standards
    29




---



##### Table of Contents



30




---



##### Table of Contents



B. Liquidity and capital resources
           31




---



##### Table of Contents



FY 2009
 Cash
Flows
   
    
    ¥25,428 million increase due to lower levels of cash used in operating activities
such as purchases of parts and raw materials, selling, general and administrative
expenses and income tax payments
  
    
    ¥32,525 million decrease due to lower level of cash received from customers as a result
of decrease in sales
  
    
    ¥20,565 million decrease due to lower purchases of available-for-sale
securities and held-to-maturity
    
    ¥8,302 million decrease of sales and maturities of securities
    
    ¥4,791 million decrease due to proceeds from maturity of time deposits
    
    ¥2,010 million increase due to higher capital expenditures including expenditures
for the partial reconstruction of the Okazaki Plant, purchases of metal molds for the
manufacture of new products, construction of the research and development facility at
the Makita China Plant, expansion of the Makita Romania Plant, construction of the
second plant in Brazil and construction of the headquarter building of the sales company
in France
  
    
    ¥17,640 million used for repurchase of the Companys own shares of common stock
    
    ¥1,638 million increase due to dividends paid
      32




---



##### Table of Contents



Capital Expenditures
       Financial Position
         1.
    
    Accumulated other comprehensive income occurred through net unrealized holding gains on
available-for-sale securities were due to the decrease in the unrealized gains on
available-for-sale securities as a result of the depreciation of the market value of the
Companys securities holding,
 2.
    
    Accumulated other comprehensive losses occurred through pension liability adjustment were due
to the increase in net actuarial loss as a result of the depreciation of the market value of
the plan asset ,
 3.
    
    Accumulated other comprehensive losses occurred through foreign currency translation
adjustments were due to the decrease in foreign currency translation adjustments as a result
of appreciation of the Japanese yen against the British pound, euro and U.S. dollars.
  33




---



##### Table of Contents



FY 2008
 Cash Flows
  
    
    ¥65,664 million decrease due to higher levels of cash used in operating activities such as
purchases of parts and raw materials, selling, general and administrative expenses, and income
tax payments
 
    
    ¥62,579 million increase due to higher levels of cash received from customers as a result
of net sales growth
  
    
    ¥6,357 million decrease due to lower purchases of available-for-sale securities and
held-to-maturity securities
    
    ¥8,101 million decrease due to higher proceeds from sales and maturities of securities
    
    ¥9,266 million decrease due to withdrawals of time deposits
    
    ¥2,056 million increase due to higher capital expenditures for reconstruction of the
Okazaki plant, improvements to the headquarters buildings, and new plant constructions of
Makita China, Makita Brazil and Makita Romania
    
    ¥1,385 million increase due to an acquisition of Makita Numazu for ¥2,034 million, net of
cash acquired
  
    
    ¥4,025 million increase due to higher dividends paid
  Capital Expenditures
     34




---



##### Table of Contents



Financial Position
       1.
    
    Accumulated other comprehensive income occurred through net unrealized holding gains on
available-for-sale securities are due to the decrease in the unrealized gains on
available-for-sale securities as a result of the depreciation of the market value of the
Companys securities holding,
 2.
    
    Accumulated other comprehensive losses occurred through pension liability adjustment are due to
the increase in net actuarial loss as a result of the depreciation of the market
value of the plan asset,
 3.
    
    Accumulated other comprehensive losses occurred through foreign currency translation adjustments
are due to the decrease in foreign currency translation adjustments as a result of
appreciation of the Japanese yen against the U.S. dollar, the British pound and the Chinese
Renmin yuan.
  
 C. Research and development, patents and licenses, etc.
         35




---



##### Table of Contents



D. Trend information
        
 E. Off-balance sheet arrangements
  36




---



##### Table of Contents



F. Tabular disclosure of contractual obligations
 Japanese yen (In millions)Expected payment date, year ending March 31,Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterCapital lease
    
    
    447
    
    
    
    129
    
    
    
    278
    
    
    
    27
    
    
    
    11
    
    
    
    2
    
    
    
    Interest expenses on
capital lease
    
    
    35
    
    
    
    17
    
    
    
    17
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Operating lease
    
    
    2,203
    
    
    
    681
    
    
    
    503
    
    
    
    319
    
    
    
    242
    
    
    
    175
    
    
    
    283Unsecured loans from bank
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    Contributions to defined
benefit plan
    
    
    2,569
    
    
    
    2,569
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligation
    
    
    9,261
    
    
    
    9,164
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    ¥
    15,015
    
    
    ¥
    12,560
    
    
    ¥
    895
    
    
    ¥
    847
    
    
    ¥
    253
    
    
    ¥
    177
    
    
    ¥
    283U.S. dollars (In thousands)Expected payment date, year ending March 31,Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterCapital lease
    
    
    4,515
    
    
    
    1,303
    
    
    
    2,808
    
    
    
    273
    
    
    
    111
    
    
    
    20
    
    
    
    Interest expenses on
capital lease
    
    
    354
    
    
    
    172
    
    
    
    172
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    Operating lease
    
    
    22,253
    
    
    
    6,879
    
    
    
    5,081
    
    
    
    3,222
    
    
    
    2,444
    
    
    
    1,768
    
    
    
    2,859Unsecured loans from bank
    
    
    5,051
    
    
    
    
    
    
    
    
    
    
    
    5,051
    
    
    
    
    
    
    
    
    
    
    
    Contributions to defined
benefit plan
    
    
    25,949
    
    
    
    25,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligation
    
    
    93,545
    
    
    
    92,566
    
    
    
    979
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    151,667
    
    
    $
    126,869
    
    
    $
    9,040
    
    
    $
    8,556
    
    
    $
    2,555
    
    
    $
    1,788
    
    
    $
    2,859
 Note:
    
    1. Determination of contributions to defined benefit plan after FY 2010 is not practicable.
2. The notional amount of derivative financial instruments that are expected to
settle in FY 2010 is ¥24,666 million and their estimated fair value is ¥(1,162) million
at March 31, 2009. Please see note 17 to the consolidated financial statements for
further information.
 
 G. Safe harbor
    37




---



##### Table of Contents



Item 6. Directors, Senior Management and Employees
 
 A. Directors and senior management
   
 
 
 
 
 38




---



##### Table of Contents



39




---



##### Table of Contents



40




---



##### Table of Contents



B. Compensation
    
 C. Board practices
       41




---



##### Table of Contents



D. Employees
  As of March 31,2007
    
    
    2008
    
    
    2009Employees by Geographic AreasJapan
    
    
    3,007
    
    
    
    3,206
    
    
    
    3,171Europe
    
    
    2,001
    
    
    
    2,323
    
    
    
    2,381North America
    
    
    926
    
    
    
    995
    
    
    
    912Asia
    
    
    2,542
    
    
    
    3,278
    
    
    
    3,203Other regions
    
    
    586
    
    
    
    634
    
    
    
    745Total
    
    
    9,062
    
    
    
    10,436
    
    
    
    10,412
    
 E. Share ownership
  Identity of
    
    Number of
    
    Percentage ofPerson or Group
    
    Shares Owned
    
    Outstanding sharesDirectors and Statutory Auditors
    
    2,131,019
    
    1.54 %
  Name
    
    Position as of March 31, 2009
    
    Number of SharesMasahiko Goto
    
    CEO&President, Representative Director
    
    1,988,643Masami Tsuruta
    
    Managing Director
    
    19,122Yasuhiko Kanzaki
    
    Managing Director
    
    21,469Kenichiro Nakai
    
    CFO&Director
    
    13,800Tadayoshi Torii
    
    Director
    
    15,500Tomoyasu Kato
    
    Director
    
    13,872Shiro Hori
    
    Director
    
    11,813Tadashi Asanuma
    
    Director
    
    6,500Hisayoshi Niwa
    
    Director
    
    7,700Zenji Mashiko
    
    Director
    
    7,500Toshio Hyuga
    
    Director
    
    9,800Tetsuhisa Kaneko
    
    Director
    
    6,300Shinichiro Tomita
    
    Director
    
    3,700Toshihito Yamazoe
    
    Standing Statutory Auditor
    
    5,000Michiyuki Kondo
    
    Outside Statutory Auditor
    
    300
 42




---



##### Table of Contents



Item 7.
Major Shareholders and Related Party Transactions
 
 A. Major shareholders
    Name of Beneficial Owner
    
    Number of Shares
    
    PercentageMaster Trust Bank of Japan, Ltd. 
(Trust account)
    
    
    8,867,600
    
    
    
    6.43%Japan Trustee Services Bank, Ltd. 
(Trust account)
    
    
    8,538,600
    
    
    
    6.19%
  Shares Owned

    
    
    
    
    
    Number of

    
    Shares OwnedDate of

    
    Prior to

    
    
    
    
    
    Shares

    
    After theName of Shareholder
    
    Transaction

    
    Transaction

    
    Percentage

    
    Changed

    
    Transaction

    
    PercentageMitsubishi UFJ Financial Group
    
    April 30, 2006
    
    
    9,022,123
    
    
    
    6.10
    %
    
    
    1,556,200
    
    
    
    10,578,323
    
    
    
    7.35
    %Barclays Global Investors, N.A.
    
    June 30, 2006
    
    
    9,029,552
    
    
    
    6.27
    %
    
    
    (905,026
    )
    
    
    8,124,526
    
    
    
    5.64
    %Mitsubishi UFJ Financial Group
    
    July 31, 2006
    
    
    10,578,323
    
    
    
    7.35
    %
    
    
    (625,100
    )
    
    
    9,953,223
    
    
    
    6.91
    %Barclays Global Investors, N.A.
    
    September 30, 2006
    
    
    8,124,526
    
    
    
    5.64
    %
    
    
    (2,089,460
    )
    
    
    6,035,066
    
    
    
    4.19
    %Nomura Asset Management
    
    January 15, 2007
    
    
    
    
    
    
    
    
    
    
    7,528,400
    
    
    
    7,528,400
    
    
    
    5.23
    %Mitsubishi UFJ Financial Group
    
    January 22, 2007
    
    
    9,953,223
    
    
    
    6.91
    %
    
    
    (1,408,800
    )
    
    
    8,544,423
    
    
    
    5.93
    %Mitsubishi UFJ Financial Group
    
    April 14, 2008
    
    
    8,544,423
    
    
    
    5.93
    %
    
    
    1,478,577
    
    
    
    10,023,000
    
    
    
    6.97
    %Mitsubishi UFJ Financial Group
    
    June 30, 2008
    
    
    10,023,000
    
    
    
    6.97
    %
    
    
    1,462,523
    
    
    
    11,485,523
    
    
    
    7.98
    %Mitsubishi UFJ Financial Group
    
    October 27,2008
    
    
    11,485,523
    
    
    
    7.98
    %
    
    
    (1,446,434
    )
    
    
    10,039,089
    
    
    
    6.97
    %Nomura Asset Management
    
    March 13,2009
    
    
    7,528,400
    
    
    
    5.23
    %
    
    
    (1,677,600
    )
    
    
    5,850,800
    
    
    
    4.18
    %
     43




---



##### Table of Contents



B. Related party transactions
      
 C. Interests of experts and counsel
  44




---



##### Table of Contents



Item 8. Financial Information
 
 A. Consolidated statements and other financial information
 1-3. Consolidated Financial Statements
    7. Legal or arbitration proceedings
   8. Dividend Policy
    In Japanese yen
    
    
    In U.S. dollarsFiscal year ended March 31
    
    Interim
    
    
    Year-end
    
    
    Interim
    
    
    Year-end2005
    
    
    11
    
    
    
    36
    
    
    
    0.10
    
    
    
    0.342006
    
    
    19
    
    
    
    38
    
    
    
    0.16
    
    
    
    0.322007
    
    
    19
    
    
    
    55
    
    
    
    0.16
    
    
    
    0.472008
    
    
    30
    
    
    
    67
    
    
    
    0.30
    
    
    
    0.672009
    
    
    30
    
    
    
    50
    
    
    
    0.31
    
    
    0.53
  
 B. Significant changes
  45




---



##### Table of Contents



Item 9. The Offer and Listing
 
 A. Offer and listing details
    Tokyo Stock Exchange Price
    
    
    NASDAQ PricePer Share of Common Stock
    
    
    Per American Depositary Share(Japanese yen)
    
    
    (U.S. dollars)Fiscal year ended March 31,
    
    High
    
    
    Low
    
    
    High
    
    
    Low2005
    
    
    2,115
    
    
    
    1,315
    
    
    
    20.27
    
    
    
    12.002006
    
    
    3,820
    
    
    
    1,755
    
    
    
    34.19
    
    
    
    16.152007
    
    
    4,630
    
    
    
    2,995
    
    
    
    39.00
    
    
    
    26.032008
    
    
    5,920
    
    
    
    2,885
    
    
    
    50.60
    
    
    
    27.282009
    
    
    4,780
    
    
    
    1,160
    
    
    
    45.76
    
    
    
    12.72QuarterlyFiscal year 20081 stquarter ended June 30, 2007
    
    
    5,650
    
    
    
    4,210
    
    
    
    45.30
    
    
    
    35.642 ndquarter ended September 30, 2007
    
    
    5,820
    
    
    
    4,030
    
    
    
    47.44
    
    
    
    35.203 rdquarter ended December 31, 2007
    
    
    5,920
    
    
    
    4,470
    
    
    
    50.60
    
    
    
    39.864 thquarter ended March 31, 2008
    
    
    4,510
    
    
    
    2,885
    
    
    
    42.13
    
    
    
    27.28Fiscal year 20091 stquarter ended June 30, 2008
    
    
    4,780
    
    
    
    3,000
    
    
    
    45.76
    
    
    
    29.942 ndquarter ended September 30, 2008
    
    
    4,380
    
    
    
    1,965
    
    
    
    39.30
    
    
    
    19.073 rdquarter ended December 31, 2008
    
    
    2,215
    
    
    
    1,160
    
    
    
    22.64
    
    
    
    12.724 thquarter ended March 31, 2009
    
    
    2,490
    
    
    
    1,580
    
    
    
    25.09
    
    
    
    17.80MonthlyJanuary 2009
    
    
    2,340
    
    
    
    1,580
    
    
    
    23.60
    
    
    
    17.80February 2009
    
    
    2,220
    
    
    
    1,750
    
    
    
    24.35
    
    
    
    19.24March 2009
    
    
    2,490
    
    
    
    1,824
    
    
    
    25.09
    
    
    
    18.55April 2009
    
    
    2,500
    
    
    
    2,125
    
    
    
    24.79
    
    
    
    21.68May 2009
    
    
    2,450
    
    
    
    2,080
    
    
    
    24.90
    
    
    
    21.68June 2009
    
    2,535
    
    
    2,095
    
    
    25.58
    
    
    22.05
 
 B. Plan of distribution
  
 C. Markets
  
 D. Selling shareholders
  
 E. Dilution
  
 F. Expenses of the issue
  46




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##### Table of Contents



Item 10. Additional Information
 
 A. Share capital
  
 B. Memorandum and articles of association
 Organization
 (kabushiki kaisha) (kaishaho) (shogyo tokibo)
 Objects and purposes
  
    
    Manufacture and sale of machine tools including electric power tools, pneumatic tools,
engine-powered tools, etc., and wood-working tools;
    
    Manufacture and sale of electric machinery and equipment, gardening machinery and various
other machinery and equipment;
    
    Manufacture and sale of interior furnishings and household goods and their installation work;
    
    Purchase, sale, lease and management of real estate;
    
    Operation of sporting and recreational facilities;
    
    Casualty insurance agency and business relating to offering of life insurance;
    
    Tourist business under the Travel Agency Law;
    
    Acquisition, assignment and licensing of industrial property rights, copyright and other
intellectual property rights and provision of technical guidance;
    
    Investment in various kinds of business; and
    
    All other business incidental or relative to any of the preceding items.
 Directors
   
    
    the Directors or Statutory Auditors power to vote in connection with their compensation;
    
    the borrowing power exercisable by a Representative Director (or a Director who is given
power by a Representative Director to exercise such power);
    
    the Directors or Statutory Auditors retirement age; or
    
    requirement to hold any shares of capital stock of the Company.
  
    
    to acquire or dispose of material assets;
    
    to borrow a substantial amount of money;
    
    to employ or discharge from employment important employees, such as general managers;
    
    to establish, change or abolish material corporate organization such as a branch office;
    
    to determine material conditions concerning offering of corporate bonds; and
    
    to establish and maintain an internal control system.
  47




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##### Table of Contents



Common stock
 General
     Authorized capital
  
 Dividends from Surplus
 Dividends from Surplus  General
  (a)
    
    Articles of Incorporation of the Company so provide;(b)
    
    the normal term of office of the Directors is no longer than one year; and(c)
    
    its non-consolidated annual financial statements and certain documents
for the latest business year present fairly its assets and profit or
loss, as required by ordinances of the Ministry of Justice.
     48




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Restriction on dividends from Surplus
     A =
    
    the total amount of other capital surplus and other retained
earnings, each such amount being that appearing on the
non-consolidated balance sheet as of the end of the last business
yearB =
    
    (if the Company has disposed of its treasury stock after the end of
the last business year) the amount of the consideration for such
treasury stock received by the Company less the book value thereofC =
    
    (if the Company has reduced its stated capital after the end of the
last business year) the amount of such reduction less the portion
thereof that has been transferred to additional paid-in capital or
legal reserve (if any)D =
    
    (if the Company has reduced its additional paid-in capital or legal
reserve after the end of the last business year) the amount of such
reduction less the portion thereof that has been transferred to
stated capital (if any)E =
    
    (if the Company has cancelled its treasury stock after the end of
the last business year) the book value of such treasury stockF =
    
    (if the Company has distributed Surplus to its shareholders after
the end of the last business year) the total book value of the
Surplus so distributedG =
    
    certain other amounts set forth in ordinances of the Ministry of
Justice, including (if the Company has reduced Surplus and increased
its stated capital, additional paid-in capital or legal reserve
after the end of the last business year) the amount of such
reduction and (if the Company has distributed surplus to the
shareholders after the end of the last business year) the amount set
aside in additional paid-in capital or legal reserve (if any) as
required by ordinances of the Ministry of Justice
  (a)
    
    the book value of its treasury stock;(b)
    
    the amount of consideration for any of the treasury stock disposed of
by the Company after the end of the last business year; and(c)
    
    certain other amounts set forth in ordinances of the Ministry of
Justice, including (if the sum of one-half of goodwill and the
deferred assets exceeds the total of stated capital, additional
paid-in capital and legal reserve, each such amount being that
appearing on the non-consolidated balance sheet as of the end of the
last business year) all or certain part of such exceeding amount as
calculated in accordance with the ordinances of the Ministry of
Justice.
 renketsu haito kisei
tekiyo kaisha
  49




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Stock splits
   Consolidation of shares
 Voting Rights
 General meeting of shareholders
     50




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##### Table of Contents



Voting rights
 Unit share system
   (1)
    
    acquisition of its own shares from specific persons other than its subsidiaries;(2)
    
    consolidation of shares;(3)
    
    any offering of new shares or existing shares held by the Company as treasury stock at a specially
favorable price (or any offering of stock acquisition rights, or bonds with stock acquisition rights at
specially favorable conditions) to any persons other than shareholders;(4)
    
    the removal of a Statutory Auditor;(5)
    
    the exemption of liability of a Director, Statutory Auditor or Accounting Auditor with certain exceptions;(6)
    
    a reduction of stated capital with certain exceptions in which a special shareholders resolution is not
required;(7)
    
    a distribution of surplus in kind other than dividends which meets certain requirements;(8)
    
    dissolution, merger, consolidation or corporate split with certain exceptions in which a shareholders
resolution is not required;(9)
    
    the transfer of the whole or a material part of the business with certain exceptions in which a
shareholders resolution is not required;(10)
    
    the taking over of the whole of the business of any other corporation with certain exceptions in which a
shareholders resolution is not required; or(11)
    
    share exchange or share transfer for the purpose of establishing 100 percent parent-subsidiary
relationships with certain exceptions in which a shareholders resolution is not required.
 Issue of additional shares and pre-emptive rights
 Voting rights
 Voting rights
  Liquidation rights
  51




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Record date
   Acquisition by the Company of Common Stock
   Issue of additional shares and pre-emptive rights
 Unit share system
       52




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##### Table of Contents



Sale by the Company of shares held by shareholders whose location is unknown
   Reporting of substantial shareholdings
   
 53




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##### Table of Contents



C. Material contracts
  
 D. Exchange controls
   
    
    individuals who do not reside in Japan; and
    
    corporations whose principal offices are located outside Japan.
   
    
    individuals who are exchange non-residents;
    
    corporations that are organized under the laws of foreign countries
and areas or whose principal offices are located outside of Japan;
    
    corporations of which 50 percent or more of their shares are held by
individuals who are exchange non-residents and/or corporations (1)
that are organized under the laws of foreign countries and areas or
(2) whose principal offices are located outside of Japan; or
    
    corporations a majority of whose officers, or officers having the
power of representation, are individuals who are exchange
non-residents.
    54




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E. Taxation
 The discussion below is intended for general information only and does not constitute a complete
analysis of all tax consequences relating to the ownership of shares of Common Stock or ADSs.
Prospective purchasers of shares of Common Stock or ADSs should consult their own tax advisors
concerning the tax consequences of their particular situations.
   1.
    
