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ANNUAL REPORTYear Ended March 31, 2009
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Millions of yenThousands of
dollars
2005 2006 2007 2008 2009 2009
Net Sales ¥ 105,081 ¥123,222 ¥137,597 ¥132,739 ¥100,355 $1,021,633Net Income (Loss) 3,123 9,340 9,995 9,002 (4,835) (49,221)Total Shareholders’ Equity 49,190 73,452 — — — —Net Assets — 77,099 97,617 98,520 88,704 903,024Total Assets 144,449 163,529 170,612 171,652 159,145 1,620,126
Yen dollars
Net Income (Loss) per Share Basic ¥ 33 ¥ 93 ¥ 85 ¥ 75 ¥ (41) $ (0.42) Diluted 26 — — — —
Number of Employees 2,897 3,080 3,382 3,773 3,741
Note: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥98.23=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2009.
MESSAGE TO SHAREHOLDERS AND INVESTORS ........................ 1
CORPORATE GOVERNANCE ....................................................... 3
BUSINESS RISKS ......................................................................... 5
FINANCIAL REVIEW .................................................................... 5
CONSOLIDATED BALANCE SHEETS ............................................ 6
CONSOLIDATED STATEMENTS OF INCOME ................................ 8
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ......... 9
Makino Milling Machine Co., Ltd. is a manufacturer of advanced machine tools, founded in May 1937. Its corporate
mission is to contribute to the development of industry in Japan and around the world by quickly discerning and
responding to industrial trends with technological innovation.
Makino’s state-of-the-art machine tools and machining technologies are used in the manufacturing systems of
companies in a wide range of industries. Working with local partners possessing strong technical capabilities, Makino has
built an extensive sales network in the United States, Europe and Asia, capable of responding to changes in global
machine tool demand and structural changes in manufacturing operations.
Major products lines: Machining centers, Numerical control (NC) electrical discharge machines (EDM), Milling machines
and other products
PROFILE
CONSOLIDATED STATEMENTS OF CASH FLOWS......................... 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................. 11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS .... 19
BOARD OF DIRECTORS AND CORPORATE AUDITORS ................. 20
CORPORATE DATA ..................................................................... 20
GLOBAL NETWORK .................................................................... 21
CONTENTS
FIVE-YEAR FINANCIAL SUMMARYMakino Milling Machine Co., Ltd. and its consolidated subsidiariesYears ended March 31
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(1) Business EnvironmentDuring the fiscal year under review, financial problems have affected the real economy, causing manufacturing activities to take a sudden downturn on a global scale. Lackluster consumption of durable consumer goods—a representative example of which is automobiles—caused a decline in capital spending in related industries. As we entered the third quarter of the fiscal year, the machine tool industry experienced a sharp drop in orders, and a dramatic drop in production was consequentially unavoidable. During the fourth quarter, operating ratio among the machine tool users dropped even further, while in machine tool markets, excess stock failed to move, further aggravating the order situation. According to statistics of the Japan Machine Tool Builders’ Association (JMTBA), the accumulated amount of orders for the machine tool industry for January through March 2009 dropped to a low level of ¥60.4 billion (down 84.6% from the same period of the previous fiscal year), and the accumulated orders for fiscal 2009 dropped by 39.2% compared with the previous fiscal year to ¥969 billion. The Group was also affected; accumulated orders posted a year-on-year drop of 38.8% to ¥83,636 million.
The machine industry, which had continued to increase production buoyed by the favorable economic conditions of the past several years, made progress in technology development, including improvements in safety and environmental friendliness. The movement has accelerated to cope with changes in the economic structure since last year. Since existing machinery and equipment is not sufficient for new product development, the machine tool industry is required to bring further technical innovation. To meet the changing times, the Group has worked on product development and machining technology research, and has prepared a system to enable us to respond to the demand for technical innovation of machine tools.
We have conducted development to meet new demands of the mold market, and have completed a full model change for vertical machining centers V33i and V56i, which form the core of our main product, the V Series. These realize an extremely high level of precision and automation, which are the current trend in die/mold machining, and are expected to capture both new and replacement demands. Further, we will introduce a new machining center for fine machining area in 2009.
The 5-axis machining center D500 released this fiscal year has begun to penetrate our markets, particularly in the mold market, despite the current stagnant demand. The new 5-axis CAM system for
molds, FF/Five, which realizes 5-axis pass based on the concept of the conventional 3-axis type, was also released in April 2009. In the medium and large mold field, the 6-axis control machining center MCC2013VG was released in January 2009, offering dramatic reduction in lead time.
While we are primarily involved in the market of mold dies for plastic, die cast aluminum and rubber, we plan to expand to press dies, a prominent market that ranks with plastic. So far we have introduced products for ultra-precise machining such as the vertical machining center FB127 and the NC electrical discharge machine EDAC1, and we will now release wire electrical discharge machines. These ultra high-precision machines use oil for machining fluid rather than water, and are expected to attract demand from electronic component and precision machine component manufacturers.
In addition to the MAG/T4 for machining large titanium alloy and MAG/A7 for machining large aluminum alloy introduced in February 2009, the product lineup for the aircraft market will be further completed with the launch of MAG/T2 for machining medium size titanium alloy.
Finally, for the robust energy market, we will release a large 5-axis machining center that is ideal for machining gear boxes for wind power generation and large diesel engines. In addition to this, we will launch the iGRINDER G10, which offers high-efficiency, high-precision grinding of difficult work such as gas turbine parts, large gears and bearings. It offers complex machining, including a combination of grinding and cutting.
As a result of the above, the Group posted sales of ¥100,355 million (down 24.4% year-on-year), operating loss of ¥262 million (compared to the operating income of ¥14,600 million of the previous fiscal year), and net loss of ¥4,835 million (compared to the net income of ¥9,002 million of the previous fiscal year) on a consolidated basis.