    An individual citizen or resident of the United States;2.
    
    a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes)
organized in or under the laws of the United States, any state thereof, or the District of
Columbia;3.
    
    An estate the income of which is subject to U.S. federal income tax without regard to its source; or4.
    
    a trust that is subject to the primary supervision of a U.S. court and the control of one or more
U.S. persons, or that has a valid election in effect under applicable Treasury regulations to be
treated as a U.S. person.
  1.
    
    is a resident of the United States for purposes of the Treaty;2.
    
    does not maintain a permanent establishment in Japan (a) with which
 shares of Common Stock or ADSs are effectively connected and through
which the U.S. Holder carries on or has carried on business and (b) of
which shares of Common Stock or ADSs form part of the business
property; and3.
    
    is eligible for benefits under the Treaty, with respect to income and
gain derived in connection with shares of Common Stock or ADSs.
   Japanese Taxation
   55




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56




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##### Table of Contents



U.S. Federal Income Taxation
 U.S. Holders
  Taxation of Dividends
         
    
    has held shares of Common Stock or ADSs for less than a specified minimum period, or
    
    is obligated to make payments related to our dividends,
  
 57




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##### Table of Contents



Taxation of Capital Gains and Losses
   Passive Foreign Investment Companies
   
  Non-U.S. Holders
    (i)
    
    the gain is effectively connected with a trade or business conducted
by the Non-U.S. Holder within the United States (and, if an
applicable tax treaty requires, is attributable to a U.S. permanent
establishment or fixed base of such Non-U.S. Holder), or(ii)
    
    the Non-U.S. Holder is an individual who was present in the United
States for 183 or more days in the taxable year of the disposition
and other conditions are met.
 58




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##### Table of Contents



Backup Withholding and Information Reporting
  
   
 F. Dividends and paying agents
  
 G. Statement by experts
  
 H. Documents on display
  
 I. Subsidiary information
  59




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##### Table of Contents



Item 11. Quantitative and Qualitative Disclosures about Market Risk
 Market Risk Exposure
  Equity and Debt Securities Price Risk
 
 Japanese yen (In millions)
    
    U.S. dollars (In thousands)2008
    
    2009
    
    2009Carrying
    
    
    
    
    
    Carrying
    
    
    
    
    
    CarryingAmount
    
    Fair Value
    
    Amount
    
    Fair Value
    
    Amount
    
    Fair ValueDue within one year
    
    ¥
    2,599
    
    
    ¥
    2,599
    
    
    ¥
    424
    
    
    ¥
    422
    
    
    $
    4,283
    
    
    $
    4,263Due after one year through five years
    
    
    2,677
    
    
    
    2,675
    
    
    
    1,947
    
    
    
    1,946
    
    
    
    19,667
    
    
    
    19,657Due after five years
    
    
    2,950
    
    
    
    2,881
    
    
    
    1,844
    
    
    
    1,794
    
    
    
    18,626
    
    
    
    18,120Indefinite periods
    
    
    40,735
    
    
    
    40,735
    
    
    
    25,347
    
    
    
    25,347
    
    
    
    256,030
    
    
    
    256,030Equity securities
    
    
    18,516
    
    
    
    18,516
    
    
    
    11,198
    
    
    
    11,198
    
    
    
    113,111
    
    
    
    113,111Total of marketable and investment
securities
    
    ¥
    67,477
    
    
    ¥
    67,406
    
    
    ¥
    40,760
    
    
    ¥
    40,707
    
    
    $
    411,717
    
    
    $
    411,181
 60




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##### Table of Contents



Foreign Exchange Risk
  Japanese yen (In millions, except average contractual rates)
    
    
    U.S. dollars (In thousands)2008
    
    
    2009
    
    
    2009Average
    
    
    
    
    
    
    
    
    
    
    AverageContract
    
    
    
    
    
    
    contractual
    
    
    Contract
    
    
    
    
    
    
    contractual
    
    
    Contractamounts
    
    
    Fair Value
    
    
    rates
    
    
    amounts
    
    
    Fair Value
    
    
    rates
    
    
    Amounts
    
    
    Fair ValueForeign currency
contracts;US$/Yen
    
    ¥
    4,614
    
    
    ¥
    155
    
    
    ¥
    103.32
    
    
    ¥
    9,324
    
    
    ¥
    (368
    )
    
    ¥
    94.31
    
    
    $
    94,181
    
    
    $
    (3,717
    )euro/Yen
    
    
    5,816
    
    
    
    (37
    )
    
    
    156.63
    
    
    
    5,495
    
    
    
    (397
    )
    
    
    121.04
    
    
    
    55,505
    
    
    
    (4,010
    )A$/Yen
    
    
    418
    
    
    
    7
    
    
    
    92.83
    
    
    
    294
    
    
    
    (20
    )
    
    
    62.61
    
    
    
    2,969
    
    
    
    (202
    )STG £/Yen
    
    
    228
    
    
    
    10
    
    
    
    206.88
    
    
    
    105
    
    
    
    (4
    )
    
    
    135.39
    
    
    
    1,061
    
    
    
    (40
    )SFR/Yen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    332
    
    
    
    (10
    )
    
    
    83.02
    
    
    
    3,353
    
    
    
    (101
    )CAN$/Yen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155
    
    
    
    (1
    )
    
    
    77.66
    
    
    
    1,566
    
    
    
    (10
    )euro/STG £
    
    
    3,804
    
    
    
    (108
    )
    
    
    
    
    
    
    1,888
    
    
    
    4
    
    
    
    
    
    
    
    19,071
    
    
    
    40US$/STG £
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    US$/euro
    
    
    1,288
    
    
    
    (36
    )
    
    
    
    
    
    
    1,380
    
    
    
    (44
    )
    
    
    
    
    
    
    13,940
    
    
    
    (445
    )STG £/euro
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    US$/A$
    
    
    450
    
    
    
    4
    
    
    
    
    
    
    
    136
    
    
    
    (1
    )
    
    
    
    
    
    
    1,374
    
    
    
    (10
    )Total
    
    ¥
    16,618
    
    
    ¥
    (5
    )
    
    
    
    
    
    ¥
    19,131
    
    
    ¥
    (841
    )
    
    
    
    
    
    $
    193,243
    
    
    $
    (8,495
    )Foreign currency swaps:US$/Yen
    
    ¥
    7,840
    
    
    ¥
    353
    
    
    ¥
    105.94
    
    
    ¥
    3,462
    
    
    ¥
    (104
    )
    
    ¥
    96.16
    
    
    $
    34,970
    
    
    $
    (1,051
    )euro/Yen
    
    
    1,860
    
    
    
    32
    
    
    
    161.73
    
    
    
    2,073
    
    
    
    (217
    )
    
    
    118.48
    
    
    
    20,939
    
    
    
    ( 2,191
    )SFR/Yen
    
    
    201
    
    
    
    
    
    
    
    100.35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    ¥
    9,901
    
    
    ¥
    385
    
    
    
    
    
    
    ¥
    5,535
    
    
    ¥
    (321
    )
    
    
    
    
    
    $
    55,909
    
    
    $
    (3,242
    )Options purchased to
sell foreign
currencies:US$/Yen
    
    ¥
    202
    
    
    ¥
    7
    
    
    ¥
    101.23
    
    
    ¥
    188
    
    
    ¥
    4
    
    
    ¥
    93.91
    
    
    $
    1,899
    
    
    $
    40Total
    
    ¥
    202
    
    
    ¥
    7
    
    
    
    
    
    
    ¥
    188
    
    
    ¥
    4
    
    
    
    
    
    
    $
    1,899
    
    
    $
    40Options written to buy
foreign currencies:US$/Yen
    
    ¥
    208
    
    
    ¥
    (2
    )
    
    ¥
    103.99
    
    
    ¥
    190
    
    
    ¥
    (11
    )
    
    ¥
    94.94
    
    
    $
    1,919
    
    
    $
    (111
    )Total
    
    ¥
    208
    
    
    ¥
    (2
    )
    
    
    
    
    
    ¥
    190
    
    
    ¥
    (11
    )
    
    
    
    
    
    $
    1,919
    
    
    $
    (111
    )
 61




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##### Table of Contents



Item 12. Description of Securities Other than Equity Securities
  
 PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
 
 A. Disclosure controls and procedures
   
 B. Managements annual report on internal control over financial reporting
  (1)
    
    pertain to the maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Company;(2)
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and(3)
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect on
the financial statements.
  Internal Control-Integrated Framework
   62




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##### Table of Contents



C. Attestation report of the registered public accounting firm
  
 D. Changes in internal control over financial reporting
  63




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 
    
   
 64




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##### Table of Contents



Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
 www.makita.co.jp/global/company/governance01.html
 
 Item 16C. Principal Accountant Fees and Services
   Fiscal year /Japanese yen (millions)FY 2008
    
    

FY 2009Audit Fees (1)
    
    ¥
    836
    
    
    ¥
    746
    (5)Audit- related Fees (2)
    
    
    5
    
    
    
    3Tax Fees (3)
    
    
    80
    
    
    
    139All Other
Fees (4)
    
    
    10

    
    
    
    Total
    
    ¥
    931
    
    
    ¥
    888
 (1)
    
    Audit Fees consist of fees billed for the professional services rendered by the Independent Registered
Public Accounting Firm for the audit of Makitas annual or interim financial statements and services
that are normally provided by the Independent Registered Public Accounting Firm in connection with
statutory and regulatory filings or engagement.(2)
    
    Audit-related Fees consist of fees billed for assurance and related services by the Independent
Registered Public Accounting Firm that are reasonably related to employee benefit plan audits, and
consultation concerning financial accounting and reporting standards.(3)
    
    Tax Fees include fees billed for the professional services rendered by the Independent Registered
Public Accounting Firm for tax compliance and transfer pricing documentation.(4)
    
    All Other Fees comprise fees for all other services not included in any of other categories noted above.(5)
    
    Audit Fees in FY 2009 are projected. 65




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##### Table of Contents



Item 16D. Exemptions from the Listing Standards for Audit Committees
  66




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Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Total Number of
    
    
    Average Price PaidShares Purchased
    
    
    per SharePeriod
    
    (Shares)
    
    
    (Japanese yen)April, 2008
    
    
    325
    
    
    
    3,215May, 2008
    
    
    3,000,464
    
    
    
    3,974June, 2008
    
    
    798
    
    
    
    4,277July, 2008
    
    
    3,975
    
    
    
    3,884August, 2008
    
    
    2,888
    
    
    
    3,320September, 2008
    
    
    1,516
    
    
    
    2,639October, 2008
    
    
    686
    
    
    
    1,821November, 2008
    
    
    3,000,536
    
    
    
    1,896December, 2008
    
    
    2,189
    
    
    
    1,851January, 2009
    
    
    197
    
    
    
    1,952February, 2009
    
    
    85
    
    
    
    1,861March, 2009
    
    
    1,279
    
    
    
    2,008Total Number of Shares Purchased and Average Price Paid per Share
    
    
    6,014,938
    
    
    
    2,935
 Issue to be stated
  
 Item 16G. Corporate Governance
 1.
    
    Independent Directors:The Market Rule 4350(c)(1) by the National Association of Securities
Dealers Automated Quotations (the NASDAQ) requires a majority of the Companys board of
directors to be comprised of independent directors, and 4350(c)(2) requires periodical
executive sessions held by these independent directors.Unlike the NASDAQ rules on corporate governance (the NASDAQ Rules), the Companies Act of Japan
and related legislation (collectively, the Japanese Company Law) sets forth the legal concept
of Outside directors. Under the Japanese Company Law, an outside director is defined as a
director (i) who is not a director of the company or any of its subsidiaries engaged in the
business operations of the company or such subsidiary, as the case may be, or an executive
officer or a company manager or other employee of the company or any of its subsidiaries, and
(ii) who has never been a director of the company or any of its subsidiaries engaged in the
business operations of the company or such subsidiary, as the case may be, or an executive
officer or a company manager or other employee of the company or any of its subsidiaries. Under
Japanese law, a directors status as an outside director is unaffected by the directors
compensation, his or her affiliation with business partners, or the boards affirmative
determination of independence. On the other hand, under Japanese law, a director who has had a
career as a director responsible for the execution of business operations, executive officer, or
other employee of the company or its subsidiaries is by definition not an outside director.Further, the Japanese Company Law does not require Japanese companies with boards of statutory
auditors such as the Company to have any independent directors on its board of directors.
Although it is not required under the Japanese Company Law, the Company currently has an
outside director.
 67




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##### Table of Contents



2.
    
    Compensation of Officers:NASDAQ Rule 4350(c)(3) requires that compensation of the chief
executive officer or all other executive officers of the company must be determined, or
recommended to the board for determination, either by (i) a majority of the independent
directors, or (ii) a compensation committee comprised solely of independent directors.Under the Japanese Company Law, in the case of a company which has elected to structure its
corporate governance system as a company with statutory auditors like the Company, there is no
statutory position exactly the same as the chief executive officer or other executive officers.
Under the Japanese Company Law, the most similar executive position of the chief executive
officer is a representative director, who is authorized to represent the company by virtue of
law. Under the Japanese Company Law and the Companys Articles of Incorporation, the aggregate
compensation of directors including representative directors must be approved by the Companys
shareholders at a general meeting of shareholders. If an executive officer concurrently assumes
office as director, compensation of such executive officer is subject to the shareholders
approval as mentioned above.3.
    
    Nomination Committee and Nomination Committee Charter:NASDAQ Rule 4350(c)(4)(A) requires
that director nominees must either be selected, or recommended for boards selection, either
by (i) a majority of the independent directors, or (ii) a nomination committee comprised
solely of independent directors, and NASDAQ Rule 4350(c)(4)(B) requires that the Company must
certify that it has adopted a formal written charter or board resolution, addressing the
nominations process and required matters.However, under the Japanese Company Law, a company which has elected to structure its corporate
governance system as a company with statutory auditors like the Company, there are no such
requirements or any other similar requirements in the nomination of directors. Consistent with
the Japanese Company Law and generally accepted business practices in Japan, directors are
elected by shareholders at a general meeting of shareholders upon nomination by the then board of
directors.4.
    
    Audit Committee and Audit Committee Charter:NASDAQ Rule 4350(d)(2)(A) requires the Company
to have, and certify that it has and will continue to have, an audit committee of at least
three members, each of whom must (i) be independent, (ii) not have participated in the
preparation of the financial statements of the company or any current subsidiary of the
company at any time during the past three years and (iii) be able to read and understand
fundamental financial statements. NASDAQ Rule 4350(d)(1) also requires the Company to adopt a
formal written committee charter. In addition, at least one member of an audit committee
needs to have a professional background in finance or accounting.In compliance with the Japanese Company Law, the Company has elected to structure its corporate
governance system as a company with statutory auditors. The statutory auditors constitute the
Companys board of statutory auditors which has a formal written charter. Accordingly, the
Company is not required to have and does not have an audit committee. The Company is relying
on paragraph (c)(3) of Rule 10A-3 of the Securities Exchange Act of 1934, as amended, which
provides a general exemption from the audit committee requirements to a foreign private issuer
with a board of statutory auditors, subject to certain requirements which continue to be
applicable under Rule 10A-3. Generally for purposes of complying with NASDAQ Rules, the Company
has interpreted the term audit committee appearing within NASDAQ Rules to mean the Companys
board of statutory auditors, as appropriate.Under the Japanese Company Law, statutory auditors are not required to be certified public
accountants. Statutory auditors have the statutory duty to examine the Companys consolidated
and non-consolidated financial statements and the business reports which are made available by
the board of directors for reporting or approval purposes at the general meetings of shareholders
and, based on such examination, to report their opinions to shareholders. They also have the
statutory duty to supervise the administration by the board members of the Companys affairs.
Statutory auditors are obligated to attend the meetings of the board of directors but are not
entitled to vote.Under the Japanese Company Law, the board of statutory auditors has a statutory duty to prepare
and submit its audit report to the board of directors each year. A statutory auditor may note an
opinion in the audit report if his or her opinion differs from the opinion expressed in the audit
report. The board of statutory auditors is empowered to establish audit principles, the method
of examination by statutory auditors of a companys affairs
and financial position, and other matters concerning the performance of the duties of statutory
auditors. Under the Japanese Company Law, boards of statutory auditors consist solely of
statutory auditors and statutory auditors may not be directors of the company. Accordingly, no
member of the board of statutory auditors is an outside director.Unlike the NASDAQ Rules, under the Japanese Company Law, at least half of the statutory
auditors of the Company must be persons who have not been a director, accounting counselor,
executive officer, company manager, or any other employee of the Company or any of its
subsidiaries at any time prior to their election as statutory auditors. Statutory auditors may
not at the same time be directors, company managers, or any other employees of the Company or any
of its subsidiaries, or accounting counselors or executive officers of any of the Companys
subsidiaries.
 68




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##### Table of Contents



5.
    
    Quorum:NASDAQ Rule 4350(f) requires each issuer to provide for a quorum as specified in its
by-laws for any meeting of the holders of common stock, which shall in no case be less than 33
1/3 percent of the outstanding shares of a companys common voting stock.Consistent with the Japanese Company Law and generally accepted business practices in Japan,
the Companys Articles of Incorporation provide that except as otherwise provided by law or by
the Articles of Incorporation, a resolution can be adopted at a general meeting of shareholders
by a majority of votes of all the shareholders represented at the meeting with no quorum
requirement.The Japanese Company Law and the Companys Articles of Incorporation provide, however, that
the quorum for the election of directors and statutory auditors shall not be less than
one-third of the total number of voting rights of all the shareholders. The Japanese Company Law
and the Companys Articles of Incorporation also provide that in order to amend the Companys
Articles of Incorporation and in certain other significant transactions specified in the Japanese
Company Law, the quorum shall be one-third of the total number of voting rights of all the
shareholders and the approval by at least two-thirds of the voting rights of all the shareholders
represented at the meeting is required.6.
    
    Conflicts of Interest:NASDAQ Rule 4350(h) requires that each issuer conduct an appropriate
review of all related party transactions for potential conflict of interest situations on an
ongoing basis and that all such transactions be approved by the companys audit committee or
another independent body of the board of directors.
Unlike the NASDAQ Rules, the Japanese Company Law requires the full board of directors to
approve (1) all transactions that a director, on his or her own behalf or on behalf of a third
party, enters into with the Company, (2) guarantees by the Company of obligations of a director
and (3) all transactions with any person other than directors with respect to which there is a
conflict of interest between the Company and any director. In addition, under the Japanese
Company Law, no director may vote on a resolution at a meeting of the board of directors if that
director has a special interest in that resolution, including, but not limited to, resolutions
with respect to transactions with the Company referred to in the immediately preceding sentence.
Under the Japanese Company Law, the quorum for meetings of the board of directors of the Company
is a majority of all directors then in office and the approval of a majority of all directors
present at the meeting is required. The number of directors who are not entitled to vote at a
meeting by having a special interest in the subject resolution shall be excluded from the number
of directors then in office and present at the meeting for such purpose. The Japanese Company
Law does not require related party transactions other than those with directors referred to above
to be approved by the board of directors or any independent body at or outside of the Company.7.
    