A description of orders and results by region follows:
- In the Japanese market, there was a downturn in demand in the IT- and automobile-related mold industries and part machining industries. As a result, sales decreased by 24.3% year-on-year to ¥103,986 million.
- As for the Asian market, demand in Chinese IT- and automobile-related mold industries diminished. In India, demand in the automobile and farming machinery component machining industries declined. Because of the doldrums in the Chinese and Indian markets, which
TO OUR SHAREHOLDERS AND INVESTORS
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Against this backdrop, we are taking measures to meet the expectations for the machine tool market, primarily by investing in technical innovation.
The consolidated performance forecasts of the Group for fiscal 2010 are as follows:
Consolidated performance forecasts for the first six months (first and second quarter combined) are sales of ¥22,000 million (down 62.9% compared to the same period of the previous fiscal year), operating loss of ¥8,500 million, and net loss of ¥9,000 million.
Consolidated performance forecasts for the full fiscal year are sales of ¥51,500 million (down 48.7% year-on-year), operating loss of ¥14,000 million, and net loss of ¥14,500 million.
July 2009
Jiro MakinoPresident
account for 60 to 70% of our sales in the Asian market, sales declined by 28.5% year-on-year to ¥23,471 million.
- In the European market, demand dropped across a wide range of sectors related to mold and part machining. As a result, sales decreased by 22.3% to ¥12,370 million.
- In the Americas market, the pace of market environment deterioration was slower than in other areas, and orders declined sharply beginning with the third quarter of the fiscal year. As a result, sales decreased by 0.7% year-on-year to ¥26,633 million.
(2) Management PrioritiesThe Company is implementing the following measures to put in place systems capable of swiftly responding to fast-evolving market conditions and to establish a robust corporate structure capable of securing profits even in a tough business environment.
1) We continue to upgrade development capabilities in order to provide high-precision and high-grade machine tools in a timely manner, responding to changing market needs. At the same time, we engage in ongoing research and surveys on various themes in order to develop machine tools attuned to next-generation needs.
2) While cultivating working environments conducive to the creation of high-precision and high-grade products, we are continuously improving production systems, including upgrading of facilities and review of production methods, in order to establish efficient and flexible production systems sensitive to changing market requirements.
3) We are also promoting overseas production and procurement of parts, taking quality and quantity of parts and materials and delivery lead times into account.
4) We intend to expand our global network of sales & marketing bases and service centers since manufacturers who use machine tools increasingly have production sites dispersed around the world.
(3) Outlook (Fiscal 2010)While China has shown signs of economic recovery and the major economic stimulus programs implemented by various countries are expected to take effect, the global economy is still not showing signs of full-scale upturn. Difficult conditions for the machine tool market will persist throughout fiscal 2010.
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1. Corporate governanceBasic corporate governance rationaleMakino Milling Machine regards strong management oversight functions as a vital element in the strengthening of competitiveness, swifter decision-making and greater transparency.
(1) Corporate governance status1) Governing body
Makino Milling Machine is a company with Board of Directors. As of June 22, 2009, the Company’s Board of Directors consists of nine directors and at present the Company has no outside directors. The Board of Directors meets once a month and, in addition to carrying out the tasks specified by laws and regulations and by the Articles of Incorporation, makes decisions on important matters and supervises operational duties. Whereas the representative director elected by the Board of Directors engages in execution of operational duties as the representative of the Company, specific operational duties are allocated among non-representative directors and executed by them. The term of office of a director is one year and directors are elected by vote of the annual general meeting of shareholders.Makino Milling Machine is also a company with corporate auditors and with Board of Auditors. As of June 22, 2009, the Company’s Board of Auditors consists of three statutory auditors (one of whom is a full-time corporate auditor), of whom two are external auditors. The statutory auditors attend meetings of the Board of Directors and make remarks, as necessary, in the course of deliberation on the agenda. Also, the Board of Auditors meets periodically and, in addition to items specified by laws and regulations, deliberates and makes decisions on matters necessary for statutory auditors’ activities, and audits directors’ execution of operational duties from an independent standpoint.
2) Internal control systems and risk management systemsAt its meeting held on May 1, 2006, the Company’s Board of Directors passed a resolution concerning ”the development of systems necessary to ensure that the execution of duties by directors complies with laws and regulations and the articles of incorporation, and other systems prescribed by the applicable Ordinance of the Ministry of Justice as systems necessary to ensure the properness of operations of a Stock Company (internal control systems)” provided for in Article 348 Paragraph 4 and in Article 362 Paragraph 5 of the Corporation Law. The Company’s internal control systems and risk management systems are described below.Positioning risk management as the basis of systems
CORPORATE GOVERNANCE
ensuring properness of execution of duties, the Company is putting in place risk management systems not only for the purpose of managing risks that may cause losses to the Company but also for preventing deviation from laws and regulations and the Articles of Incorporation and for ensuring efficient execution of duties. Directors in charge of operations and departmental heads are responsible for management of usual risks. Risks that the directors or the statutory auditors consider material, and moreover, that they consider should be examined by the Board of Directors are examined, judged and dealt with by the Board of Directors.The Company has formulated internal rules, including the Risk Management Rules in which deviation from laws and regulations and the Articles of Incorporation is provided for as a type of risk, Employment Rules and the Security Export Control Program. The Company is endeavoring to ensure compliance with laws and regulations, rules and norms by raising employee awareness through the provision of training for new employees and periodic and non-periodic training. Regarding the recording of operational activities, records are prepared and retained in accordance with the Rules of the Board of Directors in the case of information on execution of duties of directors and in accordance with the Rules for Formal Approvals in the case of decision-making for routine operations. Subsidiaries are required to report to the Company on their execution of duties and risk situations, as necessary, and the Company’s directors or employees are dispatched as directors of subsidiaries to participate in management and be responsible for oversight.Regarding audit by auditors, as well as reporting on important matters at meetings of the Board of Directors, based on the statutory auditors’ requests directors make reports or hold a meeting with statutory auditors, as necessary. Directors and employees are required to report to statutory auditors without delay concerning any eventuality that may cause significant damage or that caused damage to the Company. In the event that statutory auditors request assistants, the Company selects such assistants based on the discussion with statutory auditors about the number of assistants, positions, affiliation, etc., and secures the consent of the Board of Auditors for treatment of such assistants.In addition, with respect to the system specified by a Cabinet Office Ordinance as necessary for ensuring appropriateness of statements on finance and accounting and other information as set forth in Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Law, the Company
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(2) Compensation paid to directors and corporate auditorsThe compensation paid to directors and corporate audi-tors of the Company is as follows:
Note: 1. The Company has no outside directors. 2. The above amount includes ¥64 million recorded
as an expense for allowance for directors’ and corporate auditors’ retirement benefits for the fiscal year under review.