    Shareholder Approval:NASDAQ Rule 4350(i) requires each issuer to obtain shareholder approval
prior to the issuance of securities under certain circumstances.However, under the Japanese Company Law, regardless of the purpose of the issuance, shareholder
approval is required only in the cases of issuance of shares at a specially favorable price or of
stock acquisition rights or
bonds with stock acquisition rights under specially favorable price or specially favorable
exercise conditions, except where such shares, stock acquisition rights or bonds with stock
acquisition rights are granted to all of its shareholders on a pro rata basis. Such shareholder
approval must be obtained by a special resolution of a general meeting of shareholders, where the
quorum is one-third of the total number of voting rights and the approval of at least two-thirds of
the voting rights represented at the meeting is required. Accordingly, so far as the issue price
or exercise conditions are not specially favorable, shareholder approval is not required under the
Japanese Company Law for the matters specified in NASDAQ Rule 4350(i). The Companys practices
taken in connection with such matters are consistent with the Japanese Company Law.8.
    
    Solicitation of Proxies:NASDAQ Rule 4350(i) requires each issuer to solicit proxies and provide
proxy statement for all meetings of shareholders and provide copies of such proxy solicitation to
NASDAQ.However, under the Japanese Company Law, the Company is required to send ballots to all
shareholders meeting. Although the Company may choose to solicit proxies from all
shareholders with voting rights instead of voting by ballot, the Company, in common with the
majority of public companies in Japan, provides its shareholders with the opportunity to vote
directly by ballot.
 69




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##### Table of Contents



PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  
 Item 19. Exhibits
 1.1
    
    Articles of Incorporation, as amended and effective as of June 25, 2009 (English translation).1.2
    
    Regulations of Board of Directors, as amended and effective as of June 25, 2009 (English translation).1.3
    
    The Share Handling Regulations, as amended and effective as of January 5, 2009 (English translation)1.4
    
    Regulations of Board of Statutory Auditors effective as of July 7, 2006 (English translation),
incorporated by reference to Makitas Annual Report on Form 20-F (Commission file no. 0-12602) filed
on June 7, 2006.12.1
    
    302 Certification of Chief Executive Officer, President and Representative Director12.2
    
    302 Certification of Chief Financial Officer, Director and General Manager of Administration
Headquarters13.1
    
    906 Certifications of Chief Executive Officer and Chief Financial Officer
 70




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##### Table of Contents



SIGNATURES
  MAKITA CORPORATIONBy:
    
    /s/ Masahiko GotoName:
    
    Masahiko GotoTitle:
    
    President, Representative Director and Chief Executive Officer
  71




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##### 



Makita Corporation and Subsidiaries
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of March 31, 2008 and 2009
    
    F-3 to F-4Consolidated Statements of Income for the years ended March 31, 2007, 2008 and 2009
    
    
    F-5Consolidated Statements of Shareholders Equity for the years ended March 31, 2007, 2008 and 2009
    
    
    F-6Consolidated Statements of Cash Flows for the years ended March 31, 2007, 2008 and 2009
    
    F-7 to F-8Notes to Consolidated Financial Statements
    
    F-8 to F-40(Financial Statements of 50% or less owned persons accounted for by the equity method have been omitted
because they are not applicable.)Schedules:II. Valuation and Qualifying Accounts and Reserves
for the years ended March 31, 2007, 2008 and 2009
    
    
    F-41
  
 F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
         F-2




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##### Table of Contents



MAKITA CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 MARCH 31, 2008 AND 2009
 A S S E T S
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009CURRENT ASSETS:Cash and cash equivalents
    
    ¥
    46,306
    
    
    ¥
    34,215
    
    
    $
    345,606Time deposits
    
    
    2,393
    
    
    
    2,623
    
    
    
    26,495Marketable securities
    
    
    49,443
    
    
    
    29,470
    
    
    
    297,677Trade receivables-Notes
    
    
    2,950
    
    
    
    2,611
    
    
    
    26,374Accounts
    
    
    60,234
    
    
    
    43,078
    
    
    
    435,131Less- Allowance for doubtful receivables
    
    
    (1,018
    )
    
    
    (1,129
    )
    
    
    (11,404
    )Inventories
    
    
    112,187
    
    
    
    111,002
    
    
    
    1,121,232Deferred income taxes
    
    
    6,478
    
    
    
    7,264
    
    
    
    73,374Prepaid expenses and other current assets
    
    
    11,382
    
    
    
    11,269
    
    
    
    113,828Total current assets
    
    
    290,355
    
    
    
    240,403
    
    
    
    2,428,313PROPERTY, PLANT AND EQUIPMENT, AT COST:Land
    
    
    18,370
    
    
    
    18,173
    
    
    
    183,566Buildings and improvements
    
    
    64,268
    
    
    
    65,223
    
    
    
    658,818Machinery and equipment
    
    
    75,651
    
    
    
    74,458
    
    
    
    752,101Construction in progress
    
    
    2,765
    
    
    
    4,516
    
    
    
    45,616161,054
    
    
    
    162,370
    
    
    
    1,640,101Less- Accumulated depreciation
    
    
    (91,996
    )
    
    
    (89,674
    )
    
    
    (905,798
    )Total net property, plant and equipment
    
    
    69,058
    
    
    
    72,696
    
    
    
    734,303INVESTMENTS AND OTHER ASSETS:Investment securities
    
    
    18,034
    
    
    
    11,290
    
    
    
    114,040Goodwill
    
    
    2,001
    
    
    
    1,987
    
    
    
    20,071Other intangible assets, net
    
    
    2,240
    
    
    
    2,280
    
    
    
    23,030Deferred income taxes
    
    
    1,826
    
    
    
    5,050
    
    
    
    51,010Other assets
    
    
    2,953
    
    
    
    2,938
    
    
    
    29,677Total investments and other assets
    
    
    27,054
    
    
    
    23,545
    
    
    
    237,828Total assets
    
    ¥
    386,467
    
    
    ¥
    336,644
    
    
    $
    3,400,444
 
 F-3




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##### Table of Contents



MAKITA CORPORATION AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 MARCH 31, 2008 AND 2009
 LIABILITIES AND SHAREHOLDERS EQUITY
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009CURRENT LIABILITIES:Short-term borrowings
    
    ¥
    1,724
    
    
    ¥
    239
    
    
    $
    2,414Trade notes and accounts payable
    
    
    23,372
    
    
    
    14,820
    
    
    
    149,697Other payables
    
    
    5,640
    
    
    
    4,397
    
    
    
    44,414Accrued expenses
    
    
    7,982
    
    
    
    5,642
    
    
    
    56,990Accrued payroll
    
    
    8,096
    
    
    
    7,361
    
    
    
    74,354Income taxes payable
    
    
    7,518
    
    
    
    2,772
    
    
    
    28,000Deferred income taxes
    
    
    58
    
    
    
    50
    
    
    
    505Other liabilities
    
    
    5,266
    
    
    
    5,536
    
    
    
    55,919Total current liabilities
    
    
    59,656
    
    
    
    40,817
    
    
    
    412,293LONG-TERM LIABILITIES:Long-term indebtedness
    
    
    908
    
    
    
    818
    
    
    
    8,263Accrued retirement and termination benefits
    
    
    3,716
    
    
    
    7,116
    
    
    
    71,879Deferred income taxes
    
    
    1,215
    
    
    
    548
    
    
    
    5,535Other liabilities
    
    
    1,958
    
    
    
    1,599
    
    
    
    16,151Total long-term liabilities
    
    
    7,797
    
    
    
    10,081
    
    
    
    101,828Total liabilities
    
    
    67,453
    
    
    
    50,898
    
    
    
    514,121MINORITY INTERESTS
    
    
    2,516
    
    
    
    2,261
    
    
    
    22,838COMMITMENTS AND CONTINGENT LIABILITIES (Note 15)
    
    
    
    
    
    
    
    
    
    
    SHAREHOLDERS EQUITY:Common stock,Authorized - 496,000,000 shares in 2008496,000,000 shares in 2009Issued and outstanding- 144,008,760 shares and 143,773,625
shares, respectively in 2008140,008,760 shares and 137,764,005
shares, respectively in 2009
    
    
    23,805
    
    
    
    23,805
    
    
    
    240,455Additional paid-in capital
    
    
    45,753
    
    
    
    45,420
    
    
    
    458,788Legal reserve
    
    
    5,669
    
    
    
    5,669
    
    
    
    57,263Retained earnings
    
    
    249,191
    
    
    
    257,487
    
    
    
    2,600,878Accumulated other comprehensive income (loss)
    
    
    (7,657
    )
    
    
    (42,461
    )
    
    
    (428,899
    )Treasury
stock, at cost: -  235,135 shares in 20082,244,755 shares in 2009
    
    
    (263
    )
    
    
    (6,435
    )
    
    
    (65,000
    )Total shareholders equity
    
    
    316,498
    
    
    
    283,485
    
    
    
    2,863,485Total liabilities and shareholders equity
    
    ¥
    386,467
    
    
    ¥
    336,644
    
    
    $
    3,400,444
 
 F-4




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##### Table of Contents



MAKITA CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 FOR THE YEARS ENDED MARCH 31, 2007, 2008 AND 2009
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009NET SALES
    
    ¥
    279,933
    
    
    ¥
    342,577
    
    
    ¥
    294,034
    
    
    $
    2,970,040Cost of sales
    
    
    163,909
    
    
    
    199,220
    
    
    
    170,894
    
    
    
    1,726,202GROSS PROFIT
    
    
    116,024
    
    
    
    143,357
    
    
    
    123,140
    
    
    
    1,243,838Selling, general and administrative expenses
    
    
    66,802
    
    
    
    76,198
    
    
    
    72,635
    
    
    
    733,687Losses (gains) on disposals or sales of property, plant and
equipment, net
    
    
    (249
    )
    
    
    128
    
    
    
    430
    
    
    
    4,343Impairment of long-lived assets
    
    
    1,295
    
    
    
    
    
    
    
    
    
    
    
    OPERATING INCOME
    
    
    48,176
    
    
    
    67,031
    
    
    
    50,075
    
    
    
    505,808OTHER INCOME (EXPENSES):Interest and dividend income
    
    
    1,364
    
    
    
    2,092
    
    
    
    1,562
    
    
    
    15,778Interest expenses
    
    
    (316
    )
    
    
    (269
    )
    
    
    (236
    )
    
    
    (2,384
    )Exchange gains (losses) on foreign currency transactions, net
    
    
    (418
    )
    
    
    (1,233
    )
    
    
    (3,408
    )
    
    
    (34,424
    )Realized gains (losses) on securities, net
    
    
    918
    
    
    
    (1,384
    )
    
    
    (3,548
    )
    
    
    (35,838
    )Other, net
    
    
    (401
    )
    
    
    (466
    )
    
    
    (428
    )
    
    
    (4,324
    )Total
    
    
    1,147
    
    
    
    (1,260
    )
    
    
    (6,058
    )
    
    
    (61,192
    )INCOME BEFORE INCOME TAXES
    
    
    49,323
    
    
    
    65,771
    
    
    
    44,017
    
    
    
    444,616PROVISION FOR INCOME TAXES:Current
    
    
    16,486
    
    
    
    19,148
    
    
    
    11,277
    
    
    
    113,909Deferred
    
    
    (4,134
    )
    
    
    580
    
    
    
    (546
    )
    
    
    (5,515
    )Total
    
    
    12,352
    
    
    
    19,728
    
    
    
    10,731
    
    
    
    108,394NET INCOME
    
    ¥
    36,971
    
    
    ¥
    46,043
    
    
    ¥
    33,286
    
    
    $
    336,222
 Yen
    
    
    U.S. dollars2007
    
    
    2008
    
    
    2009
    
    
    2009PER SHARE OF COMMON STOCK AND ADS:Earnings per share:Basic
    
    ¥
    257.3
    
    
    ¥
    320.3
    
    
    ¥
    236.9
    
    
    $
    2.39Cash dividends per share paid for the year
    
    
    57.0
    
    
    
    85.0
    
    
    
    97.0
    
    
    
    0.98
 
 F-5




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##### Table of Contents



MAKITA CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 FOR THE YEARS ENDED MARCH 31, 2007, 2008 AND 2009
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009COMMON STOCK:Beginning balance
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    $
    240,455Ending balance
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    ¥
    23,805
    
    
    $
    240,455ADDITIONAL PAID-IN CAPITAL:Beginning balance
    
    ¥
    45,437
    
    
    ¥
    45,437
    
    
    ¥
    45,753
    
    
    $
    462,152Retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    (329
    )
    
    
    (3,324
    )Disposal of treasury stock
    
    
    
    
    
    
    316
    
    
    
    (4
    )
    
    
    (40
    )Ending balance
    
    ¥
    45,437
    
    
    ¥
    45,753
    
    
    ¥
    45,420
    
    
    $
    458,788LEGAL RESERVE:Beginning balance
    
    ¥
    5,669
    
    
    ¥
    5,669
    
    
    ¥
    5,669
    
    
    $
    57,263Ending balance
    
    ¥
    5,669
    
    
    ¥
    5,669
    
    
    ¥
    5,669
    
    
    $
    57,263RETAINED EARNINGS:Beginning balance
    
    ¥
    186,586
    
    
    ¥
    215,365
    
    
    ¥
    249,191
    
    
    $
    2,517,081Net income
    
    
    36,971
    
    
    
    46,043
    
    
    
    33,286
    
    
    
    336,222Cash dividends
    
    
    (8,192
    )
    
    
    (12,217
    )
    
    
    (13,855
    )
    
    
    (139,950
    )Retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    (11,135
    )
    
    
    (112,475
    )Ending balance
    
    ¥
    215,365
    
    
    ¥
    249,191
    
    
    ¥
    257,487
    
    
    $
    2,600,878ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF
TAX:Beginning balance
    
    ¥
    5,345
    
    
    ¥
    12,697
    
    
    ¥
    (7,657
    )
    
    $
    (77,343
    )Other comprehensive income (loss) for the year
    
    
    7,515
    
    
    
    (20,354
    )
    
    
    (34,804
    )
    
    
    (351,556
    )Adjustment to initially apply SFAS No.158, net of tax
    
    
    (163
    )
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    ¥
    12,697
    
    
    ¥
    (7,657
    )
    
    ¥
    (42,461
    )
    
    $
    (428,899
    )TREASURY STOCK:Beginning balance
    
    ¥
    (258
    )
    
    ¥
    (298
    )
    
    ¥
    (263
    )
    
    $
    (2,657
    )Purchases
    
    
    (40
    )
    
    
    (51
    )
    
    
    (17,655
    )
    
    
    (178,333
    )Retirement
    
    
    
    
    
    
    
    
    
    
    11,464
    
    
    
    115,798Disposal
    
    
    
    
    
    
    86
    
    
    
    19
    
    
    
    192Ending balance
    
    ¥
    (298
    )
    
    ¥
    (263
    )
    
    ¥
    (6,435
    )
    
    $
    (65,000
    )DISCLOSURE OF COMPREHENSIVE INCOME (LOSS):Net income for the year
    
    ¥
    36,971
    
    
    ¥
    46,043
    
    
    ¥
    33,286
    
    
    $
    336,222Other comprehensive income (loss) for the year
    
    
    7,515
    
    
    
    (20,354
    )
    
    
    (34,804
    )
    
    
    (351,556
    )Total comprehensive income (loss) for the year
    
    ¥
    44,486
    
    
    ¥
    25,689
    
    
    ¥
    (1,518
    )
    
    $
    (15,334
    )
 
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MAKITA CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED MARCH 31, 2007, 2008 AND 2009
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    ¥
    36,971
    
    
    ¥
    46,043
    
    
    ¥
    33,286
    
    
    $
    336,222Adjustments to reconcile net income to net cash provided
by operating activities-Depreciation and amortization
    
    
    8,773
    
    
    
    8,871
    
    
    
    8,887
    
    
    
    89,768Deferred income tax expense (benefit)
    
    
    (4,134
    )
    
    
    580
    
    
    
    (546
    )
    
    
    (5,515
    )Realized losses (gains) on securities, net
    
    
    (918
    )
    
    
    1,384
    
    
    
    3,548
    
    
    
    35,838Losses (gains) on disposals or sales of property, plant
and equipment, net
    
    
    (249
    )
    
    
    128
    
    
    
    430
    
    
    
    4,343Impairment of long-lived assets
    
    
    1,295
    
    
    
    
    
    
    
    
    
    
    
    Changes in assets and liabilities-Trade receivables
    
    
    (6,398
    )
    
    
    (6,463
    )
    
    
    9,555
    
    
    
    96,515Inventories
    
    
    (7,979
    )
    
    
    (22,499
    )
    
    
    (17,314
    )
    
    
    (174,889
    )Trade notes and accounts payable and accrued expenses
    
    
    4,055
    
    
    
    6,896
    
    
    
    (10,005
    )
    
    
    (101,061
    )Income taxes payable
    
    
    2,198
    
    
    
    (3,357
    )
    
    
    (4,589
    )
    
    
    (46,354
    )Accrued retirement and termination benefits
    
    
    (1,702
    )
    
    
    (2,053
    )
    
    
    (2,297
    )
    
    
    (23,202
    )Other, net
    
    
    448
    
    
    
    (255
    )
    
    
    1,223
    
    
    
    12,355Net cash provided by operating activities
    
    
    32,360
    
    
    
    29,275
    
    
    
    22,178
    
    
    
    224,020CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (12,980
    )
    
    
    (15,036
    )
    
    
    (17,046
    )
    
    
    (172,182
    )Purchases of available-for-sale securities
    
    
    (26,798
    )
    
    
    (19,944
    )
    
    
    (375
    )
    
    
    (3,788
    )Purchases of held-to-maturity securities
    
    
    (499
    )
    
    
    (996
    )
    
    
    
    
    
    
    Proceeds from sales of available-for-sale securities
    
    
    6,635
    
    
    
    4,382
    
    
    
    15,310
    
    
    
    154,646Proceeds from maturities of available-for-sale securities
    
    
    10,476
    
    
    
    21,030
    
    
    
    2,500
    
    
    
    25,253Proceeds from maturities of held-to-maturity securities
    
    
    1,500
    
    
    
    1,300
    
    
    
    600
    
    
    
    6,061Proceeds from sales of property, plant and equipment
    
    
    739
    
    
    
    1,812
    
    
    
    135
    
    
    
    1,364Decrease (increase) in time deposits
    
    
    (5,035
    )
    
    
    4,231
    
    
    
    (560
    )
    
    
    (5,657
    )Cash paid for acquisition of business, net of cash acquired
    
    
    (649
    )
    
    
    (2,034
    )
    
    
    
    
    
    
    Other, net
    
    
    (665
    )
    
    
    747
    
    
    
    (332
    )
    
    
    (3,354
    )Net cash provided by (used in) investing activities
    
    
    (27,276
    )
    
    
    (4,508
    )
    
    
    232
    
    
    
    2,343CASH FLOWS FROM FINANCING ACTIVITIES:Increase (decrease) in short-term borrowings
    
    
    135
    
    
    
    (1,279
    )
    
    
    (1,345
    )
    
    
    (13,586
    )Purchases of treasury stock, net
    
    
    (40
    )
    
    
    (47
    )
    
    
    (17,640
    )
    
    
    (178,181
    )Cash dividends paid
    
    
    (8,192
    )
    
    
    (12,217
    )
    
    
    (13,855
    )
    
    
    (139,950
    )Other, net
    
    
    (210
    )
    
    
    (272
    )
    
    
    (339
    )
    
    
    (3,424
    )Net cash used in financing activities
    
    
    (8,307
    )
    
    
    (13,815
    )
    
    
    (33,179
    )
    
    
    (335,141
    )EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS
    
    ¥
    1,297
    
    
    ¥
    (1,774
    )
    
    ¥
    (1,322
    )
    
    $
    (13,353
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (1,926
    )
    
    
    9,178
    
    
    
    (12,091
    )
    
    
    (122,131
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    39,054
    
    
    
    37,128
    
    
    
    46,306
    
    
    
    467,737CASH AND CASH EQUIVALENTS, END OF YEAR
    
    ¥
    37,128
    
    
    ¥
    46,306
    
    
    ¥
    34,215
    
    
    $
    345,606SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:Cash paid during the year for-Interest
    
    ¥
    316
    
    
    ¥
    269
    
    
    ¥
    232
    
    
    $
    2,343Income taxes
    
    
    14,289
    
    
    
    22,505
    
    
    
    15,866
    
    
    
    160,263NON-CASH INVESTING AND FINANCING ACTIVITIES:Delivery of treasury stock in connection
with the share exchange
    
    ¥
    
    
    
    ¥
    397
    
    
    ¥
    
    
    
    $
    
 
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##### Table of Contents



MAKITA CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    DESCRIPTION OF BUSINESSMakita Corporation (the Company) is a recognized leader in
the manufacture and sale of power tools. The Company and its
subsidiaries main products include drills, rotary hammers,
demolition hammers, grinders and cordless impact drivers. The
Company and its subsidiaries (collectively Makita) also
manufacture and sell pneumatic tools and garden tools.Domestic sales in Japan are made by the Company, while
overseas sales are made almost entirely through sales
subsidiaries and distributors under the Makita or Maktec
brand name. 84.3% of consolidated net sales for the year
ended March 31, 2009, were generated from customers outside
Japan, with 46.6% from Europe, 14.4% from North America and
7.5% from Asia and 15.8% from other areas.Makitas manufacturing and assembly operations are conducted
primarily at three plants in Japan and eight plants overseas,
located in the United States, Germany, the United Kingdom,
Brazil (two plants), China (two plants) and Romania.2.
    