On Introduction of Measures against Large-scale purchases of the Company’s Shares (Anti-Takeover Measures) The Company aims to produce reliable products, providing the machine tools and technologies that are most suitable for our customers so that they can manufacture their products efficiently. It is an invaluable asset to the Company to satisfy their demand and to maintain strict confidentiality of them.We believe that we must eliminate large-scale purchases of the shares which will damage this relationship based on trust.The introduction of the Anti-takeover Measures was approved by the shareholders at the Ordinary General Meeting of Shareholders on June 20, 2008 and came into effect.
maintains and manages such system in accordance with the basic framework of internal control as indicated in the” On the Setting of the Standards and Practice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting (Council Opinions)” published by the Business Accounting Council.
3) Internal audit and audit by corporate auditorsNecessary audits are performed at the Company on the basis of close cooperation between the corporate auditors, the accounting auditor and relevant staff at the Finance Department, the General Affairs Department and the Internal Audit Office. Internal audit on maintenance and management of internal control over financial reporting is conducted by the Internal Audit Office (consists of three members), which is established as an independent organization and directly reports to the President, in cooperation with relevant departments of the Company and its consolidated subsidiaries. Regarding audits by the accounting auditor, necessary coordination such as scheduling is made internally through discussion between the corporate auditors, the Finance Department, the General Affairs Department and the Internal Audit Office. Corporate auditors and the Finance Department periodically exchange views with the accounting auditor and the necessary coordination is made. In addition, corporate auditors witness the audit process, as deemed necessary, to monitor the accounting auditor’s audit proceedings. Regarding audits by auditors, the statutory auditors gather necessary and sufficient information for conducting audits, including the situation of the Company and situations of its subsidiaries and affiliates, on a routine basis through systematic exchanges of views with directors, managerial personnel, key employees, and the accounting auditor of the Company and its subsidiaries and affiliates. Also, statutory auditors receive reports on the accounting auditor’s audit results, and use such information in conducting stringent audits.
4) Accounting auditsCertified public accountants engaged in the Company’s accounting audits are Mr. Kiyotaka Yamazaki, Mr. Takayuki Nakagawa, and Mr. Naruhito Minami, all of whom are with Gyosei & Co. Assistants engaged in the accounting audits comprise five certified public accountants, three junior accountants and two other persons.
5) Relation with external auditorsThere are no personal, capital or transactional relations between the Company and its two external auditors.
Number of persons Amount of compensa-tion (Millions of yen)
Director 11 211Corporate auditor 3 60
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(Assets, Liabilities and Net Assets) Total assets on a consolidated basis at the end of the fiscal year ended March 31, 2009 decreased by ¥12,507 million from the end of the previous fiscal year to ¥159,145 million. This is primarily attributable to a decline in notes and accounts receivable.
Total liabilities decreased by ¥2,691 million from the end of the previous fiscal year to ¥70,440 million, primarily attributable to a decrease in notes and accounts payable of ¥17,245 million, an increase in long-term loans of ¥14,388 million and issuance of bonds worth ¥10,000 million.
Net assets decreased by ¥9,815 million from the end of the previous fiscal year to ¥88,704 million due to a decrease in unrealized gain on available-for-salesecurities of ¥2,562 million and a decrease in the foreign currency translation adjustments of ¥2,575 million, etc.
(Cash Flow)Net cash provided by operating activities was ¥2,872 million, primarily attributable to a decrease in notes and accounts receivable-trade of ¥18,877 million, a decrease in notes and accounts payable-trade of ¥15,370 million and payment of income taxes by ¥3,168 million.
Net cash used in investing activities was ¥7,422 million, reflecting primarily the payment for purchases of property, plant and equipment.
Net cash provided by financing activities was ¥19,396 million as a result of proceeds from long-term loans of ¥15,000 million and issuance of bonds worth ¥10,000 million, etc.
As a result of the above, cash and cash equivalents on a consolidated basis at the end of the fiscal year ended March 31, 2009 increased by ¥14,357 million from the end of the previous fiscal year to ¥39,978 million.
The table below shows trends in cash flow indicators.
FINANCIAL REVIEW
The Group operates around the world, and the
operations are influenced by a range of different factors,
the most important of which are as follows:
- Changes in global economic conditions: The sales
of the Company heavily depend on capital expenditures
in the manufacturing industry in Japan, Asia, and
America. Since the investment appetite of companies is
likely to fall more sharply than the general economy,
there is the possibility that orders and sales of producer
goods will decline rapidly if the global economy slows.
- Trends in individual industries: Many of the
Company’s products are used in automotive companies.
Although trends in capital expenditure in the auto sector
are the most stable in the manufacturing industry, they
have a very substantial effect on sales of the Company
because the capital expenditure, which is large, has a
very significant influence on supply and demand in the
market for machine tools. Sales in growth industries,
including IT and digital home appliances, change sharply
every fiscal year because of violent fluctuations in supply
and demand.