    BASIS OF PRESENTING FINANCIAL STATEMENTSThe books of the Company and its domestic subsidiaries are
maintained in conformity with Japanese accounting principles,
while foreign subsidiaries maintain their books in conformity
with the standards of their countries of domicile.The accompanying consolidated financial statements reflect
all necessary adjustments, not recorded in the Companys and
its subsidiaries books, to present them in conformity with
U.S. generally accepted accounting principles (U.S. GAAP).3.
    
    SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
 (a)
    
    Principles of ConsolidationThe accompanying consolidated
financial statements include the
accounts of the Company, all of
its majority owned subsidiaries
and those variable interest
entities where Makita is the
primary beneficiary under
Financial Accounting Standards
Board (FASB) Interpretation
No. 46 (revised December 2003)
(FIN 46R), Consolidation of
Variable Interest Entities. All
significant inter-company
balances and transactions have
been eliminated in
consolidation. Makita did not
have any consolidated variable
interest entities as set out in
FIN 46R for any of the periods
presented herein.(b)
    
    Foreign Currency TranslationUnder the provisions of
Statement of Financial
Accounting Standards (SFAS)
No. 52, Foreign Currency
Translation, overseas
subsidiaries assets and
liabilities denominated in their
local foreign currencies are
translated at the exchange rate
in effect at each fiscal
year-end and income and expenses
are translated at the average
rates of exchange prevailing
during each fiscal year. The
local currencies of the overseas
subsidiaries are regarded as
their functional currencies. The
resulting currency translation
adjustments are included in
accumulated other comprehensive
income (loss) in shareholders
equity.Gains and losses resulting from all foreign currency transactions, including foreign exchange
contracts, and translation of receivables and payables denominated in foreign currencies are
included in other income (expenses).(c)
    
    Cash and Cash EquivalentsCash and cash equivalents consist of cash on hand and time deposits
with original maturities of three months or less.
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(d)
    
    Marketable and Investment SecuritiesMakita accounts for marketable and investment securities in accordance
with SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, which requires all investments in debt and
marketable equity securities to be classified as either trading,
available-for-sale securities or held-to-maturity securities. Makita
classifies investments in debt and marketable equity securities as
available-for-sale or held-to-maturity securities. Makita does not
hold any marketable and investment securities that are bought and held
primarily for the purpose of sale in the near term.Except for non-marketable equity securities, available-for-sale
securities are reported at fair value, and unrealized gains or losses
are recorded as a separate component of accumulated other
comprehensive income, net of applicable income taxes. Non-marketable
equity securities are carried at cost and reviewed periodically for
impairment. Held-to-maturity securities are reported at amortized
cost, adjusted for the amortization or accretion of premiums or
discounts.A decline in fair value of any available-for-sale or held-to-maturity
security below the carrying amount that is deemed to be
other-than-temporary results in a write-down of the carrying amount to
the fair value as a new cost basis and the amount of the write-down is
included in earnings.Available-for-sale securities are periodically reviewed for
other-than-temporary declines on criteria that include the length and
magnitude of decline, the financial condition and prospects of the
issuer, Makitas intent and ability to retain the investment for a
period of time to allow for recovery in market value and other
relevant factors.Held-to-maturity securities are periodically evaluated for possible
impairment by taking into consideration the financial condition,
business prospects and credit worthiness of the issuer. Impairment is
measured based on the amount by which the carrying amount of the
investment exceeds its fair value. Fair value is determined based on
quoted market prices or other valuation techniques as appropriate.Makita classifies marketable securities, which are available for
current operations, in current assets. Other investments are
classified as investment securities as a part of non-current
investments and other assets in the consolidated balance sheets.The cost of a security sold or the amount reclassified out of
accumulated other comprehensive income into earnings is determined by
the average cost method.(e)
    
    Allowance for Doubtful ReceivablesAllowance for doubtful receivables represents the Makitas best estimate of the
amount of probable credit losses in its existing receivables. The allowance is
determined based on, but is not limited to, historical collection experience adjusted
for the effects of the current economic environment, assessment of inherent risks,
aging and financial performance. Account balances are charged off against the
allowance after all means of collection have been exhausted and the potentiality for
recovery is considered remote.(f)
    
    InventoriesInventory costs include raw materials, labor and manufacturing overheads. Inventories
are valued at the lower of cost or market price, with cost determined principally
based on the average cost method. Makita estimates the obsolescence of inventory
based on the difference between the cost of inventory and its estimated market value
reflecting certain assumptions about anticipated future demand. The carrying value of
inventory is then reduced to account for such obsolescence. Once inventory items are
written-down or written-off, such items are not written-up subsequently. All existing
and anticipated modifications to product models are evaluated against on-hand
inventories, and are adjusted for potential obsolescence.
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##### Table of Contents



(g)
    
    Property, Plant and Equipment and DepreciationProperty, plant and equipment is stated at cost. For the Company, depreciation is
computed principally by using the declining-balance method over the estimated useful
lives. Most of the subsidiaries have adopted the straight-line method for computing
depreciation. The depreciation period generally ranges from 10 years to 60 years for
buildings and improvements and from 3 years to 20 years for machinery and equipment.
The cost and accumulated depreciation and amortization applicable to assets retired
are removed from the accounts and any resulting gain or loss is recognized.
Betterments, renewals and extraordinary repairs that extend the life of the assets
are capitalized. Other maintenance and repair costs are expensed as incurred.Depreciation expense for the years ended March 31, 2007, 2008 and 2009 amounted to
¥8,495 million, ¥8,519 million and ¥8,444 million ($85,293 thousand), respectively,
which included amortization of capitalized lease equipment.Certain leased buildings, improvements, machinery and equipment are accounted for as
capital leases in conformity with SFAS No. 13, Accounting for Leases. The aggregate
cost included in property, plant and equipment and related accumulated amortization
as of March 31, 2008 and 2009, was as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Aggregate cost
    
    ¥
    986
    
    
    
    723
    
    
    
    7,303Accumulated amortization
    
    
    437
    
    
    
    279
    
    
    
    2,818
 (h)
    
    Goodwill and Other Intangible AssetsMakita follows the provisions of SFAS No. 141 Business Combinations
and SFAS No. 142 Goodwill and Other Intangible Assets. SFAS No. 141
requires the use of only the purchase method of accounting for
business combinations and refines the definition of intangible assets
acquired in a purchase business combination. SFAS No. 142 eliminates
the amortization of goodwill and instead requires annual impairment
testing thereof. SFAS No. 142 also requires acquired intangible assets
with a definite useful life to be amortized over their respective
estimated useful lives and reviewed for impairment in accordance with
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. Any acquired intangible asset determined to have an
indefinite useful life is not amortized, but instead is tested for
impairment based on its fair value until its life would be determined
to be no longer indefinite. In connection with the impairment
evaluation, SFAS No. 142 requires Makita to perform an assessment of
whether there is an indication that goodwill is impaired. To
accomplish this, Makita identifies its reporting units, determines the
carrying value of each reporting unit by assigning the assets and
liabilities, including existing goodwill and intangible assets to
those reporting units, and determines the fair value of each reporting
unit.(i)
    
    Environmental LiabilitiesLiabilities for environmental remediation and other environmental
costs, if any, are accrued when environmental assessments or remedial
efforts are probable and the costs can be reasonably estimated. Such
liabilities are adjusted as further information develops or
circumstances change. Costs of future obligations are not discounted
to their present values unless the amount and timing of such payments
are determinable.(j)
    
    Research and Development Costs and Advertising CostsResearch and development costs, included in selling, general and
administrative expenses in the consolidated statements of income, are
expensed as incurred and totaled ¥5,460 million, ¥5,922 million and
¥6,883 million ($69,525 thousand) for the years ended March 31, 2007,
2008 and 2009, respectively.Advertising costs are also expensed as incurred and totaled ¥6,002
million, ¥6,860 million and ¥5,747 million ($58,051 thousand) for the
years ended March 31, 2007, 2008 and 2009, respectively.
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##### Table of Contents



(k)
    
    Shipping and Handling CostsShipping and handling costs, which mainly include transportation to
customers, are included in selling, general and administrative
expenses in the consolidated statements of income. Shipping and
handling costs were ¥7,637 million, ¥9,882 million and ¥8,712 million
($88,000 thousand) for the years ended March 31, 2007, 2008 and 2009,
respectively.(l)
    
    Income TaxesMakita accounts for income taxes in accordance with the provisions of
SFAS No. 109, Accounting for Income Taxes, which requires an asset
and liability approach for financial accounting and reporting for
income taxes. Deferred income tax assets and liabilities are
recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred income tax
assets and liabilities are measured using the enacted tax rates
expected to apply to taxable income in the years the temporary
differences and carryforwards are expected to be recovered or settled.
The effect on deferred income tax assets and liabilities of a change
in tax rates or laws is recognized in income in the period that
includes the enactment date.Makita also adopted FASB Interpretation No. 48 (FIN 48), Accounting
for Uncertainty in Income Taxes, an interpretation of FASB Statement
No. 109 on April 1, 2007. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in financial statements and
prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. FIN48 requires that the
tax effects of a position be recognized only when it is more likely
than not to be sustained upon examination. Makita classifies penalties
and interest related to unrecognized tax benefits, if any, in
provision for income taxes.(m)
    
    Product WarrantiesA liability for the estimated product warranty related cost is
established at the time revenue is recognized and is included in other
liabilities and cost of sales. Estimates for accrued product warranty
costs are primarily based on historical experience, and are affected
by ongoing product failure rates, specific product class failures
outside of the baseline experience, material usage and service
delivery costs incurred in correcting a product failure.(n)
    
    Pension PlansMakita accounts for pension plans in accordance with the provisions of
SFAS No. 87, Employers Accounting for Pensions. Under SFAS No. 87,
changes in the amount of either the projected benefit obligation or
plan assets resulting from actual results different from that assumed
and from changes in assumptions can result in gains and losses to be
recognized in the consolidated financial statements in the future
periods. Amortization of an unrecognized net gain or loss is included
as a component of the net periodic benefit plan cost for a year if, as
of the beginning of the year, that unrecognized net gain or loss
exceeds 10 percent of the greater of (1) the projected benefit
obligation or (2) the fair value of that plans assets. In such cases,
the amount of amortization recognized is the excess divided by the
average remaining service period of active employees expected to
receive benefits under the plan.Effective March 31, 2007, the Company adopted SFAS No. 158,
Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans. SFAS No.158 requires, among other things, the
recognition of the funded status of each defined pension benefit plan,
retiree health care and other postretirement benefit plans and
postemployment benefit plans on the balance sheet. Each overfunded
plan is recognized as an asset and each underfunded plan is recognized
as a liability. The initial impact of the standard due to unrecognized
prior service costs or credits and net actuarial gains or losses as
well as subsequent changes in the funded status is recognized as a
component of accumulated comprehensive income (loss) in shareholders
equity. Additional minimum pension liabilities (AML) and related
intangible assets were also derecognized upon adoption of the new
standard.(o)
    
    Earnings Per ShareBasic earnings per share is computed by dividing net income available
to common shareholders by the weighted-average number of common shares
outstanding during each year.(p)
    
    Impairment of Long-Lived AssetsMakita accounts for impairment of long lived assets with finite useful
lives in accordance with the provisions of SFAS No. 144. Long-lived
assets, such as property, plant and equipment, and certain intangible
assets subject to amortization, are reviewed for impairment whenever
events or charges in circumstances indicate that the carrying amount
of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an
asset to its estimated undiscounted future cash flow. An impairment
charge is recognized in the amount by which the carrying amount of the
asset exceeds the fair value of the asset. The fair value is
determined by the projected discounted cash flows or other valuation
techniques as appropriate. Assets to be disposed of, if any, are
separately presented in the balance sheet and reported at the lower of
the carrying amount or fair value less costs to sell, and are no
longer depreciated.
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##### Table of Contents



(q)
    
    Derivative Financial InstrumentsMakita conforms to SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities as amended. Makita recognizes all
derivative instruments as either assets or liabilities in the
consolidated balance sheets and measures those instruments at fair
value. The accounting for changes in the fair value of a derivative
instrument depends on whether it has been designated and qualifies as
part of a hedging relationship, and on the type of hedging
relationship.Makita employs derivative financial instruments, including forward
foreign currency exchange contracts, foreign currency options,
interest rate swaps and currency swap agreements to manage its
exposure to
fluctuations in foreign currency exchange rates and
interest rates. Makita does not use derivatives for speculation or
trading purpose. Changes in the fair value of derivatives are recorded
each period in current earnings depending on whether a derivative is
designated as part of a hedge transaction and the type of hedge
transaction. The ineffective portion of all hedges is recognized
currently in earnings.(r)
    
    Use of Estimates in the Preparation of Financial StatementsThe preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosures of
contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.Makita has identified the following areas where it believes
assumptions and estimates are particularly critical to the
consolidated financial statements. These are revenue recognition,
determination of an allowance for doubtful receivables, impairment of
long-lived assets, realizability of deferred income tax assets, the
determination of unrealized losses on securities for which the decline
in market value is considered to be other than temporary, the
actuarial assumptions on retirement and termination benefit plans and
valuation of inventories.(s)
    
    Revenue RecognitionMakita recognizes revenue at the time of delivery or shipment when all
of the following conditions are met. (1) The sales price is fixed and
determinable, (2) Collectibility is reasonably assured, (3) The title
and risk of loss pass to the customer, and (4) Payment terms are
established consistent with Makitas normal payment terms.Makita offers sales incentives to qualifying customers through various
incentive programs. Sales incentives primarily involve volume-based
rebates, cooperative advertising and cash discounts, and are accounted
for in accordance with the Emerging Issues Task Force Issue No. 01-9
(EITF 01-9), Accounting for Consideration by a Vendor to a Customer
(including a Reseller of vendors product).Volume-based rebates are provided to customers only if customers
attain a pre-determined cumulative level of revenue transactions
within a specified period of one year or less. Liabilities for
volume-based rebates are recognized with a corresponding reduction of
revenue for the expected sales incentive at the time the related
revenue is recognized, and are based on the estimation of sales volume
reflecting the historical performance of individual customers.Cooperative advertising is provided to certain customers as
contribution or sponsored fund for advertisements. Under cooperative
advertising programs, Makita does not receive an identifiable benefit
sufficiently separable from its customers. Accordingly, cooperative
advertisings are also recognized as a reduction of revenue at the time
the related revenue is recognized based on Makitas ability to
reliably estimate such future advertising to be taken.Cash discounts are provided as a certain percentage of the invoice
price as predetermined by spot contracts or based on contractually
agreed upon amounts with customers. Cash discounts are recognized as a
reduction of revenue at the time the related revenue is recognized
based on Makitas ability to reliably estimate such future discounts
to be taken. Estimates of expected cash discounts are evaluated and
adjusted periodically based on actual sales transactions and
historical trend.When repairs are made and charged to customers, the revenue from this
source is recognized when the repairs have been completed and the item
is shipped to the customer.Taxes collected from customers and remitted to governmental
authorities are accounted for on a net basis and therefore are
excluded from revenues in the consolidated statements of income.
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##### Table of Contents



(t)
    
    New Accounting StandardsIn September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements. SFAS No. 157 has been subsequently amended by FASB
Staff Position FAS157-1, Application of FASB Statement No. 157 to
FASB
Statement No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or
Measurement under Statement 13 and FASB Staff Position FAS157-2,
Effective Date of FASB Statement No. 157. SFAS No. 157, as amended,
defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements for instruments
within its scope. SFAS No. 157, as amended, is effective from the
fiscal period beginning after November 15, 2007, except for
non-financial assets and liabilities that are not recognized or
disclosed at fair value in an entitys financial statements on a
recurring basis (at least annually), for which it is effective from
the fiscal period beginning after November 15, 2008. SFAS No. 157, as
amended, is required to be adopted by Makita in this fiscal year. This
Statement defines fair value as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
adoption did not give rise to any material effect on Makitas
consolidated financial position or results of operations. Makita does
not expect the adoption of SFAS No. 157 for non-financial assets and
liabilities that are not recognized or disclosed at fair value in an
entitys financial statements on a recurring basis (at least annually)
from the fiscal period beginning after November 15, 2008 will have a
material impact on its consolidated results of operations and
financial condition.In February 2007, the FASB issued SFAS No. 159, The Fair Value Option
for Financial Assets and Financial LiabilitiesIncluding an amendment
of FASB Statement No. 115, which permits an entity to measure many
financial assets and financial liabilities at fair value that are not
currently required to be measured at fair value. Entities that elect
the fair value option report unrealized gains and losses in earnings.
SFAS No. 159 is effective for fiscal periods beginning after November
15, 2007 and is required to be adopted by Makita, in this fiscal year.
The adoption did not give rise to any material effect on Makitas
consolidated financial position or results of operations as Makita did
not elect to report financial assets and liabilities under the fair
value option.In December 2007, the FASB issued SFAS No. 141(R), Business
Combinations, and No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51. These statements
aim to improve, simplify, and converge internationally the accounting
for business combinations and the reporting of noncontrolling
interests in consolidated financial statements. These statements are
effective for fiscal years beginning after December 15, 2008 and are
required to be adopted by Makita, in the fiscal year beginning April
1, 2009. Under SFAS No. 141(R), an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition date at fair value with limited
exceptions. SFAS No. 141(R) also establishes disclosure requirements
to enable the evaluation of the nature and financial effects of the
business combination. SFAS No. 160 establishes new accounting and
reporting standards for the noncontrolling interest in a subsidiary
and for the deconsolidation of a subsidiary. Specifically, this
statement requires the recognition of noncontrolling interests
(minority interests) as equity in the consolidated financial
statements. The amount of net income attributable to noncontrolling
interests will be included in consolidated net income on the face of
the consolidated income statement. This statement also establishes
disclosure requirements that clearly identify and distinguish between
the interests of the parent and the interests of the noncontrolling
owners. Other than the recharacterization of minority interests,
Makita does not expect the adoption of these statements will have a
material impact on its consolidated results of operations and
financial condition.In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities- an amendment of FASB
Statement No. 133, which amends and expands the current disclosures
required by SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 161 requires entities to provide
greater transparency on how and why an entity uses derivative
instruments, how derivative instruments and related hedged items are
accounted for under SFAS No. 133, and how derivative instruments and
related hedged items affect an entitys financial position, results of
operations and cash flows. SFAS No. 161 does not change the existing
standards relative to recognition and measurement of derivative
instruments and hedging activities. SFAS No. 161 is effective for
financial statements issued for fiscal years and interim periods
beginning after November 15, 2008 and is required to be adopted by
Makita, in this fiscal year.In December 2008, the FASB issued FSP FAS No. 132(R)-1, Employers
Disclosures about Postretirement Benefit Plan Assets. FSP 132(R)-1
requires additional disclosures about plan assets including investment
policies, fair value of each major category of plan assets,
development of fair value measurements and concentrations of risk. FSP
132(R)-1 is effective for fiscal years ending after December 15, 2009
and is required to be adopted by Makita in the year ending March 31,
2010. Makita is currently evaluating these additional disclosure
requirements, but Makita does not expect the adoption of FSP 132(R)-1
will have a impact on its consolidated results of operations and
financial condition.(u)
    
    ReclassificationsCertain reclassifications have been made to the prior years
consolidated financial statements to conform with the presentation
used for the year ended March 31, 2009.
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##### Table of Contents



4.
    