- Exchange rate fluctuations: More than half of the
Company’s products are sold overseas. Moreover, we
have developed a range of operations overseas.
Exchange rates consequently have a significant impact on
the sales and income of the Company.
- Changes in the supply-demand of parts and raw
materials: Machine tools contain many parts and raw
materials. If supply of parts and raw materials tightens,
prices may rise, and this in turn could influence income.
If the needed quality, quantity, and delivery dates are not
secured, it could influence production and sales.
- Country risk: The Company has made inroads into
countries that are modernizing their industries. If
unexpected changes occur in the political, economic, or
social circumstances in these countries, or if legal
regulations are established or tightened, it could affect
the sales and income of the Company.
BUSINESS RISKS
66th term 67th term 68th termTerm ended March 2005
Term ended March 2006
Term ended March 2007
Capital adequacy ratio 34.1 44.9 54.9
Capital adequacy ratio on a market value basis (%) 38.2 99.1 105.6
Ratio of interest-bearing debt to cash flows (%) 46.9 5.6 1.7
Interest coverage ratio (times) 1.5 7.8 16.2
69th term 70th termTerm ended March 2008
Term ended March 2009
Capital adequacy ratio 55.8 55.0
Capital adequacy ratio on a market value basis (%) 48.4 19.0
Ratio of interest-bearing debt to cash flows (%) 2.5 15.6
Interest coverage ratio (times) 17.0 4.9
Capital adequacy ratio: Shareholders’ equity / Total assetsCapital adequacy ratio on a market value basis: Market capitalization / Total assetsRatio of interest-bearing debt to cash flows: Interest-bearing debt / Cash flowsInterest coverage ratio: Cash flows / Interest payment
* Each indicator is calculated from consolidated financial data.
* Market capitalization is computed based on the number of shares issued, excluding treasury stock.
* Cash flows mean cash flows from operating activities.* Interest-bearing debt includes all liabilities bearing interest
posted in the consolidated balance sheets.Interest payment is interest paid recorded in the consolidated statements of cash flows.
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Millions of yenThousands of
dollars
2008 2009 2009
ASSETS
Current assets:
Cash and time deposits ¥ 21,002 ¥ 39,235 $ 399,420
Marketable securities (Notes 2.e and 4) 4,737 2,160 21,989
Notes and accounts receivable 45,313 24,529 249,710
Inventories (Notes 2.f and 5) 36,812 34,365 349,842
Deferred income taxes (Notes 2.l and 9) 2,998 828 8,429
Other current assets 3,425 3,414 34,755
Allowance for doubtful accounts (Note 2.h) (421) (1,079) (10,984)
Total current assets 113,867 103,454 1,053,181
Investments and other assets:
Investment securities (Notes 2.e and 4) 11,585 7,261 73,918
Long-term loans receivable 587 493 5,019
Deferred income taxes (Notes 2.l and 9) 824 1,231 12,532
Other assets 6,231 6,956 70,813
Allowance for doubtful accounts (Note 2.h) (52) (266) (2,708)
Allowance for investment losses (Note 2.k) (126) — —
Total investments and other assets 19,049 15,676 159,585
Property, plant and equipment (Note 2.g):
Land 7,802 9,628 98,015
Buildings and structures 49,832 49,479 503,706
Machinery and equipment 23,367 24,006 244,386
Lease assets (Note 8) — 1,666 16,960
Construction in progress 265 228 2,321
81,267 85,010 865,418
Accumulated depreciation (42,531) (44,995) (458,058)
Total property, plant and equipment 38,735 40,014 407,350
Total assets ¥ 171,652 ¥ 159,145 $ 1,620,126
The accompanying notes are an integral part of these statements.
CONSOLIDATED BALANCE SHEETSMAKINO MILLING MACHINE CO., LTD. March 31, 2008 and 2009
US$1=¥98.23
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Millions of yenThousands of
dollars
2008 2009 2009
LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable:
Trade ¥ 28,308 ¥ 11,063 $ 112,623
Other 3,271 622 6,332
Short-term loans from banks 4,491 4,752 48,376
Current portion of long-term debt (Note 6) 3,731 611 6,220
Accrued expenses 6,827 4,608 46,910
Accrued income taxes 2,221 603 6,139
Reserve for directors’ bonus (Note 2.i) 70 — —
Other current liabilities 2,325 1,881 19,149
Total current liabilities 51,247 24,143 245,780
Long-term liabilities:
Long-term debt (Note 6) 14,925 39,314 400,224
Lease obligations (Note 8) — 1,905 19,393
Allowance for employees’
retirement benefits (Notes 2.j and 7) 1,625 642 6,536
Allowance for directors’ and
corporate auditors’ retirement benefits (Note 2.j) 1,503 1,309 13,326
Deferred income taxes (Notes 2.l and 9) 3,302 2,699 27,476
Other long-term liabilities 527 424 4,316
Total long-term liabilities 21,884 46,297 471,312
Net assets:
Shareholders’ equity
Common stock, no par value 19,263 19,263 196,101
Authorized : 300,000,000 shares in 2008 and 2009
Issued : 119,944,543 shares in 2008 and 2009
Capital surplus 32,595 32,595 331,823
Retained earnings (Note 10) 45,171 42,455 432,200
Treasury stock, at cost (Note 2.o) (2,233) (2,764) (28,138)
94,797 91,550 931,996
Evaluation and conversion difference
Unrealized gain on available-for-sale
securities (Note 2.e) 4,254 1,692 17,225
Foreign currency
translation adjustments (Note 2.d) (3,211) (5,786) (58,903)
1,043 (4,094) (41,678)
Minority interests 2,680 1,249 12,715
Total net assets 98,520 88,704 903,024
Total liabilities and net assets ¥ 171,652 ¥ 159,145 $ 1,620,126The accompanying notes are an integral part of these statements.
US$1=¥98.23
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The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF INCOMEMAKINO MILLING MACHINE CO., LTD. For the years ended March 31, 2008 and 2009
Millions of yenThousands of
dollars
2008 2009 2009
Net sales ¥ 132,739 ¥ 100,355 $ 1,021,633
Cost of sales 91,458 76,641 780,220
Gross profit 41,281 23,714 241,413
Selling, general and administrative expenses 26,680 23,976 244,080
Operating income (loss) 14,600 (262) (2,667)
Other income (expenses):
Interest and dividend income 404 375 3,818
Interest expense (549) (626) (6,373)
Loss on valuation of derivatives — (250) (2,545)
Gain on sales of property, plant and equipment 70 11 112
Reversal of allowance for doubtful accounts 29 — —
Gain on sales of subsidiaries and affiliates’ stocks — 122 1,242
Loss on disposal of property, plant and equipment (46) (48) (489)
Loss on disposal of inventories (27) — —
Loss on valuation of goodwill of foreign subsidiaries (249) — —
Loss on valuation of investment securities (12) (134) (1,364)
Provision of allowance for investment losses (126) — —
Provision for retirement allowances
for directors of subsidiaries for previous years (237) — —
Provision of allowance for doubtful accounts
for subsidiaries and affiliates — (814) (8,287)
Loss on valuation of stocks of subsidiaries and affiliates — (89) (906)
Exchange gains (losses), net (1,056) 727 7,401
Other, net 323 229 2,331
Income (loss) before income taxes 13,124 (759) (7,727)
Income taxes (Note 2.l) - Current 3,572 1,095 11,147
- Deferred 315 2,965 30,184
Income (loss) after income taxes 9,236 (4,819) (49,058)
Minority interests in earnings of consolidated subsidiaries 233 15 153
Net income (loss) ¥ 9,002 ¥ (4,835) $ (49,221)
Yen Dollars
Per share of common stock (Note 10):
Net income (loss) ¥ 75.79 ¥ (41.63) $ (0.42)
Cash dividends applicable to the period 15.00 7.50 0.08
US$1=¥98.23
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Millions of yenThousands of
dollars
2008 2009 2009
Common stock:
Balance at beginning of year ¥ 19,263 ¥ 19,263 $ 196,101
Balance at end of year ¥ 19,263 ¥ 19,263 $ 196,101
Capital surplus:
Balance at beginning of year ¥ 32,619 ¥ 32,595 $ 331,823
Acquisition of treasury stock (23) — —
Balance at end of year ¥ 32,595 ¥ 32,595 $ 331,823
Retained earnings (Note 10):
Balance at beginning of year ¥ 36,740 ¥ 45,171 $ 459,849
Increase in retained earnings resulting from adoption of
a new accounting standard on unification of accounting policies
applied to foreign subsidiaries for consolidated financial statements — 1,790 18,223
Net income (loss) 9,002 (4,835) (49,221)
Cash dividends (1,967) (1,752) (17,836)
Accumulated other comprehensive loss arising
from minimum pension liability adjustment (189) — —
Increase due to newly consolidated subsidiaries 1,584 2,081 21,185
Balance at end of year ¥ 45,171 ¥ 42,455 $ 432,200
Unrealized gain on available-for-sale securities (Note 2.e) :
Balance at beginning of year ¥ 6,670 ¥ 4,254 $ 43,307
Net change during the year (2,415) (2,562) (26,082)
Balance at end of year ¥ 4,254 ¥ 1,692 $ 17,225
Foreign currency translation adjustments (Note 2.d):
Balance at beginning of year ¥ (1,345) ¥ (3,211) $ (32,689)
Net change during the year (1,865) (2,575) (26,214)
Balance at end of year ¥ (3,211) ¥ (5,786) $ (58,903)
Treasury stock (Note 2.o) :
Balance at beginning of year ¥ (318) ¥ (2,233) $ (22,732)
Acquisition of treasury stock (1,915) (531) (5,406)
Balance at end of year ¥ (2,233) ¥ (2,764) $ (28,138)
Minority interests:
Balance at beginning of year ¥ 3,988 ¥ 2,680 $ 27,283
Net change during the year (1,307) (1,430) (14,558)
Balance at end of year ¥ 2,680 ¥ 1,249 $ 12,715
The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSMAKINO MILLING MACHINE CO., LTD. For the years ended March 31, 2008 and 2009
US$1=¥98.23
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Millions of yenThousands of
dollars
2008 2009 2009
Cash flows from operating activities:
Income (loss) before income taxes ¥ 13,124 ¥ (759) $ (7,727)
Adjustments for:
Income taxes paid (5,127) (3,168) (32,251)
Depreciation and amortization 3,084 3,766 38,339
Amortization of goodwill 39 39 397
Increase (decrease) in allowance for
directors’ and corporate auditors’ retirement benefits 178 (193) (1,965)
Increase (decrease) in allowance for employees’
retirement benefits 119 827 8,419
Increase (decrease) in reserve for directors’ bonus (10) (70) (713)
Increase (decrease) in allowance for doubtful accounts (33) 918 9,345
(Gain) loss on sales of property, plant and equipment (70) (11) (112)
Loss on disposal of property, plant and equipment 46 48 489
(Increase) decrease in notes and accounts receivable, trade (2,613) 18,877 192,171
(Increase) decrease in inventories (2,093) 1,146 11,666
Increase (decrease) in notes and accounts payable, trade 2,571 (15,370) (156,470)
Other, net 129 (3,177) (32,342)
Net cash provided by (used in) operating activities 9,343 2,872 29,238
Cash flows from investing activities:
(Increase) decrease in time deposits 562 (1,500) (15,270)
Payment for purchases of investment securities (2) (56) (570)
Payment for purchases of property, plant and equipment (6,696) (6,102) (62,120)
Proceeds from sales of property, plant and equipment 630 333 3,390
Other, net (188) (97) (987)
Net cash provided by (used in) investing activities (5,694) (7,422) (75,557)
Cash flows from financing activities:
Increase (decrease) in short-term loans, net 256 529 5,385
Repayments of lease obligations — (115) (1,171)
Proceeds from long-term loans payable — 15,000 152,703
Repayment of long-term loans payable (2,252) (3,731) (37,982)
Proceeds from issue of bonds — 10,000 101,802
Payment for purchases of treasury stock (1,844) (531) (5,406)
Dividends paid (1,973) (1,755) (17,866)
Net cash provided by (used in) financing activities (5,814) 19,396 197,455
Effect of exchange rate changes on cash and cash equivalents (359) (824) (8,388)
Net increase (decrease) in cash and cash equivalents (2,524) 14,021 142,736
Increase in cash and cash equivalents
arising from newly consolidated subsidiaries 384 335 3,410
Cash and cash equivalents, beginning of period (Note 2.b) 27,761 25,621 260,827
Cash and cash equivalents, end of period (Note 2.b) ¥ 25,621 ¥ 39,978 $ 406,984
The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOWSMAKINO MILLING MACHINE CO., LTD. For the years ended March 31, 2008 and 2009
US$1=¥98.23
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1. Basis of Presenting Financial StatementsThe accompanying consolidated financial statements of Makino Milling Machine Co., Ltd. (the "Company") have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles and practices generally accepted and applied in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing the consolidated financial statements, certain reclassifications and rearrangements have been made to the financial statements issued domestically in Japan in order to present these statements in a form, which is more familiar to the readers outside Japan.