    TRANSLATION OF FINANCIAL STATEMENTSSolely for the convenience of readers, the accompanying consolidated
financial statement amounts as of and for the year ended March 31,
2009, are also presented in U.S. dollars by arithmetically translating
all yen amounts using the approximate prevailing exchange rate at the
Federal Reserve Bank of New York of ¥99 to US$1 at March 31, 2009.
This translation should not be construed as a representation that the
amounts shown could be or could have been converted into U.S. dollars
at the rate indicated.5.
    
    INVENTORIESInventories as of March 31, 2008 and 2009 comprised the following:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Finished goods
    
    ¥
    92,053
    
    
    ¥
    95,837
    
    
    $
    968,051Work in process
    
    
    2,607
    
    
    
    2,408
    
    
    
    24,323Raw materials
    
    
    17,527
    
    
    
    12,757
    
    
    
    128,858¥
    112,187
    
    
    ¥
    111,002
    
    
    $
    1,121,232
 6.
    
    IMPAIRMENT OF LONG LIVED ASSETSDuring the year ended March 31, 2007, Makita decided to relocate the
manufacturing business (stationary woodworking machines) of its
subsidiary, Makita Ichinomiya Corporation, to Makitas Okazaki plant
in order to streamline the production function in Japan. As a result
of this decision, Makita performed an impairment assessment pursuant
to the provisions of SFAS No. 144 and recorded an impairment charge
totaling ¥1,295 million for the year ended March 31, 2007 related to
the assets that were not transferred. The fair value of the related
assets was determined by reference to sales of comparable assets in
similar markets. The impaired assets were sold during the year ended
March 31, 2008 and the subsidiary liquidated during the year ended
March 31, 2009. The impact of the sale and liquidation was not
material.
 F-14




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##### Table of Contents



7.
    
    MARKETABLE SECURITIES AND INVESTMENT SECURITIESMarketable securities and investment securities consisted of available-for-sale securities and held-to-maturity securities.The cost, gross unrealized holding gains and losses, fair value and carrying amount for such securities by major security type as of March
31, 2008 and 2009, were as follows:
 Yen (millions)Gross UnrealizedHoldingCarryingAs of March 31, 2008
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair value
    
    
    AmountAvailable-for-sale:Marketable securities:Foreign government debt securities
    
    ¥
    1
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    1
    
    
    ¥
    1Corporate and bank debt securities
    
    
    3,410
    
    
    
    83
    
    
    
    
    
    
    
    3,493
    
    
    
    3,493Investments in trusts
    
    
    42,563
    
    
    
    991
    
    
    
    616
    
    
    
    42,938
    
    
    
    42,938Marketable equity securities
    
    
    1,473
    
    
    
    941
    
    
    
    2
    
    
    
    2,412
    
    
    
    2,412¥
    47,447
    
    
    ¥
    2,015
    
    
    ¥
    618
    
    
    ¥
    48,844
    
    
    ¥
    48,844Investment securities:Investments in trusts
    
    ¥
    184
    
    
    ¥
    4
    
    
    ¥
    6
    
    
    ¥
    182
    
    
    ¥
    182Marketable equity securities
    
    
    9,662
    
    
    
    5,977
    
    
    
    107
    
    
    
    15,532
    
    
    
    15,532Non-marketable equity securities (carried at cost)
    
    
    572
    
    
    
    
    
    
    
    
    
    
    
    572
    
    
    
    572¥
    10,418
    
    
    ¥
    5,981
    
    
    ¥
    113
    
    
    ¥
    16,286
    
    
    ¥
    16,286Held-to-maturity:Marketable securities:Japanese corporate debt securities
    
    ¥
    599
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    599
    
    
    ¥
    599¥
    599
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    599
    
    
    ¥
    599Investment securities:Japanese corporate debt securities
    
    ¥
    1,748
    
    
    ¥
    
    
    
    ¥
    71
    
    
    ¥
    1,677
    
    
    ¥
    1,748¥
    1,748
    
    
    ¥
    
    
    
    ¥
    71
    
    
    ¥
    1,677
    
    
    ¥
    1,748Total marketable securities
    
    ¥
    48,046
    
    
    ¥
    2,015
    
    
    ¥
    618
    
    
    ¥
    49,443
    
    
    ¥
    49,443Total investment securities
    
    ¥
    12,166
    
    
    ¥
    5,981
    
    
    ¥
    184
    
    
    ¥
    17,963
    
    
    ¥
    18,034
 F-15




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##### Table of Contents



Yen (millions)Gross UnrealizedHoldingCarryingAs of March 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair value
    
    
    AmountAvailable-for-sale:Marketable securities:Corporate and bank debt securities
    
    ¥
    954
    
    
    ¥
    60
    
    
    ¥
    
    
    
    ¥
    1,014
    
    
    ¥
    1,014Investments in trusts
    
    
    26,704
    
    
    
    204
    
    
    
    110
    
    
    
    26,798
    
    
    
    26,798Marketable equity securities
    
    
    998
    
    
    
    343
    
    
    
    33
    
    
    
    1,308
    
    
    
    1,308¥
    28,656
    
    
    ¥
    607
    
    
    ¥
    143
    
    
    ¥
    29,120
    
    
    ¥
    29,120Investment securities:Investments in trusts
    
    ¥
    1
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    1
    
    
    ¥
    1Marketable equity securities
    
    
    7,818
    
    
    
    1,847
    
    
    
    177
    
    
    
    9,488
    
    
    
    9,488Non-marketable equity securities
(carried at cost)
    
    
    402
    
    
    
    
    
    
    
    
    
    
    
    402
    
    
    
    402¥
    8,221
    
    
    ¥
    1,847
    
    
    ¥
    177
    
    
    ¥
    9,891
    
    
    ¥
    9,891Held-to-maturity:Marketable securities:Japanese corporate debt securities
    
    ¥
    350
    
    
    ¥
    
    
    
    ¥
    2
    
    
    ¥
    348
    
    
    ¥
    350¥
    350
    
    
    ¥
    
    
    
    ¥
    2
    
    
    ¥
    348
    
    
    ¥
    350Investment securities:Japanese corporate debt securities
    
    ¥
    1,399
    
    
    ¥
    1
    
    
    ¥
    52
    
    
    ¥
    1,348
    
    
    ¥
    1,399¥
    1,399
    
    
    ¥
    1
    
    
    ¥
    52
    
    
    ¥
    1,348
    
    
    ¥
    1,399Total marketable securities
    
    ¥
    29,006
    
    
    ¥
    607
    
    
    ¥
    145
    
    
    ¥
    29,468
    
    
    ¥
    29,470Total investment securities
    
    ¥
    9,620
    
    
    ¥
    1,848
    
    
    ¥
    229
    
    
    ¥
    11,239
    
    
    ¥
    11,290
 U.S. dollars (thousands)Gross UnrealizedHoldingCarryingAs of March 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair value
    
    
    AmountAvailable-for-sale:Marketable securities:Corporate and bank debt securities
    
    $
    9,636
    
    
    $
    606
    
    
    $
    
    
    
    $
    10,242
    
    
    $
    10,242Investments in trusts
    
    
    269,737
    
    
    
    2,061
    
    
    
    1,111
    
    
    
    270,687
    
    
    
    270,687Marketable equity securities
    
    
    10,081
    
    
    
    3,464
    
    
    
    333
    
    
    
    13,212
    
    
    
    13,212$
    289,454
    
    
    $
    6,131
    
    
    $
    1,444
    
    
    $
    294,141
    
    
    $
    294,141Investment securities:Investments in trusts
    
    $
    10
    
    
    $
    
    
    
    $
    
    
    
    $
    10
    
    
    $
    10Marketable equity securities
    
    
    78,969
    
    
    
    18,657
    
    
    
    1,788
    
    
    
    95,838
    
    
    
    95,838Non-marketable equity securities
(carried at cost)
    
    
    4,061
    
    
    
    
    
    
    
    
    
    
    
    4,061
    
    
    
    4,061$
    83,040
    
    
    $
    18,657
    
    
    $
    1,788
    
    
    $
    99,909
    
    
    $
    99,909Held-to-maturity:Marketable securities:Japanese corporate debt securities
    
    $
    3,536
    
    
    $
    
    
    
    $
    21
    
    
    $
    3,515
    
    
    $
    3,536$
    3,536
    
    
    $
    
    
    
    $
    21
    
    
    $
    3,515
    
    
    $
    3,536Investment securities:Japanese corporate debt securities
    
    $
    14,131
    
    
    $
    10
    
    
    $
    525
    
    
    $
    13,616
    
    
    $
    14,131$
    14,131
    
    
    $
    10
    
    
    $
    525
    
    
    $
    13,616
    
    
    $
    14,131Total marketable securities
    
    $
    292,990
    
    
    $
    6,131
    
    
    $
    1,465
    
    
    $
    297,656
    
    
    $
    297,677Total investment securities
    
    $
    97,171
    
    
    $
    18,667
    
    
    $
    2,313
    
    
    $
    113,525
    
    
    $
    114,040
  F-16




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##### Table of Contents



The following table shows the gross unrealized holding losses and fair value, aggregated by investment
category and length of time that individual securities have been in a continuous unrealized loss position,
at March 31, 2008 and 2009.The gross unrealized loss position of available-for-sale securities has been continuing for a relatively
short period of time. Based on this and other relevant factors, management has determined that these
investments are not considered other-than-temporarily impaired. Makita has not held unrealized losses for
twelve months or more at March 31, 2008 and 2009 with respect to available-for-sale securities.The securities that are held to maturity each have a strong credit rating and Makita has both the intent
and ability to hold such investments to maturity; therefore, Makita believes that it will not realize any
losses on the held-to-maturity securities.
 Yen (millions)Less than 12 months
    
    
    12 months or moreGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    
    UnrealizedHolding
    
    
    
    
    
    
    HoldingAs of March 31, 2008
    
    Fair value
    
    
    Losses
    
    
    Fair value
    
    
    LossesAvailable-for-sale:Marketable securities:Investments in trusts
    
    ¥
    3,502
    
    
    ¥
    616
    
    
    ¥
    
    
    
    ¥
    Marketable equity securities
    
    
    168
    
    
    
    2
    
    
    
    
    
    
    
    ¥
    3,670
    
    
    ¥
    618
    
    
    ¥
    
    
    
    ¥
    Investment securities:Investments in trusts
    
    ¥
    156
    
    
    ¥
    6
    
    
    ¥
    
    
    
    ¥
    Marketable equity securities
    
    
    1,386
    
    
    
    107
    
    
    
    
    
    
    
    ¥
    1,542
    
    
    ¥
    113
    
    
    ¥
    
    
    
    ¥
    Held-to-maturity:Investment securities:Japanese corporate debt securities
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    978
    
    
    ¥
    71¥
    
    
    
    ¥
    
    
    
    ¥
    978
    
    
    ¥
    71
 F-17




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##### Table of Contents



Yen (millions)Less than 12 months
    
    
    12 months or moreGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    
    UnrealizedHolding
    
    
    
    
    
    
    HoldingAs of March 31, 2009
    
    Fair value
    
    
    Losses
    
    
    Fair value
    
    
    LossesAvailable-for-sale:Marketable securities:Investments in trusts
    
    ¥
    1,739
    
    
    ¥
    110
    
    
    ¥
    
    
    
    ¥
    Marketable equity securities
    
    
    249
    
    
    
    33
    
    
    
    
    
    
    
    ¥
    1,988
    
    
    ¥
    143
    
    
    ¥
    
    
    
    ¥
    Investment securities:Investments in trusts
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    Marketable equity securities
    
    
    2,142
    
    
    
    177
    
    
    
    
    
    
    
    ¥
    2,142
    
    
    ¥
    177
    
    
    ¥
    
    
    
    ¥
    Held-to-maturity:Marketable securities:Japanese corporate debt securities
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    148
    
    
    ¥
    2Investment securities:Japanese corporate debt securities
    
    
    98
    
    
    
    2
    
    
    
    749
    
    
    
    50¥
    98
    
    
    ¥
    2
    
    
    ¥
    897
    
    
    ¥
    52
 U.S. dollars (thousands)Less than 12 months
    
    
    12 months or moreGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    
    UnrealizedHolding
    
    
    
    
    
    
    HoldingAs of March 31, 2009
    
    Fair value
    
    
    Losses
    
    
    Fair value
    
    
    LossesAvailable-for-sale:Marketable securities:Investments in trusts
    
    $
    17,566
    
    
    $
    1,111
    
    
    $
    
    
    
    $
    Marketable equity securities
    
    
    2,515
    
    
    
    333
    
    
    
    
    
    
    
    $
    20,081
    
    
    $
    1,444
    
    
    $
    
    
    
    $
    Investment securities:Investments in trusts
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Marketable equity securities
    
    
    21,636
    
    
    
    1,788
    
    
    
    
    
    
    
    $
    21,636
    
    
    $
    1,788
    
    
    $
    
    
    
    $
    Held-to-maturity:Marketable securities:Japanese corporate debt securities
    
    $
    
    
    
    $
    
    
    
    $
    1,495
    
    
    $
    21Investment securities:Japanese corporate debt securities
    
    
    990
    
    
    
    21
    
    
    
    7,566
    
    
    
    504$
    990
    
    
    $
    21
    
    
    $
    9,061
    
    
    $
    525
 F-18




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##### Table of Contents



Maturities of debt securities classified as available-for-sale and held-to-maturity as of March 31, 2009, regardless of their balance sheet classification, were as follows:Maturities of debt securities based on Cost as of March 31, 2009
 Yen (millions)
    
    
    U.S.dollars (thousands)Available-
    
    
    Held-to-
    
    
    
    
    
    
    Available-
    
    
    Held-to-for-sale
    
    
    maturity
    
    
    Total
    
    
    for-sale
    
    
    maturity
    
    
    TotalDue within one year
    
    ¥
    
    
    
    ¥
    350
    
    
    ¥
    350
    
    
    $
    
    
    
    $
    3,536
    
    
    $
    3,536Due after one to five years
    
    
    95
    
    
    
    799
    
    
    
    894
    
    
    
    959
    
    
    
    8,071
    
    
    
    9,030Due after five to ten years
    
    
    859
    
    
    
    
    
    
    
    859
    
    
    
    8,677
    
    
    
    
    
    
    
    8,677Due after ten years
    
    
    
    
    
    
    600
    
    
    
    600
    
    
    
    
    
    
    
    6,060
    
    
    
    6,060Total
    
    ¥
    954
    
    
    ¥
    1,749
    
    
    ¥
    2,703
    
    
    $
    9,636
    
    
    $
    17,667
    
    
    $
    27,303
 Maturities of debt securities based on Fair Value as of March 31, 2009
 Yen (millions)
    
    
    U.S.dollars (thousands)Available-
    
    
    Held-to-
    
    
    
    
    
    
    Available-
    
    
    Held-to-for-sale
    
    
    maturity
    
    
    Total
    
    
    for-sale
    
    
    maturity
    
    
    TotalDue within one year
    
    ¥
    
    
    
    ¥
    348
    
    
    ¥
    348
    
    
    $
    
    
    
    $
    3,515
    
    
    $
    3,515Due after one to five years
    
    
    99
    
    
    
    798
    
    
    
    897
    
    
    
    1,000
    
    
    
    8,061
    
    
    
    9,061Due after five to ten years
    
    
    915
    
    
    
    
    
    
    
    915
    
    
    
    9,242
    
    
    
    
    
    
    
    9,242Due after ten years
    
    
    
    
    
    
    550
    
    
    
    550
    
    
    
    
    
    
    
    5,555
    
    
    
    5,555Total
    
    ¥
    1,014
    
    
    ¥
    1,696
    
    
    ¥
    2,710
    
    
    $
    10,242
    
    
    $
    17,131
    
    
    $
    27,373
 Gross realized gains on sales of marketable securities and investment securities for the years ended March 31, 2007, 2008 and 2009 amounted to ¥1,096 million and ¥365 million and ¥534 million ($5,394 thousand),
respectively.Gross realized losses, which included the gross realized losses considered as other than temporary, during the years ended March 31, 2007, 2008 and 2009 amounted to ¥178 million, ¥1,749 million and ¥4,082 million
($41,232 thousand), respectively. The cost of the securities sold was computed based on the average cost of all the shares of each such security held at the time of sale. Gross unrealized losses on marketable
securities and investment securities of which declines in market value are considered to be other than temporary were charged to earnings as realized losses on securities, amounting to ¥159 million, ¥1,662 million
and ¥4,059 million ($41,000 thousand) for the years ended March 31, 2007, 2008 and 2009, respectively. Proceeds from the sales and maturities of available-for-sale securities were ¥17,111 million, ¥25,412 million
and ¥17,810 million ($179,899 thousand) for the years ended March 31, 2007, 2008 and 2009, respectively. Proceeds from maturities of the held-to-maturity securities were ¥1,500 million, ¥1,300 million and ¥600
million ($6,061 thousand) for the years ended March 31, 2007, 2008 and 2009, respectively.
 F-19




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##### Table of Contents



8.
    
    ACQUISITIONAt the Board of Directors meeting held on March 20, 2007, in order to
strengthen the gardening tool business, the Board of the Company decided to
make Fuji Robin Industries Ltd. (Fuji Robin, which manufactures and sells
engines, machinery for agriculture, forestry and construction industries, etc.
in Japan) a wholly-owned subsidiary of the Company through a tender offer. As a
result, the Company purchased 10,279,375 shares of Fuji Robins outstanding
shares, representing 79.3% interest, for total cash consideration of ¥2,673
million, and Fuji Robin became a subsidiary of the Company as of May 15, 2007.
On May 25, 2007, in order to acquire all of the remaining shares of Fuji Robin,
the Company entered into a share exchange agreement with Fuji Robin. On August
1, 2007, the Company acquired the remaining shares of Fuji Robin by exchanging
0.059 of the Companys treasury stock for each share of Fuji Robins
outstanding common stock. The Company and Fuji Robin obtained third party
appraisals of the respective share prices which were used as a basis of
negotiation over the share exchange ratio, and the Company issued 81,456 shares
of treasury stock. Fuji Robin was renamed Makita Numazu Corporation (MNC) as
of August 1, 2007. The total cost for acquiring MNC was ¥3,380 million. The
Company, pursuant to SFAS No.141, used the purchase method to account for the
acquisition of MNC.The following table reflects the fair value of 100% of the assets and
liabilities of Fuji Robin as of August 1, 2007:
 Yen(millions)Cash and cash equivalent
    
    ¥
    788Receivables and other assets
    
    
    5,064Property and equipment
    
    
    3,951Intangible assets
    
    
    162Goodwill (not deductible for tax purposes)
    
    
    1,251Trade payables, bank
borrowings and other liabilities
    
    
    (7,836
    )Net assets
    
    ¥
    3,380
 The results of operations and cash flows associated with MNC since May 15, 2007
have been included in the accompanying consolidated financial statements of
Makita. Makita has not presented pro forma results of operations of the
acquisition because the results are not material.
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##### Table of Contents



9.
    