In addition, the notes to the consolidated financial statements include information, which is not required under generally accepted accounting principles and practices in Japan but is presented herein as additional information.
Amounts of less than one million yen have been omitted as permitted under generally accepted accounting principles and practices in Japan. As a result, the totals shown in the accompanying consolidated financial statements (both in yen and dollars) do not necessarily agree with the sum of individual amounts.
2. Summary of Significant Accounting Policies(a) Principles of consolidationThe accompanying consolidated financial statements include the accounts of the Company and its subsidiaries (25 subsidiaries for 2008 and 26 for 2009). The significant subsidiaries, which are consolidated with the Company, are listed below:
MAKINO ASIA PTE LTDMAKINO INC.MAKINO Europe GmbHMAKINO RESOURCE DEVELOPMENT PTE LTDMakino J Co., Ltd.Makino Denso Co., Ltd.Makino Technical Service Co., Ltd.Kanto Bussan Kaisha, Ltd.Makino Giken Co., Ltd.Makino Logistics Co., Ltd.
Makino Logistics Co., Ltd., previously the Company’s unconsolidated subsidiary, is newly included in the scope of consolidation from the fiscal year ended March 31, 2009 due to an increase in its significance.
The remaining subsidiaries, whose assets, net sales, net income and the underlying net equity of retained earnings in the aggregate are not significant in the consolidated totals, have not been consolidated with the Company.
The fiscal year of the consolidated subsidiaries is the same as the Company’s except for three subsidiaries, Makino do Brasil Ltda., Makino S de R. L. de C. V. and MAKINO CHINA Co. LTD., whose fiscal years end on December 31. Significant transactions between December 31 and March 31 are reflected in the consolidated financial statements.
The equity method is not applied since the combined net profit and loss and the underlying net equity of retained earnings in the aggregate in unconsolidated subsidiaries and affiliates are not significant in the consolidated totals.
All significant intercompany accounts and transactions are eliminated in consolidation. The difference between acquisition cost and the underlying net equity at the time of acquisition is amortized evenly over five years.
(b) Cash equivalentsCash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits and certificate of deposits, all of which mature or become due within three months of the date of acquisition.
(c) Foreign currency translationsAll short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statements of income unless they are hedged by forward exchange contracts.
(d) Foreign currency financial statementsThe balance sheet accounts of the consolidated overseas subsidiaries are translated into Japanese yen at the rates of exchange at the balance sheet date except as to capital, which is translated at the historical rates of exchange at dates of acquisition. Differences arising from translation are shown as "Foreign currency translation adjustments" in the net assets in accompanying consolidated balance sheets.
The revenue and expense accounts of the consolidated overseas subsidiaries used to be translated to Japanese yen
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSMAKINO MILLING MACHINE CO., LTD.
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at the rates of exchange at the balance sheet date. Since the fiscal year ended March 31, 2009, however, the Company has applied the average rates of exchange in effect during the year in order to reflect transactions more fairly. As a result of the change, loss before income taxes decreased by ¥106 million ($1,079 thousand) for the fiscal year ended March 31, 2009.
(e) Marketable securities and investment securitiesInvestments in unconsolidated subsidiaries and affiliates are stated at cost. Equity method is not applied as in Note 2 (a). Marketable securities and investment securities other than investment securities in subsidiaries and affiliates are stated at market value. However, such securities without market value are stated at cost if they are not significantly impaired. The Company credits or charges unrealized gain or loss, net of income taxes, on the above securities to net assets as "Unrealized gain on available-for-sale securities".
(f) InventoriesFinished products and work in process are principally valued at the lower of cost or net realized value, determined by the specific identification method. Raw materials and supplies are stated at the most recent purchase prices.
Effective from the fiscal year ended March 31, 2009, the Company and its domestic subsidiaries adopted "Accounting Standard for Measurement of Inventories". As a result of the adoption, loss before income taxes increased by ¥160 million ($1,629 thousand) for the fiscal year ended March 31, 2009.
(g) Property, plant, equipment and depreciationProperty, plant and equipment, including significant renewals and additions, are carried at cost. The cost of property, plant and equipment retired or otherwise disposed of and accumulated depreciation in respect thereof are eliminated from the related accounts, and the resulting gain or loss is reflected in income. Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.
Depreciation is mainly computed by the declining balance method using the rates based on estimated useful lives of the assets, according to general class, type of construction and use. The range of useful lives is principally from 5 to 50 years for buildings and structures and from 3 to 12 years for machinery and equipment.
Effective from April 1, 2007, the Company and its domestic consolidated subsidiaries adopted the new depreciation method based on the revised Japanese Corporation Tax Law. As a result of this adoption, operating income and income before income taxes for the fiscal year ended March 31, 2008 decreased by ¥93 million each.
Effective from April 1, 2007, the Company and its domestic consolidated subsidiaries began to depreciate the amounts of 5% of acquisition costs of property, plant and equipment acquired before March 31, 2007 after deducting their memorandum prices, evenly over 5 years. This depreciation starts from the following fiscal year after the time when the book value of property, plant and equipment reaches to 5% of their acquisition costs, and is included in depreciation expenses. As a result, operating income and income before income taxes for the fiscal year ended March 31, 2008 decreased by ¥105 million each.
(h) Allowance for doubtful accounts The Company provides for possible losses due to uncollectibility of notes, accounts, loans receivable, etc. based on the Company’s past credit loss experience and management’s estimate.
(i) Reserve for directors’ bonusReserve for directors’ bonus is provided for the estimated payments of directors’ bonus which is applicable for the period.
(j) Allowance for employees’ retirement benefits and directors’ and corporate auditors’ retirement benefitsEmployees (excluding directors and corporate auditors) of the Company and most of its domestic consolidated subsidiaries are covered by a retirement plan whereby each employee, under most circumstances, upon mandatory retirement at the age of 60 years or earlier termination of employment, is entitled to either a lump sum retirement payment or pension payment based on compensation at the time of retirement and years of service. These employees’ retirement plans are funded.
The employees’ retirement benefits are accounted for as the liability for retirement benefits based on projected benefit obligations and plan assets in conformity with the accounting standard for the employees’ retirement benefits.
Directors and corporate auditors are not covered by these plans. However, liabilities for directors’ and corporate auditors’ retirement benefits include amounts equal to management’s estimate of the amounts payable to them at the balance sheet dates if they retired at those dates. Amounts payable to directors and corporate auditors upon retirement are subject to the approval of shareholders.
(k) Allowance for investment lossesAllowance for investment losses is provided for the estimated losses on investments based on the evaluation of the financial conditions of the investees.
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(l) Income taxesDeferred income taxes are recognized applying the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse.
(m) Hedge accountingThe Company uses derivative financial instruments to manage their exposures to fluctuations in foreign exchange and interest rates. The Company does not enter into derivatives for trading or speculative purposes.
The monetary credit and debt denominated in foreign currencies for which foreign exchange forward contracts are used to hedge the foreign currency fluctuations are translated at the contracted rates if the derivatives meet certain hedging criteria.
(n) Appropriations of retained earningsAppropriations of retained earnings are accounted for and reflected in the accompanying consolidated financial statements basically when they are approved by the shareholders or resolved by the board of directors.
(o) Treasury stockThe portion of treasury stock attributable to minority shareholders is deducted from minority interests in the accompanying consolidated balance sheets, and the portion attributable to the Company is deducted from shareholders’ equity.
(p) ReclassificationsCertain reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year’s presentation.
(q) Unification of accounting policies applied to foreign subsidiaries for consolidated financial statementsEffective from April 1, 2008, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” and necessary adjustments were made. As a result, operating loss and loss before income taxes increased by ¥47 million ($478 thousand) and ¥16 million ($163 thousand), respectively.
3. United States Dollar AmountsThe United States dollar amounts presented in the accompanying consolidated financial statements are included solely for convenience and are stated, as a matter of arithmetical computation only, at the rate of ¥98.23 = U.S.$1, which was the prevailing exchange rate on March 31, 2009.
These translations should not be construed as representations that the Japanese yen amounts actually represent, or have been or could be converted into United States dollars at that rate.
4. Marketable Securities and Investment Securities(1) Marketable securities and investment securities quoted at an exchange as of March 31, 2008 and 2009
Millions of yen
2008
Acquisition costAmount on
balance sheetDifference
Available-for-sale securities whose amount on balance sheet exceeds acquisition cost(1) Stocks ¥ 4,373 ¥ 11,113 ¥ 6,740(2) Other 1,513 1,514 1Sub total ¥ 5,887 ¥ 12,628 ¥ 6,741Available-for-sale securities whose amount on balance sheet does not exceed acquisition cost(1) Stocks ¥ 19 ¥ 14 ¥ (4)(2) Other 321 298 (23)
Sub total ¥ 340 ¥ 312 ¥ (28)Total ¥ 6,228 ¥ 12,941 ¥ 6,713
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Millions of yen
2009
Acquisition costAmount on
balance sheetDifference