    INCOME TAXESIncome before income taxes and the provision for income taxes for the years ended March 31, 2007, 2008 and 2009 were as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009Income before income taxes:Domestic
    
    ¥
    16,341
    
    
    ¥
    19,896
    
    
    ¥
    8,523
    
    
    $
    86,091Foreign
    
    
    32,982
    
    
    
    45,875
    
    
    
    35,494
    
    
    
    358,525¥
    49,323
    
    
    ¥
    65,771
    
    
    ¥
    44,017
    
    
    $
    444,616Provision for income taxes:Current-Domestic
    
    ¥
    8,366
    
    
    ¥
    6,957
    
    
    ¥
    2,721
    
    
    $
    27,485Foreign
    
    
    8,120
    
    
    
    12,191
    
    
    
    8,556
    
    
    
    86,424¥
    16,486
    
    
    ¥
    19,148
    
    
    ¥
    11,277
    
    
    $
    113,909Deferred-Domestic
    
    ¥
    (2,453
    )
    
    ¥
    1,283
    
    
    ¥
    (158
    )
    
    $
    (1,596
    )Foreign
    
    
    (1,681
    )
    
    
    (703
    )
    
    
    (388
    )
    
    
    (3,919
    )(4,134
    )
    
    
    580
    
    
    
    (546
    )
    
    
    (5,515
    )Consolidated provision for income taxes
    
    ¥
    12,352
    
    
    ¥
    19,728
    
    
    ¥
    10,731
    
    
    $
    108,394
 Total income taxes were allocated as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009Provision for income taxes
    
    ¥
    12,352
    
    
    ¥
    19,728
    
    
    ¥
    10,731
    
    
    $
    108,394Shareholders equity:Foreign currency translation adjustments
    
    
    93
    
    
    
    (107
    )
    
    
    (127
    )
    
    
    (1,283
    )Net unrealized holding gains on
available-for-sale securities
    
    
    (935
    )
    
    
    (4,320
    )
    
    
    (2,066
    )
    
    
    (20,868
    )Minimum Pension liability adjustment
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    Pension liability adjustment
    
    
    
    
    
    
    (2,549
    )
    
    
    (2,491
    )
    
    
    (25,162
    )Adjustment to initially apply SFAS No.158
    
    
    (110
    )
    
    
    
    
    
    
    
    
    
    
    ¥
    11,466
    
    
    ¥
    12,752
    
    
    ¥
    6,047
    
    
    $
    61,081
 The Company and its domestic subsidiaries are subject to a National Corporate tax of 30.0%, an Inhabitant tax of approximately 5.6% and a deductible Enterprise tax of approximately 7.9%, which in
the aggregate resulted in a combined statutory income tax rate of approximately 40.3% for the years ended March 31, 2007, 2008 and 2009.
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A reconciliation of the combined statutory income tax rates to the effective income tax rates was as follows:
 Year ended March 31,2007
    
    
    2008
    
    
    2009Combined statutory income tax rate in Japan
    
    
    40.3
    %
    
    
    40.3
    %
    
    
    40.3
    %Non-deductible expenses
    
    
    0.8
    
    
    
    0.6
    
    
    
    0.8Non-taxable dividends received
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.3
    )Change in valuation allowance
    
    
    (5.4
    )
    
    
    (0.4
    )
    
    
    0.1Tax sparing impact
    
    
    (2.1
    )
    
    
    (0.7
    )
    
    
    (3.0
    )Effect of the foreign tax rate differential
    
    
    (10.4
    )
    
    
    (11.1
    )
    
    
    (15.1
    )Other, net
    
    
    1.9
    
    
    
    1.4
    
    
    
    1.6Effective income tax rate
    
    
    25.0
    %
    
    
    30.0
    %
    
    
    24.4
    %
 According to the provisions of the tax treaties which have been concluded between Japan and 12 countries, Japanese corporations can claim a tax credit against Japanese income taxes on income earned in one of those 12 countries, even though
that income is exempted from income taxes or is reduced by special tax incentive measures in those countries, as if no special exemption or reduction were provided. The Company applied such tax sparing mainly to China with the indicated
tax reduction effect. The effect of the tax sparing
resulted in a decrease of tax expense by ¥1,021 million or
2.1% and ¥453 million or 0.7% and ¥1,337 million
or 3.0% for the years ended March 31, 2007, 2008 and 2009,
respectively.

For the year ended March 31, 2007, the Company reversed the valuation allowance on deferred tax assets related to certain subsidiaries based on the improved results of operation and a steady outlook for the future operations of these
subsidiaries, resulting in a decrease the total valuation allowance, including the effects of translation, by ¥2,655 million. Also, an effect of the foreign tax rate differential of ¥5,133 million was recorded, almost half the amount was
attributable to a profit growth of subsidiaries located in China where these Chinese subsidiaries have been granted tax holiday benefits. As a result, the effective tax rate for the year ended March 31, 2007 was 25.0%, a decrease of 15.3%
as compared with the statutory income tax rate of 40.3%, due mainly to a decrease in valuation allowance and an effect of the foreign tax rate differential.

For the year ended March 31, 2008, an effect of the foreign tax rate differential of ¥7,334 million was recorded, which was attributable to a profit growth of subsidiaries. Due mainly to this effect, the effective tax rate for the year
ended March 31, 2008 was 30.0%, a decrease of 10.3 % as compared with the statutory income tax rate of 40.3%.

For the year ended March 31, 2009, an effect of the foreign tax rate differential of ¥6,628 million was recorded, which was attributable to proportionately higher profits in the overseas subsidiaries compared to those in the Company and
domestic subsidiaries. Due mainly to this effect, the effective tax rate for the year ended March 31, 2009 was 24.4%, a decrease of 15.9% as compared with the statutory income tax rate of 40.3%.

The significant components of deferred income tax expense attributable to income before income taxes for the years ended March 31, 2007, 2008 and 2009 were as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009Deferred tax expense
(exclusive of the effects
of other components below)
    
    ¥
    (1,467
    )
    
    ¥
    765
    
    
    ¥
    (546
    )
    
    $
    (5,515
    )Increase (decrease) in
beginning-of-the-year
balance of the valuation
allowance for deferred
tax assets
    
    
    (2,667
    )
    
    
    (185
    )
    
    
    
    
    
    
    ¥
    (4,134
    )
    
    ¥
    580
    
    
    ¥
    (546
    )
    
    $
    (5,515
    )
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##### Table of Contents



Significant components of deferred income tax assets and liabilities as of March 31, 2008 and 2009, were as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Deferred income tax assets:Marketable securities and investment securities
    
    ¥
    1,495
    
    
    ¥
    2,854
    
    
    $
    28,828Accrued retirement and termination benefits
    
    
    1,681
    
    
    
    2,423
    
    
    
    24,475Accrued expenses
    
    
    517
    
    
    
    502
    
    
    
    5,071Inventories
    
    
    1,900
    
    
    
    1,940
    
    
    
    19,596Property, plant and equipment
    
    
    2,570
    
    
    
    2,028
    
    
    
    20,485Accrued payroll
    
    
    1,906
    
    
    
    1,813
    
    
    
    18,313Net operating loss carryforwards
    
    
    774
    
    
    
    602
    
    
    
    6,081Other
    
    
    1,713
    
    
    
    2,550
    
    
    
    25,757Total gross deferred income tax assets
    
    
    12,556
    
    
    
    14,712
    
    
    
    148,606Valuation allowance
    
    
    (331
    )
    
    
    (329
    )
    
    
    (3,323
    )¥
    12,225
    
    
    ¥
    14,383
    
    
    $
    145,283Deferred income tax liabilities:Undistributed earnings of overseas subsidiaries
    
    ¥
    (565
    )
    
    ¥
    (449
    )
    
    $
    (4,535
    )Unrealized gain on available-for-sale securities
    
    
    (2,929
    )
    
    
    (859
    )
    
    
    (8,676
    )Property, plant and equipment
    
    
    (1,699
    )
    
    
    (1,353
    )
    
    
    (13,667
    )Other
    
    
    (1
    )
    
    
    (6
    )
    
    
    (61
    )Total gross deferred income tax liabilities
    
    ¥
    (5,194
    )
    
    ¥
    (2,667
    )
    
    $
    (26,939
    )Net deferred income tax assets
    
    ¥
    7,031
    
    
    ¥
    11,716
    
    
    $
    118,344
 Net deferred income taxes are recorded in the consolidated balance sheets as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Deferred
income taxes:Current assets
    
    ¥
    6,478
    
    
    ¥
    7,264
    
    
    $
    73,374Investment and other assets
    
    
    1,826
    
    
    
    5,050
    
    
    
    51,010Current liabilities
    
    
    (58
    )
    
    
    (50
    )
    
    
    (505
    )Long-term liabilities
    
    
    (1,215
    )
    
    
    (548
    )
    
    
    (5,535
    )¥
    7,031
    
    
    ¥
    11,716
    
    
    $
    118,344
 In assessing the realizability of deferred income tax assets,
Makita considers whether it is more likely than not that some
portion or all of the deferred income tax assets will not be
realized. The ultimate realization of deferred income tax
assets is dependent upon the generation of future taxable
income during the periods in which those temporary
differences become deductible and net operating loss
carryforwards are utilizable. Makita considers the scheduled
reversal of deferred income tax liabilities, projected future
taxable income, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income
and projections for future taxable income over the periods in
which the deferred income tax assets are deductible, Makita
believes it is more likely than not that the benefits of
these deductible differences and net operating loss
carryforwards, net of the existing valuation allowance, will
be realized. The actual amount of the deferred income tax
assets realizable, however, would be reduced if estimates of
future taxable income during the carryforward period are not
achieved. Makita has recorded a valuation allowance of ¥329
million as of March 31, 2009 against certain deferred income
tax assets due to the lack of available tax planning strategy
to prevent a portion of net operating loss carryforwards from
expiring unused.
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As of March 31, 2009, certain subsidiaries had net operating
loss carryforwards for income tax purposes of ¥3,240 million
($32,727 thousand) which are available to offset future
taxable income, if any. The net operating losses will expire
as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)Within 5 years
    
    
    197
    
    
    
    1,9906 to 20 years
    
    
    1,861
    
    
    
    18,798Indefinite
    
    
    1,182
    
    
    
    11,9393,240
    
    
    
    32,727
 As of March 31, 2009, Makita had net tax sparing carryforwards for income tax
purposes of ¥1,103 million ($11,141 thousand) which are available to reduce
future income taxes payable, if any. The net tax sparing will expire within 3
years.Income taxes have not been accrued on undistributed earnings of domestic
subsidiaries as the tax law provides a means by which the investment in a
domestic subsidiary can be recovered tax free.Makita has not recognized deferred tax liabilities for certain portions of
undistributed earnings of foreign subsidiaries in the total amount of ¥108,819
million ($1,099,182 thousand) as of March 31, 2009 because Makita considers
these earnings to be indefinitely reinvested, and the calculation of the
unrecognized deferred tax liabilities is not practicable.Makita adopted FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty
in Income Taxes, an interpretation of FASB Statement No. 109 on April 1, 2007.
The unrecognized tax benefits as of April 1, 2007 and for the years ended March
31, 2008 and 2009 were neither material nor expected to significantly increase
or decrease within 12 months period subsequent to March 31, 2009. Makita
classifies penalties and interest related to unrecognized tax benefits, if any,
in provision for income taxes, and the total amounts of penalties and interest
related to unrecognized tax benefits recorded were not material as of April 1,
2007 and for the years ended March 31, 2008 and 2009. Makita conducts business
globally and, as a result, the Company and its subsidiaries file income tax
returns in various jurisdictions all over the world. The Company is no longer
subject to income tax examinations for the periods prior to the fiscal year
ended March 31, 2005, and one of the Companys major subsidiaries in the United
States remains subject to income tax examinations for the periods beginning in
the fiscal year ended March 31, 2005.
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##### Table of Contents



10.
    
    RETIREMENT AND TERMINATION BENEFIT PLANSThe Company and certain of its subsidiaries have various contributory
and noncontributory employee benefit plans covering substantially all
of their employees. Under the plans, employees are entitled to
lump-sum payments at the time of termination or retirement, or to
pension payments. A domestic noncontributory plan covers substantially
all of the employees of the Company.The amounts of lump-sum or pension payments under the plans are generally
determined on the basis of length of service and remuneration at the time of
termination or retirement.The net periodic pension costs (benefit) of the defined benefit plans for the years ended March 31, 2007, 2008 and 2009 consisted of the
following components:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009Service cost-benefit earned during the year
    
    ¥
    1,611
    
    
    ¥
    1,410
    
    
    ¥
    1,525
    
    
    $
    15,404Interest cost on projected benefit obligation
    
    
    804
    
    
    
    927
    
    
    
    906
    
    
    
    9,152Expected return on plan assets
    
    
    (1,268
    )
    
    
    (1,459
    )
    
    
    (1,444
    )
    
    
    (14,586
    )Amortization of prior service cost
    
    
    (215
    )
    
    
    (215
    )
    
    
    (206
    )
    
    
    (2,081
    )Amortization of net transition obligation
    
    
    37
    
    
    
    37
    
    
    
    4
    
    
    
    41Recognized actuarial loss
    
    
    428
    
    
    
    414
    
    
    
    191
    
    
    
    1,929Net periodic pension costs (benefit)
    
    ¥
    1,397
    
    
    ¥
    1,114
    
    
    ¥
    976
    
    
    $
    9,859
 Net actuarial loss and amortization of prior service cost will be amortized from accumulated
other comprehensive income into net periodic benefit cost over the next fiscal year are as
follows:
 Yen
    
    
    U.S. dollars(millions)
    
    (thousands)Net actuarial loss
    
    ¥
    187
    
    
    $
    1,889Amortization of prior service cost
    
    
    (206
    )
    
    
    (2,081
    )
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##### Table of Contents



Reconciliations of beginning and ending balances of the benefit obligations and the fair
value of the plan assets are as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Change in benefit obligation:Benefit obligation at beginning of year
    
    ¥
    37,389
    
    
    ¥
    38,898
    
    
    $
    392,909Service cost
    
    
    1,410
    
    
    
    1,525
    
    
    
    15,404Interest cost
    
    
    927
    
    
    
    906
    
    
    
    9,152Plan amendment
    
    
    136
    
    
    
    (3
    )
    
    
    (30
    )Actuarial (gain) loss
    
    
    104
    
    
    
    (1,636
    )
    
    
    (16,525
    )Business acquired
    
    
    761
    
    
    
    
    
    
    
    Benefits paid
    
    
    (1,856
    )
    
    
    (2,282
    )
    
    
    (23,051
    )Foreign exchange impact
    
    
    27
    
    
    
    (554
    )
    
    
    (5,596
    )Benefit obligation at end of year
    
    
    38,898
    
    
    
    36,854
    
    
    
    372,263Change in plan assets:Fair value of plan assets at beginning of year
    
    ¥
    38,456
    
    
    ¥
    35,052
    
    
    $
    354,061Actual return on plan assets
    
    
    (4,803
    )
    
    
    (6,350
    )
    
    
    (64,142
    )Employer contributions
    
    
    3,022
    
    
    
    2,961
    
    
    
    29,909Benefits paid
    
    
    (1,659
    )
    
    
    (1,974
    )
    
    
    (19,939
    )Foreign exchange impact
    
    
    36
    
    
    
    (67
    )
    
    
    (677
    )Fair value of plan assets at end of year
    
    
    35,052
    
    
    
    29,622
    
    
    
    299,212Funded status
    
    ¥
    (3,846
    )
    
    ¥
    (7,232
    )
    
    $
    (73,051
    )Amounts recognized in accumulated other
comprehensive income consisted of:Net actuarial loss
    
    ¥
    9,366
    
    
    ¥
    15,346
    
    
    $
    155,010Prior service cost
    
    
    (2,575
    )
    
    
    (2,372
    )
    
    
    (23,959
    )Net transition obligation being recognized
over 19 years
    
    
    4
    
    
    
    
    
    
    
    ¥
    6,795
    
    
    ¥
    12,974
    
    
    $
    131,051Amounts recognized in the consolidated balance
sheet consisted of:Current liabilities
    
    ¥
    (130
    )
    
    ¥
    (116
    )
    
    $
    (1,172
    )Non-current liabilities
    
    
    (3,716
    )
    
    
    (7,116
    )
    
    
    (71,879
    )¥
    (3,846
    )
    
    ¥
    (7,232
    )
    
    $
    (73,051
    )
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##### Table of Contents



Measurement dateThe Company uses a March 31 measurement date for all of its plans.The accumulated benefit obligation for all defined benefit plans was as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Accumulated benefit obligation
    
    ¥
    34,146
    
    
    ¥
    33,084
    
    
    $
    334,182
 AssumptionsThe weighted-average assumptions used to determine benefit obligations at March 31, 2008 and 2009, were as follows:
 2008
    
    
    2009Discount rate
    
    
    2.4
    %
    
    
    2.5
    %Assumed rate of increase in future compensation levels
    
    
    3.3
    %
    
    
    2.8
    %
 The weighted-average assumptions used to determine net periodic pension cost for each of the years in the three-year period ended March 31, 2009, were as follows:
 2007
    
    
    2008
    
    
    2009Discount rate
    
    
    2.2
    %
    
    
    2.5
    %
    
    
    2.4
    %Assumed rate of increase in future compensation levels
    
    
    3.3
    %
    
    
    3.3
    %
    
    
    3.3
    %Expected long-term rate of return on plan assets
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    3.8
    %
 Makita determines the discount rate based on long-term high quality fixed income debt securities that have the same maturity period as the period over which pension benefits are expected to be settled.
In addition, Makita also takes into account estimates with respect to future changes that are expected by management in the interest rates on its debt securities when determining the discount rate.Makita determines the expected long-term rate of return on plan assets based on the expected long-term return of the various asset categories in which the plan invests considering the current
expectations for future returns and actual historical returns.Plan AssetsThe benefit plan weighted-average asset allocations at March 31, 2008, and 2009, by asset category were as follows:
 2008
    
    
    2009Asset
Category:Equity securities
    
    
    45.7
    %
    
    
    38.3
    %Debt securities
    
    
    36.8
    
    
    
    34.0Real estate
    
    
    1.1
    
    
    
    1.0Life insurance company general accounts
    
    
    11.4
    
    
    
    16.8Other
    
    
    5.0
    
    
    
    9.9100.0
    %
    
    
    100.0
    %
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##### Table of Contents



Makitas funding policy is to contribute monthly the amounts which would provide sufficient assets for future payments of pension benefits. The plans assets are invested primarily in marketable equity
securities and interest-bearing securities.Makita determined the mix of equity securities and debt securities after taking into consideration the expected long-term yield on pension assets. To decide whether changes in the basic portfolio are
necessary, Makita examines the divergence between the expected long-term income and the actual income from the portfolio on an annual basis. Makita revises the portfolio when it is deemed necessary to
reach the expected long-term yield. The plans equity securities include common stock of the Company in the amount of ¥6 million ($61 thousand) at March 31, 2009.Information for pension plans with an accumulated benefit obligation in excess of plan assets
 Yen
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Projected benefit obligation
    
    ¥
    3,989
    
    
    ¥
    36,854
    
    
    $
    372,263Accumulated benefit obligation
    
    
    3,890
    
    
    
    33,084
    
    
    
    334,182Fair value of plan assets
    
    
    370
    
    
    
    29,622
    
    
    
    299,212An accumulated benefit obligation in excess of plan assets
    
    
    3,520
    
    
    
    3,462
    
    
    
    34,970
 Cash flowsContributionsMakita expects to contribute ¥2,569 million ($25,949 thousand) to its domestic and foreign defined benefit plans in the fiscal year ending March 31, 2010.Estimated future benefit paymentsAt March 31,2009, the benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter are as
follows:
 Yen
    
    
    U.S. dollarsYear ending March 31,
    
    (millions)
    
    
    (thousands)2010
    
    ¥
    1,864
    
    
    $
    18,8282011
    
    
    1,956
    
    
    
    19,7582012
    
    
    1,853
    
    
    
    18,7172013
    
    
    1,927
    
    
    
    19,4642014
    
    
    1,801
    
    
    
    18,1922015-2019
    
    
    8,937
    
    
    
    90,273Total
    
    ¥
    18,338
    
    
    $
    185,232
 Certain foreign subsidiaries have defined contribution plans. The total expenses charged to income under these plans were ¥223 million, ¥270 million and ¥229 million ($2,313
thousand) for the years ended March 31, 2007, 2008 and 2009, respectively.The Company has unfunded retirement allowance programs for the Directors and the Statutory Auditors. Under such programs, the aggregate amount set aside as retirement allowances for
the Directors and the Statutory Auditors was ¥468 million and ¥450 million ($4,545 thousand) as of March 31, 2008 and 2009, respectively, which is included in other liabilities in
the accompanying balance sheets. This Executive retirement and termination allowances program was abolished by the Annual General Meeting of Shareholders held in June 2006. The
aggregate amount set aside will be paid to the Directors and the Statutory Auditors when they retire.
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11.
    
    SHORT-TERM BORROWINGS AND LONG-TERM INDEBTEDNESSAs of March 31, 2008 and 2009, short-term borrowings consisted of the following:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Bank borrowings
    
    ¥
    1,582
    
    
    ¥
    110
    
    
    $
    1,111Current maturities of long-term indebtedness
    
    
    142
    
    
    
    129
    
    
    
    1,303Total
    
    ¥
    1,724
    
    
    ¥
    239
    
    
    $
    2,414
 Short-term borrowings, excluding current maturities of long-term indebtedness, amounting to ¥1,582 million and ¥110 million ($1,111 thousand) as of March 31, 2008 and 2009, respectively, consisted primarily of bank
borrowings of overseas subsidiaries denominated in foreign currencies.As of March 31, 2008 and 2009, the weighted average interest rate on the borrowings was 8.9% and 8.0%, respectively.Certain subsidiaries of the Company had unused lines of credit available for immediate short-term borrowings without restrictions amounting to ¥22,664 million and ¥15,969 million ($161,303 thousand) as of March 31, 2008
and 2009, respectively.As of March 31, 2008 and 2009, long-term indebtedness consisted of the following:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    20091.9% (weighted average rate) unsecured loans from banks, due 2012
    
    ¥
    500
    
    
    ¥
    500
    
    
    $
    5,051Capital lease obligations (see Note 3(g))
    
    
    550
    
    
    
    447
    
    
    
    4,515Less- Current maturities included in short-term borrowings
    
    
    (142
    )
    
    
    (129
    )
    
    
    (1,303
    )¥
    908
    
    
    ¥
    818
    
    
    $
    8,263
 There were no covenants or cross default provisions under the Makitas financing arrangements. Furthermore, there were no subsidiary level dividend restrictions under the financing arrangements.The aggregate annual maturities of long-term indebtedness subsequent to March 31, 2009 are as
summarized below:
 Yen
    
    
    U.S. dollarsYear ending March 31,
    
    (millions)
    
    
    (thousands)2010
    
    ¥
    129
    
    
    $
    1,3032011
    
    
    278
    
    
    
    2,8082012
    
    
    527
    
    
    
    5,3242013
    
    
    11
    
    
    
    1112014
    
    
    2
    
    
    
    202015 and thereafter
    
    
    
    
    
    
    Total
    
    ¥
    947
    
    
    $
    9,566
 12.
    
    SHAREHOLDERS EQUITYAt the Board of Directors meeting held on April 30, 2008 and October
31,2008, the Company authorized the repurchase of shares of its common
stock pursuant to Article 156 of the Companies Act of Japan, as
applied pursuant to Paragraph 3, Article 165 of the Companies Act of
Japan, 6,000,000 shares of treasury stock were repurchased during the
fiscal year ended March 31, 2009. Further at the Board of Directors
meeting held on January 30, 2009, the Company decided to retire the
treasury stock pursuant to the provisions of Article 178 of the
Companies Act of Japan. 4,000,000 shares of treasury stock were
retired during the fiscal year ended March 31,2009.The Companies Act of Japan provides that an amount equal to 10% of
distributions from retained earnings paid by the Company should be
appropriated as capital reserve or earned reserve (hereinafter called
reserve). No further appropriations are required when the total amount
of the reserve exceed 25% of capital stock.Based on a resolution of the Board of Directors, at the annual meeting of
shareholders to be held on June 25, 2009, the shareholders approved the
declaration of a cash dividend in the amount of ¥6,888 million, which will be
paid to shareholders of record as of March 31, 2009. The declaration of this
dividend has not been reflected in the consolidated financial statements as of
March 31, 2009.The amount of retained earnings available for dividends distribution is
recorded in the Companys non-consolidated books and amounted to ¥135,222
million ($1,366 million) as of March 31, 2009.
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13.
    
    OTHER COMPREHENSIVE INCOME (LOSS)Accumulated other comprehensive income (loss) as of March 31, 2007, 2008 and 2009, were as follows:
 Yen
    
    
    U.S.dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009Foreign currency translation adjustments:Beginning balance
    
    ¥
    (6,043
    )
    
    ¥
    2,764
    
    
    ¥
    (7,510
    )
    
    $
    (75,859
    )Adjustments for the year
    
    
    8,807
    
    
    
    (10,274
    )
    
    
    (28,051
    )
    
    
    (283,343
    )Ending balance
    
    ¥
    2,764
    
    
    
    (7,510
    )
    
    ¥
    (35,561
    )
    
    $
    (359,202
    )Net unrealized holding gains on available-for-sale securities:Beginning balance
    
    ¥
    11,666
    
    
    ¥
    10,280
    
    
    ¥
    3,885
    
    
    $
    39,243Adjustments for the year
    
    
    (1,386
    )
    
    
    (6,395
    )
    
    
    (3,065
    )
    
    
    (30,960
    )Ending balance
    
    ¥
    10,280
    
    
    
    3,885
    
    
    ¥
    820
    
    
    
    8,283Minimum pension liability adjustment:Beginning balance
    
    ¥
    (278
    )
    
    ¥
    
    
    
    ¥
    
    
    
    $
    Adjustments for the year
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    Adjustments to initially apply SFAS No.158
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    
    
    
    $
    Pension liability adjustment:Beginning balance
    
    ¥
    
    
    
    ¥
    (347
    )
    
    ¥
    (4,032
    )
    
    $
    (40,727
    )Adjustments for the year
    
    
    
    
    
    
    (3,685
    )
    
    
    (3,688
    )
    
    
    (37,253
    )Adjustments to initially apply SFAS No.158
    
    
    (347
    )
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    ¥
    (347
    )
    
    ¥
    (4,032
    )
    
    ¥
    (7,720
    )
    
    $
    (77,980
    )Total other accumulated comprehensive income (loss):Beginning balance
    
    ¥
    5,345
    
    
    ¥
    12,697
    
    
    ¥
    (7,657
    )
    
    $
    (77,343
    )Adjustments for the year
    
    
    7,515
    
    
    
    (20,354
    )
    
    
    (34,804
    )
    
    
    (351,556
    )Adjustments to initially apply SFAS No.158
    
    
    (163
    )
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    ¥
    12,697
    
    
    ¥
    (7,657
    )
    
    ¥
    (42,461
    )
    
    $
    (428,899
    )
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Tax effects allocated to each component of other comprehensive income were as follows:
 Yen (millions)Tax benefit
    
    
    Net of taxPretax amount
    
    
    (expense)
    
    
    amountFor the year ended March 31, 2007Foreign currency translation adjustment
    
    ¥
    8,900
    
    
    ¥
    (93
    )
    
    ¥
    8,807Unrealized holding losses on available-for-sale securities:Unrealized holding losses arising during the year
    
    
    (1,403
    )
    
    
    565
    
    
    
    (838
    )Less- Reclassification adjustment for gains realized in net income
    
    
    (918
    )
    
    
    370
    
    
    
    (548
    )Net unrealized losses
    
    
    (2,321
    )
    
    
    935
    
    
    
    (1,386
    )Minimum pension liability adjustment
    
    
    160
    
    
    
    (66
    )
    
    
    94Other comprehensive income
    
    ¥
    6,739
    
    
    ¥
    776
    
    
    ¥
    7,515
 Yen (millions)Tax benefit
    
    
    Net of taxPretax amount
    
    
    (expense)
    
    
    amountFor the year ended March 31, 2008Foreign currency translation adjustment
    
    ¥
    (10,381
    )
    
    ¥
    107
    
    
    ¥
    (10,274
    )Unrealized holding losses on available-for-sale securities:Unrealized holding losses arising during the year
    
    
    (12,099
    )
    
    
    4,878
    
    
    
    (7,221
    )Less- Reclassification adjustment for losses realized in net income
    
    
    1,384
    
    
    
    (558
    )
    
    
    826Net unrealized losses
    
    
    (10,715
    )
    
    
    4,320
    
    
    
    (6,395
    )Pension liability adjustment:Unrealized losses arising during the year
    
    
    (6,470
    )
    
    
    2,633
    
    
    
    (3,837
    )Less- Reclassification adjustment for losses realized in net income
    
    
    236
    
    
    
    (84
    )
    
    
    152Net unrealized losses
    
    
    (6,234
    )
    
    
    2,549
    
    
    
    (3,685
    )Other comprehensive losses
    
    ¥
    (27,330
    )
    
    ¥
    6,976
    
    
    ¥
    (20,354
    )
 Yen (millions)Tax benefit
    
    
    Net of taxPretax amount
    
    
    (expense)
    
    
    amountFor the year ended March 31, 2009Foreign currency translation adjustment
    
    ¥
    (28,178
    )
    
    ¥
    127
    
    
    ¥
    (28,051
    )Unrealized holding losses on available-for-sale securities:Unrealized holding losses arising during the year
    
    
    (8,679
    )
    
    
    3,497
    
    
    
    (5,182
    )Less- Reclassification adjustment for losses realized in net income
    
    
    3,548
    
    
    
    (1,431
    )
    
    
    2,117Net unrealized losses
    
    
    (5,131
    )
    
    
    2,066
    
    
    
    (3,065
    )Pension liability adjustment:Unrealized losses arising during the year
    
    
    (6,168
    )
    
    
    2,487
    
    
    
    (3,681
    )Less- Reclassification adjustment for gains realized in net income
    
    
    (11
    )
    
    
    4
    
    
    
    (7
    )Net unrealized losses
    
    
    (6,179
    )
    
    
    2,491
    
    
    
    (3,688
    )Other comprehensive losses
    
    ¥
    (39,488
    )
    
    ¥
    4,684
    
    
    ¥
    (34,804
    )
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##### Table of Contents



U.S. dollars (thousands)Tax benefit
    
    
    Net of taxPretax amount
    
    
    (expense)
    
    
    amountFor the year ended March 31, 2009Foreign currency translation adjustment
    
    $
    (284,626
    )
    
    $
    1,283
    
    
    $
    (283,343
    )Unrealized holding losses on available-for-sale securities:Unrealized holding losses arising during the year
    
    
    (87,666
    )
    
    
    35,322
    
    
    
    (52,344
    )Less- Reclassification adjustment for losses realized in net income
    
    
    35,838
    
    
    
    (14,454
    )
    
    
    21,384Net unrealized losses
    
    
    (51,828
    )
    
    
    20,868
    
    
    
    (30,960
    )Pension liability adjustment:Unrealized losses arising during the year
    
    
    (62,304
    )
    
    
    25,122
    
    
    
    (37,182
    )Less- Reclassification adjustment for gains realized in net income
    
    
    (111
    )
    
    
    40
    
    
    
    (71
    )Net unrealized losses
    
    
    (62,415
    )
    
    
    25,162
    
    
    
    (37,253
    )Other comprehensive losses
    
    $
    (398,869
    )
    
    $
    47,313
    
    
    $
    (351,556
    )
 14.
    
    EARNINGS PER SHAREA reconciliation of the numerators and denominators of basic earnings per share computations is as follows, there are no diluted effect during the representing fiscal years.
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)Numerator
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009Net income available to common share
holders  Basic
    
    ¥
    36,971
    
    
    ¥
    46,043
    
    
    ¥
    33,286
    
    
    $
    336,222Denominator
    
    Number of sharesWeighted average common shares
outstanding  Basic
    
    
    143,706,789
    
    
    
    143,749,824
    
    
    
    140,518,582Yen
    
    U.S. dollarsEarnings per share:Basic
    
    ¥
    257.3
    
    
    ¥
    320.3
    
    
    ¥
    236.9
    
    
    $
    2.39
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15.
    
    COMMITMENTS AND CONTINGENT LIABILITIESAt March 31, 2009, the Company was contingently liable as a
guarantor for housing and education loans to employees in
the amount of ¥8 million ($81 thousand). The Company will be
required to satisfy the outstanding loan commitments of
certain employees in the event those employees are not able
to fulfill their repayment obligations. The fair value of
the liabilities for the Companys obligations under the
guarantees described above as of March 31, 2009, was
insignificant.At March 31, 2009, Makita was contingently liable as a
guarantor for the borrowings of the union organized by
customers in the amount of ¥93 million ($939 thousand). The
fair value of the liabilities for Makitas obligations under
the guarantees described above as of March 31, 2009, was
insignificant.Makitas purchase obligations, mainly for raw materials,
were ¥9,261 million ($93,545 thousand) as of March 31,
2009.At March 31, 2009, Makita was contingently liable in connection with
discounts of notes receivable in the amount of ¥481 million ($4,859
thousand).Makita is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion
of management, the ultimate disposition of these matters
will not have a material adverse effect on Makitas
consolidated financial position, results of operations, or
cash flows.Makita made rental payments of ¥1,881 million, ¥2,132
million and ¥2,207 million ($22,293 thousand) under
cancelable and noncancelable operating lease agreements for
offices, warehouses, automobiles and office equipment during
the years ended March 31, 2007, 2008 and 2009, respectively.
The minimum rental payments required under noncancelable
operating lease agreements as of March 31, 2009, were as
follows:
 Yen
    
    
    U.S. dollarsYear ending March 31,
    
    (millions)
    
    
    (thousands)2010
    
    ¥
    681
    
    
    $
    6,8792011
    
    
    503
    
    
    
    5,0812012
    
    
    319
    
    
    
    3,2222013
    
    
    242
    
    
    
    2,4442014
    
    
    175
    
    
    
    1,7682015 and thereafter
    
    
    283
    
    
    
    2,859¥
    2,203
    
    
    $
    22,253
 Makita generally guarantees the performance of products delivered and services rendered for a certain period or term. Estimates for product warranty cost are made based on historical warranty claim experience. The change in accrued product warranty cost
for the years ended March 31, 2007, 2008 and 2009 was summarized as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009Balance at beginning of year
    
    ¥
    928
    
    
    ¥
    1,306
    
    
    ¥
    1,964
    
    
    $
    19,838Addition
    
    
    1,476
    
    
    
    2,117
    
    
    
    1,648
    
    
    
    16,646Utilization
    
    
    ( 1,163
    )
    
    
    (1,357
    )
    
    
    (1,593
    )
    
    
    (16,091
    )Foreign exchange impact
    
    
    65
    
    
    
    (102
    )
    
    
    (342
    )
    
    
    (3,454
    )Balance at end of year
    
    ¥
    1,306
    
    
    ¥
    1,964
    
    
    ¥
    1,677
    
    
    $
    16,939
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16.
    
    FAIR VALUE MEASUREMENTSIn this fiscal year, Makita adopted SFAS No. 157,
Fair Value Measurements, for all financial assets and liabilities and for non-financial assets and liabilities that are recognized or disclosed at fair value in an entitys financial
statements on recurring basis (at least annually). SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. SFAS No. 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value as follows:
 Level 1 -
    
    Inputs are quoted prices in active markets for identical assets or liabilities.Level 2 -
    
    Inputs are listed below.
 1.
    
    Inputs are quoted prices for similar assets or liabilities in active markets,2.
    
    Inputs are quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable,3.
    
    Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 Level 3 -
    
    Inputs are derived from valuation techniques in which one or more significant inputs or value
drivers are unobservable, which reflect the reporting entitys own assumptions about the assumptions that market participants would use in establishing a price.
 The following table presents our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2009 consistent with the fair value hierarchy provisions of SFAS No. 157.
 Yen (millions)As of March 31, 2009
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Available-for-sale securities
    
    ¥
    38,609
    
    
    ¥
    
    
    
    ¥
    Derivatives
    
    
    
    
    
    
    119
    
    
    
    Liabilities:Derivatives
    
    ¥
    
    
    
    ¥
    (1,288
    )
    
    ¥
    
 U.S. dollars (thousands)As of March 31, 2009
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Available-for-sale securities
    
    $
    389,989
    
    
    $
    
    
    
    $
    Derivatives
    
    
    
    
    
    
    1,202
    
    
    
    Liabilities:Derivatives
    
    $
    
    
    
    $
    (13,010
    )
    
    $
    
 Level 1:Available-for-sale securities are comprised principally of investment in trusts and marketable equity securities, which are valued using an unadjusted quoted market price in active markets with sufficient volume and
frequency of transactions.Level 2:Derivatives are comprised principally of foreign currency contracts and currency swaps, which are estimated by obtaining quotes and other relevant information from brokers.
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##### Table of Contents



17.
    
    DERIVATIVES AND HEDGING ACTIVITIES
 (a)
    
    Risk management policyMakita is exposed to market risks, such as changes in currency exchange rates and interest rates. Derivative financial instruments are comprised principally of foreign exchange contracts, currency swaps, currency options contracts and interest
rate swaps utilized by the Company and certain of its subsidiaries to reduce these risks. Makita does not use derivative instruments for trading or speculation purpose.

Makita is also exposed to a risk of credit-related losses in the event of nonperformance by counter parties to the financial instrument contracts; however it is not expected that any counter parties will fail to meet their obligations, because
the contracts are diversified among a number of major internationally recognized credit worthy financial institutions.(b)
    
    Foreign currency exchange rate risk managementMakita operates internationally, giving rise to significant exposures to market risks from changes in foreign exchange rates, and enters into forward exchange contracts, currency swaps and currency options to hedge the foreign currency
exposure.These derivative instruments are principally intended to protect against foreign exchange exposure related to intercompany transfer of inventories and financing activities.
The derivative instruments as of March 31, 2009 were as follows.
 Yen (millions)Asset Derivatives
    
    
    Liability DerivativesBalance
    
    Fair
    
    
    Balance
    
    FairDerivatives not designated as hedging instruments
    
    Sheet Location
    
    Value
    
    
    Sheet Location
    
    ValueForeign currency contracts
    
    Other current assets
    
    ¥
    22
    
    
    Other liabilities
    
    ¥
    863Currency swaps
    
    Other current assets
    
    
    93
    
    
    Other liabilities
    
    
    414Currency option contracts
    
    Other current assets
    
    
    4
    
    
    Other liabilities
    
    
    11Total
    
    
    
    
    
    ¥
    119
    
    
    
    
    
    
    ¥
    1,288
 U.S. dollars (thousands)Asset Derivatives
    
    
    Liability DerivativesBalance
    
    Fair
    
    
    Balance
    
    FairDerivatives not designated as hedging instruments
    
    Sheet Location
    
    Value
    
    
    Sheet Location
    
    ValueForeign currency contracts
    
    Other current assets
    
    $
    222
    
    
    Other liabilities
    
    $
    8,717Currency swaps
    
    Other current assets
    
    
    940
    
    
    Other liabilities
    
    
    4,182Currency option contracts
    
    Other current assets
    
    
    40
    
    
    Other liabilities
    
    
    111Total
    
    
    
    
    
    $
    1,202
    
    
    
    
    
    
    $
    13,010
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The amount of gain or (loss) recognized in income on derivative for the year ended March 31,2009 was as follows.
 Yen (millions)
    
    
    U.S. dollars (thousands)Amount of Gain or (Loss)
    
    
    
    
    
    Amount of Gain or (Loss)
    
    
    Amount of Gain or (Loss)Recognized in Income on
    
    
    
    
    
    Recognized in Income on
    
    
    Recognized in Income onDerivative
    
    
    
    
    
    Derivative
    
    
    DerivativeLocation of Gain or (Loss)Derivatives not designated
    
    Recognized in Income onas hedging instruments
    
    Derivative
    
    
    2009
    
    
    2009Foreign currency
contracts
    
    Exchange gains (losses)
    
    ¥
    (  836
    )
    
    $
    ( 8,444
    )Currency swaps
    
    Exchange gains (losses)
    
    
    (  706
    )
    
    
    ( 7,131
    )Currency option contracts
    
    Exchange gains (losses)
    
    
    (    12
    )
    
    
    (    122
    )Total
    
    
    
    
    
    ¥
    ( 1,554
    )
    
    $
    ( 15,697
    )
 Total gross notional amounts for outstanding derivatives (recorded at fair value) were as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2009
    
    
    2009Foreign currency contracts
    
    ¥
    19,131
    
    
    $
    193,243Foreign currency swaps
    
    
    5,535
    
    
    
    55,909Currency option contracts
    
    
    378
    
    
    
    3,818Total
    
    ¥
    25,044
    
    
    $
    252,970
 The notional amounts for Foreign currency contracts, Foreign currency swaps and Currency option contracts, presented by currency, were as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2009
    
    
    2009US$
    
    ¥
    14,697
    
    
    $
    148,455Euro
    
    
    9,456
    
    
    
    95,515Other
    
    
    891
    
    
    
    9,000Total
    
    ¥
    25,044
    
    
    $
    252,970
 (c)
    
    Interest rate risk managementMakita executes financing and investing activities through the Company. As Makitas subsidiaries are financed by loans
within the Groupfrom subsidiaries with surplus funds to subsidiaries that lack fundsinterest expense variation is
insignificant.
 F-36




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##### Table of Contents



18.
    
    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTSThe following methods and significant assumptions were used to estimate the fair value of each class of financial instruments for
which it is practicable to estimate a fair value:
 (a)
    
    Cash and Cash Equivalents, Time Deposits, Trade Notes and Accounts Receivable, Short-term
Borrowings, Trade Notes and Accounts Payable, Other payables, and Other Accrued ExpensesThe carrying amounts approximate fair value because of the short maturities of those instruments.(b)
    
    Long-term Time DepositsThe fair value is estimated by discounting future cash flows using the current rates that Makita
would be offered for deposits with similar terms and remaining maturities.(c)
    
    Marketable Securities and Investment SecuritiesThe fair value of marketable and investment securities is estimated based on quoted market
prices. For certain investments such as non-marketable securities, since there are no quoted
market prices existing, a reasonable estimation of a fair value could not be made without
incurring excessive cost, and such securities have been excluded from fair value disclosure. The
fair value of such securities is estimated if and when there are indications that the investment
may be impaired. Non-marketable securities amounted to ¥572 million and ¥402 million ($4,061
thousand) as of March 31, 2008 and 2009, respectively.(d)
    
    Long-term IndebtednessThe fair value of long-term indebtedness is a present value of future cash flows associated with
each instrument discounted using Makitas current borrowing rates for similar debt instruments
of comparable maturities.(e)
    
    Other Derivative Financial InstrumentsThe fair values of other derivative financial instruments, foreign currency contracts, currency
swaps and currency option contracts, all of which are used for hedging purposes, are estimated
by obtaining quotes and other relevant information from brokers.The estimated fair value of the financial instruments was as follows:
 Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)2008
    
    
    2009
    
    
    2009Carrying
    
    
    
    
    
    
    Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueMarketable securities
    
    ¥
    49,443
    
    
    ¥
    49,443
    
    
    ¥
    29,470
    
    
    ¥
    29,468
    
    
    $
    297,677
    
    
    $
    297,656Investment securities
    
    
    17,462
    
    
    
    17,391
    
    
    
    10,888
    
    
    
    10,837
    
    
    
    109,979
    
    
    
    109,464Long-term time deposits
    
    
    2,207
    
    
    
    2,207
    
    
    
    2,203
    
    
    
    2,203
    
    
    
    22,253
    
    
    
    22,253Long-term indebtedness including
current maturities
    
    
    (1,050
    )
    
    
    (1,050
    )
    
    
    (947
    )
    
    
    (947
    )
    
    
    (9,566
    )
    
    
    (9,566
    )Foreign currency contracts:Assets
    
    
    186
    
    
    
    186
    
    
    
    22
    
    
    
    22
    
    
    
    222
    
    
    
    222Liabilities
    
    
    (191
    )
    
    
    (191
    )
    
    
    (863
    )
    
    
    (863
    )
    
    
    (8,717
    )
    
    
    (8,717
    )Currency swaps:Assets
    
    
    408
    
    
    
    408
    
    
    
    93
    
    
    
    93
    
    
    
    940
    
    
    
    940Liabilities
    
    
    (23
    )
    
    
    (23
    )
    
    
    (414
    )
    
    
    (414
    )
    
    
    (4,182
    )
    
    
    (4,182
    )Currency option contracts:Assets
    
    
    7
    
    
    
    7
    
    
    
    4
    
    
    
    4
    
    
    
    40
    
    
    
    40Liabilities
    
    
    (2
    )
    
    
    (2
    )
    
    
    (11
    )
    
    
    (11
    )
    
    
    (111
    )
    
    
    (111
    )
 (f)
    
    LimitationThe fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.These estimates are subjective in nature and
involve uncertainties and are matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
 F-37




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##### Table of Contents



19.
    
    OPERATING SEGMENT INFORMATIONThe operating segments presented below are defined as components of the
enterprise for which separate financial information is available and
regularly reviewed by the Companys chief operating decision maker. The
Companys chief operating decision maker utilizes various measurements to
assess segment performance and allocate resources to the segments.During the three years ended March 31, 2007, 2008 and 2009, Makitas
operating structure included the following geographical operating segments:
Japan Group, Europe Group, North America Group, Asia Group, and Other Group.Makita evaluates the performance of each operating segment based on U.S. GAAP.Segment Products and Services
Makita is a manufacturer and wholesaler of electric power tools and other tools. The operating segments derive substantially all of their revenues from the sale of electric power tools and parts and repairs.Year ended March 31, 2007
 Yen(millions)North
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate andJapan
    
    
    Europe
    
    
    America
    
    
    Asia
    
    
    Other
    
    
    Total
    
    
    Eliminations
    
    
    ConsolidatedSales:External customers
    
    ¥
    61,776
    
    
    ¥
    124,924
    
    
    ¥
    51,432
    
    
    ¥
    9,698
    
    
    ¥
    32,103
    
    
    ¥
    279,933
    
    
    ¥
    
    
    
    ¥
    279,933Intersegment
    
    
    64,040
    
    
    
    5,709
    
    
    
    5,297
    
    
    
    67,021
    
    
    
    149
    
    
    
    142,216
    
    
    
    (142,216
    )
    
    
    Total
    
    ¥
    125,816
    
    
    ¥
    130,633
    
    
    ¥
    56,729
    
    
    ¥
    76,719
    
    
    ¥
    32,252
    
    
    ¥
    422,149
    
    
    ¥
    (142,216
    )
    
    ¥
    279,933Operating expenses
    
    ¥
    108,403
    
    
    ¥
    112,577
    
    
    ¥
    54,217
    
    
    ¥
    66,815
    
    
    ¥
    28,786
    
    
    ¥
    370,798
    
    
    ¥
    (139,041
    )
    
    ¥
    231,757Operating income
    
    
    17,413
    
    
    
    18,056
    
    
    
    2,512
    
    
    
    9,904
    
    
    
    3,466
    
    
    
    51,351
    
    
    
    (3,175
    )
    
    
    48,176Long-lived assets
    
    
    36,831
    
    
    
    10,345
    
    
    
    3,381
    
    
    
    10,296
    
    
    
    2,690
    
    
    
    63,543
    
    
    
    (163
    )
    
    
    63,380Identifiable assets
    
    
    257,735
    
    
    
    110,158
    
    
    
    38,756
    
    
    
    50,934
    
    
    
    26,535
    
    
    
    484,118
    
    
    
    (115,624
    )
    
    
    368,494Depreciation and amortization
    
    
    5,270
    
    
    
    1,432
    
    
    
    637
    
    
    
    1,233
    
    
    
    261
    
    
    
    8,833
    
    
    
    (60
    )
    
    
    8,773Capital expenditures
    
    
    7,266
    
    
    
    2,820
    
    
    
    451
    
    
    
    2,235
    
    
    
    351
    
    
    
    13,123
    
    
    
    (143
    )
    
    
    12,980
 F-38




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##### Table of Contents



Yen(millions)North
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate andJapan
    
    
    Europe
    
    
    America
    
    
    Asia
    
    
    Other
    
    
    Total
    
    
    Eliminations
    
    
    ConsolidatedSales:External customers
    
    ¥
    72,466
    
    
    ¥
    160,218
    
    
    ¥
    56,234
    
    
    ¥
    11,271
    
    
    ¥
    42,388
    
    
    ¥
    342,577
    
    
    ¥
    
    
    
    ¥
    342,577Intersegment
    
    
    69,540
    
    
    
    5,606
    
    
    
    5,212
    
    
    
    101,211
    
    
    
    172
    
    
    
    181,741
    
    
    
    (181,741
    )
    
    
    Total
    
    ¥
    142,006
    
    
    ¥
    165,824
    
    
    ¥
    61,446
    
    
    ¥
    112,482
    
    
    ¥
    42,560
    
    
    ¥
    524,318
    
    
    ¥
    (181,741
    )
    
    ¥
    342,577Operating expenses
    
    ¥
    120,020
    
    
    ¥
    138,850
    
    
    ¥
    59,727
    
    
    ¥
    98,468
    
    
    ¥
    36,964
    
    
    ¥
    454,029
    
    
    ¥
    (178,483
    )
    
    ¥
    275,546Operating income
    
    
    21,986
    
    
    
    26,974
    
    
    
    1,719
    
    
    
    14,014
    
    
    
    5,596
    
    
    
    70,289
    
    
    
    (3,258
    )
    
    
    67,031Long-lived assets
    
    
    42,752
    
    
    
    10,563
    
    
    
    2,656
    
    
    
    9,961
    
    
    
    3,313
    
    
    
    69,245
    
    
    
    (187
    )
    
    
    69,058Identifiable assets
    
    
    264,721
    
    
    
    126,428
    
    
    
    39,523
    
    
    
    52,890
    
    
    
    31,556
    
    
    
    515,118
    
    
    
    (128,651
    )
    
    
    386,467Depreciation and amortization
    
    
    4,874
    
    
    
    1,653
    
    
    
    691
    
    
    
    1,397
    
    
    
    320
    
    
    
    8,935
    
    
    
    (64
    )
    
    
    8,871Capital expenditures
    
    
    8,637
    
    
    
    2,453
    
    
    
    713
    
    
    
    2,220
    
    
    
    1,113
    
    
    
    15,136
    
    
    
    (100
    )
    
    
    15,036
  Yen(millions)North
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate andJapan
    
    
    Europe
    
    
    America
    
    
    Asia
    
    
    Other
    
    
    Total
    
    
    Eliminations
    
    
    ConsolidatedSales:External customers
    
    ¥
    63,859
    
    
    ¥
    137,230
    
    
    ¥
    42,446
    
    
    ¥
    9,954
    
    
    ¥
    40,545
    
    
    ¥
    294,034
    
    
    ¥
    
    
    
    ¥
    294,034Intersegment
    
    
    56,371
    
    
    
    4,154
    
    
    
    4,690
    
    
    
    86,697
    
    
    
    121
    
    
    
    152,033
    
    
    
    (152,033
    )
    
    
    Total
    
    ¥
    120,230
    
    
    ¥
    141,384
    
    
    ¥
    47,136
    
    
    ¥
    96,651
    
    
    ¥
    40,666
    
    
    ¥
    446,067
    
    
    ¥
    (152,033
    )
    
    ¥
    294,034Operating expenses
    
    ¥
    112,109
    
    
    ¥
    121,668
    
    
    ¥
    46,291
    
    
    ¥
    84,438
    
    
    ¥
    35,816
    
    
    ¥
    400,322
    
    
    ¥
    (156,363
    )
    
    ¥
    243,959Operating income
    
    
    8,121
    
    
    
    19,716
    
    
    
    845
    
    
    
    12,213
    
    
    
    4,850
    
    
    
    45,745
    
    
    
    4,330
    
    
    
    50,075Long-lived assets
    
    
    44,114
    
    
    
    11,395
    
    
    
    2,231
    
    
    
    11,302
    
    
    
    3,827
    
    
    
    72,869
    
    
    
    (173
    )
    
    
    72,696Identifiable assets
    
    
    235,252
    
    
    
    110,897
    
    
    
    33,533
    
    
    
    48,311
    
    
    
    36,134
    
    
    
    464,127
    
    
    
    (127,483
    )
    
    
    336,644Depreciation and amortization
    
    
    5,084
    
    
    
    1,534
    
    
    
    586
    
    
    
    1,493
    
    
    
    268
    
    
    
    8,965
    
    
    
    (78
    )
    
    
    8,887Capital expenditures
    
    
    6,682
    
    
    
    5,245
    
    
    
    359
    
    
    
    3,045
    
    
    
    1,856
    
    
    
    17,187
    
    
    
    (141
    )
    
    
    17,046
  U.S. dollars(thousands)North
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate andJapan
    
    
    Europe
    
    
    America
    
    
    Asia
    
    
    Other
    
    
    Total
    
    
    Eliminations
    
    
    ConsolidatedSales:External customers
    
    $
    645,040
    
    
    $
    1,386,162
    
    
    $
    428,747
    
    
    $
    100,545
    
    
    $
    409,546
    
    
    $
    2,970,040
    
    
    $
    
    
    
    $
    2,970,040Intersegment
    
    
    569,404
    
    
    
    41,960
    
    
    
    47,374
    
    
    
    875,727
    
    
    
    1,222
    
    
    
    1,535,687
    
    
    
    (1,535,687
    )
    
    
    Total
    
    $
    1,214,444
    
    
    $
    1,428,122
    
    
    $
    476,121
    
    
    $
    976,272
    
    
    $
    410,768
    
    
    $
    4,505,727
    
    
    $
    (1,535,687
    )
    
    $
    2,970,040Operating expenses
    
    $
    1,132,414
    
    
    $
    1,228,970
    
    
    $
    467,586
    
    
    $
    852,908
    
    
    $
    361,778
    
    
    $
    4,043,656
    
    
    $
    (1,579,424
    )
    
    $
    2,464,232Operating income
    
    
    82,030
    
    
    
    199,152
    
    
    
    8,535
    
    
    
    123,364
    
    
    
    48,990
    
    
    
    462,071
    
    
    
    43,737
    
    
    
    505,808Long-lived assets
    
    
    445,596
    
    
    
    115,101
    
    
    
    22,535
    
    
    
    114,162
    
    
    
    38,657
    
    
    
    736,051
    
    
    
    (1,748
    )
    
    
    734,303Identifiable assets
    
    
    2,376,283
    
    
    
    1,120,172
    
    
    
    338,717
    
    
    
    487,990
    
    
    
    364,990
    
    
    
    4,688,152
    
    
    
    (1,287,708
    )
    
    
    3,400,444Depreciation and amortization
    
    
    51,354
    
    
    
    15,495
    
    
    
    5,919
    
    
    
    15,081
    
    
    
    2,707
    
    
    
    90,556
    
    
    
    (788
    )
    
    
    89,768Capital expenditures
    
    
    67,495
    
    
    
    52,980
    
    
    
    3,626
    
    
    
    30,758
    
    
    
    18,747
    
    
    
    173,606
    
    
    
    (1,424
    )
    
    
    172,182
   Yen
    
    
    U.S. dollars(millions)
    
    
    (thousands)Sales
    
    
    SalesThe United States of America
    
    ¥
    32,105
    
    
    $
    324,293Finland
    
    
    29,745
    
    
    
    300,455
 F-39




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##### Table of Contents



Consolidated Net Sales by Product Categories(Yen millions, except for percentage amounts)
    
    
    U.S. dollarsYear ended March 31,
    
    
    (thousands)2007
    
    
    2008
    
    
    2009
    
    
    2009Power Tools
    
    ¥
    210,894
    
    
    
    75.3
    %
    
    ¥
    255,869
    
    
    
    74.7
    %
    
    ¥
    214,703
    
    
    
    73.0
    %
    
    $
    2,168,717Gardening and Household
Products
    
    
    28,123
    
    
    
    10.0
    
    
    
    40,410
    
    
    
    11.8
    
    
    
    36,916
    
    
    
    12.6
    
    
    
    372,889Parts, Repairs and
Accessories
    
    
    40,916
    
    
    
    14.7
    
    
    
    46,298
    
    
    
    13.5
    
    
    
    42,415
    
    
    
    14.4
    
    
    
    428,434Total
    
    ¥
    279,933
    
    
    
    100.0
    %
    
    ¥
    342,577
    
    
    
    100.0
    %
    
    ¥
    294,034
    
    
    
    100.0
    %
    
    $
    2,970,040
 20.
    
    RELATED PARTY TRANSACTIONSThe transactions between the Company and Maruwa Co., Ltd.
(Maruwa), for which a representative director of the Company,
Masahiko Goto, and certain of his family members have a
majority of the voting rights, amounted to ¥2 million for
advertising expenses for each of the years ended March 31,
2007, 2008 and 2009.The Companys purchases of raw materials and production
equipment from Toa Co., Ltd., for which a representative
director of the Company, Masahiko Goto, and certain of his
family members have a majority of the voting rights, were ¥129
million, ¥96 million and ¥109 million ($1,101 thousand) during
the years ended March 31, 2007, 2008 and 2009, respectively.
The accounts payable of the Company related to these
transactions were ¥6 million, ¥15 million and ¥5 million ($51
thousand) as of March 31, 2007, 2008 and 2009, respectively.The outside director, Motohiko Yokoyama is a president of JTEKT Corporation.
The Companys purchases of raw materials and production equipment from JTEKT
Corporation, were ¥498 million during March 31, 2007, ¥658 million during the
year ended March 31, 2008 and ¥614 million ($6,202 thousand) during the year
ended March 31, 2009. The accounts payables of the Company related to these
transactions were ¥35 million, ¥65 million and ¥27 million ($273 thousand) as
of March 31, 2007, 2008, and 2009 respectively.
 F-40




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##### Table of Contents



MAKITA CORPORATION AND SUBSIDIARIES  SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES  FOR THE YEARS ENDED MARCH 31, 2007, 2008 AND 2009
 Japanese Yen (millions)AdditionsBalance at
    
    
    Charged to
    
    
    Charged to
    
    
    Deductions
    
    
    
    
    
    
    Balance atbeginning
    
    
    costs and
    
    
    Other
    
    
    from
    
    
    Translation
    
    
    end ofDescriptions
    
    of year
    
    
    expenses
    
    
    Accounts
    
    
    reserves
    
    
    adjustments
    
    
    year2007:Allowance for doubtful receivables
    
    ¥
    1,016
    
    
    ¥
    175
    
    
    ¥
    
    
    
    ¥
    (386
    )
    
    ¥
    64
    
    
    ¥
    869Deferred income tax assets
valuation allowance
    
    
    2,973
    
    
    
    34
    
    
    
    
    
    
    
    (2,701
    )
    
    
    12
    
    
    
    318Volume-based rebates
    
    
    2,724
    
    
    
    
    
    
    
    7,477
    
    
    
    (6,139
    )
    
    
    (203
    )
    
    
    3,859Cooperative advertisings
    
    
    577
    
    
    
    
    
    
    
    3,026
    
    
    
    (2,576
    )
    
    
    (70
    )
    
    
    957Cash discounts
    
    
    491
    
    
    
    
    
    
    
    5,315
    
    
    
    (5,439
    )
    
    
    (19
    )
    
    
    3482008:Allowance for doubtful receivables
    
    
    869
    
    
    
    269
    
    
    
    
    
    
    
    (73
    )
    
    
    (47
    )
    
    
    1,018Deferred income tax assets
valuation allowance
    
    
    318
    
    
    
    
    
    
    
    251
    
    
    
    (237
    )
    
    
    (1
    )
    
    
    331Volume-based rebates
    
    
    3,859
    
    
    
    
    
    
    
    9,897
    
    
    
    (9,626
    )
    
    
    346
    
    
    
    4,476Cooperative advertisings
    
    
    957
    
    
    
    
    
    
    
    3,517
    
    
    
    (3,585
    )
    
    
    64
    
    
    
    953Cash discounts
    
    
    348
    
    
    
    
    
    
    
    5,881
    
    
    
    (5,891
    )
    
    
    58
    
    
    
    3962009:Allowance for doubtful receivables
    
    
    1,018
    
    
    
    474
    
    
    
    
    
    
    
    (131
    )
    
    
    (232
    )
    
    
    1,129Deferred income tax assets
valuation allowance
    
    
    331
    
    
    
    
    
    
    
    41
    
    
    
    (32
    )
    
    
    (11
    )
    
    
    329Volume-based rebates
    
    
    4,476
    
    
    
    
    
    
    
    7,866
    
    
    
    (10,343
    )
    
    
    662
    
    
    
    2,661Cooperative advertisings
    
    
    953
    
    
    
    
    
    
    
    3,435
    
    
    
    (3,981
    )
    
    
    185
    
    
    
    592Cash discounts
    
    
    396
    
    
    
    
    
    
    
    5,444
    
    
    
    (5,514
    )
    
    
    14
    
    
    
    340
 F-41