Available-for-sale securities whose amount on balance sheet exceeds acquisition cost(1) Stocks ¥ 4,001 ¥ 6,896 ¥ 2,895(2) Other 1,016 1,016 0Sub total ¥ 5,017 ¥ 7,913 ¥ 2,895Available-for-sale securities whose amount on balance sheet does not exceed acquisition cost(1) Stocks ¥ 448 ¥ 253 ¥ (194)(2) Other 20 14 (5)
Sub total ¥ 468 ¥ 268 ¥ (199)Total ¥ 5,486 ¥ 8,181 ¥ 2,695
Thousands of dollars
2009
Acquisition costAmount on
balance sheetDifference
Available-for-sale securities whose amount on balance sheet exceeds acquisition cost(1) Stocks $ 40,731 $ 70,203 $ 29,472(2) Other 10,343 10,343 0Sub total $ 51,074 $ 80,556 $ 29,472Available-for-sale securities whose amount on balance sheet does not exceed acquisition cost(1) Stocks $ 4,561 $ 2,576 $ (1,975)(2) Other 204 143 (51)
Sub total $ 4,764 $ 2,728 $ (2,026)Total $ 55,849 $ 83,284 $ 27,436
(2) Available-for-sale securities sold during 2008 and 2009
Millions of yenThousands of
dollars
2008 2009 2009Amounts sold ¥ 414 ¥ 805 $ 8,195Gains (losses) from sales of the available-for-sale securities 0 (32) (326)
(3) Securities not revalued by the market
Millions of yenThousands of
dollars
2008 2009 2009Investments in subsidiaries and affiliated companies ¥ 415 ¥ 21 $ 214Available-for-sale securities
Unlisted stocks 42 89 906Money management fund 2,771 926 9,427Mid-term government bond funds 52 53 540Other 100 150 1,527
Total ¥ 3,381 ¥ 1,239 $ 12,613
5. Inventories Inventories as of March 31, 2008 and 2009 comprise the following:
As of March 31,
Millions of yenThousands of
dollars
2008 2009 2009Finished products ¥ 10,880 ¥ 11,100 $ 113,000Work in process 11,604 9,136 93,006Raw materials and supplies 14,327 14,128 143,826
Total ¥ 36,812 ¥ 34,365 $ 349,842
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6. Long-Term DebtLong-term debt comprises the following:
As of March 31,
Millions of yenThousands of
dollars
2008 2009 2009Long-term bank loans due through 2014 ¥ 8,656 ¥ 19,925 $ 202,8401.23 per cent. Yen unsecured bonds due 2010 10,000 10,000 101,8021.70 per cent. Yen unsecured bonds due 2013 — 10,000 101,802
18,656 39,925 406,444Less: Portion due within one year (3,731) (611) (6,220)
Total Long-term debt ¥ 14,925 ¥ 39,314 $ 400,224
The weighted average interest on long-term bank loans on March 31, 2009 was 2.18%.The aggregate annual maturities of long-term debt on March 31, 2009 are as follows:
Year ending March 31,Millions of
yenThousands of
dollars
2010 ¥ 611 $ 6,2202011 14,678 149,4252012 2,374 24,1682013 2,374 24,168
2014 and thereafter 19,889 202,474
7. Employees’ Retirement BenefitsThe Company and its domestic consolidated subsidiaries have defined benefit pension plans, which consist of a benefit plan provided under the Welfare Pension Insurance Law of Japan, a corporate pension plan and a lump-sum payment plan as well as defined contribution pension plans.
Some of the overseas consolidated subsidiaries have defined contribution plans as well as defined benefit plans.
(1) The multi-employer pension plan under which required contributions are accounted for as benefit costs (as of March 31, 2008)(a) Funded status
Millions of yenThousands of
dollars
Fair value of plan assets ¥ 116,372 $ 1,184,689Benefit obligation 147,188 1,498,402
Net amount ¥ (30,815) $ (313,703)
(b) The Group’s proportion of the contributions to the aggregate pension contributions
7.23%
(2) The liability (asset) for employees’ retirement benefitsAs of March 31,
Millions of yenThousands of
dollars
2008 2009 2009Projected benefit obligation ¥ 9,585 ¥ 13,341 $ 135,814Fair value of plan assets (10,364) (10,671) (108,633)Unrecognized actuarial loss (1,366) (5,661) (57,630)Unrecognized prior service cost 450 391 3,980Prepaid pension cost 3,320 3,242 33,004
Net liability (asset) ¥ 1,625 ¥ 642 $ 6,536
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(3) The components of net periodic benefit costsYear ended March 31,
Millions of yenThousands of
dollars
2008 2009 2009Service cost ¥ 455 ¥ 389 $ 3,960Interest cost 206 497 5,060Expected return on plan assets (297) (517) (5,263)Amortization of unrecognized actuarial loss 43 382 3,889Amortization of unrecognized prior service cost (58) (55) (560)Contribution for Welfare Pension Insurance fund 469 527 5,365Extra retirement benefit and others 9 51 519Contribution for defined contribution pension plan 150 163 1,659Net periodic benefit costs ¥ 978 ¥ 1,439 $ 14,649
(4) Assumptions used in accounting for the plansYear ended March 31,
2008 2009Period allocation method for estimated retirement benefits Mainly Straight-line Mainly Straight-lineDiscount rate Mainly 2.5% Mainly 2.5%Expected rate of return on plan assets Mainly 2.5% Mainly 2.5%Amortization of prior service cost Mainly10years Mainly10yearsRecognition period of actuarial gain/loss Mainly10years Mainly10years
8. LeasesLease assets accounted for as finance leases are depreciated using the same methods applied to the tangible fixed assets which the Company owns, except for those not accompanying the transfer of ownership, which are depreciated to residual value of zero by the straight-line method over the lease terms.
Effective from April 1, 2008, the Company adopted “Accounting Standard for Lease Transactions” and “Implementation Guideline for Accounting Standard for Lease Transactions”. This change has no effect on operating loss and loss before income taxes.
Note that finance leases not accompanying the transfer of ownership which commenced before March 31, 2008 continue to be accounted for as operating leases in accordance with accounting principles and practices generally accepted in Japan. A summary of assumed amounts of acquisition cost which includes interest portion, accumulated depreciation, and net book value of those leases at March 31, 2008 and 2009 is as follows:
Millions of yenThousands of dollars
2008 2008 2009Acquisition cost ¥3,403 ¥2,722 $27,710Accumulated depreciation ¥1,680 ¥1,624 $16,533Net book value ¥1,722 ¥1,097 $11,168
Future lease payments (including interest portion) subsequent to March 31,2008 and 2009 for finance leases accounted for as operating leases are as follows:
Millions of yenThousands of dollars
2008 2008 2009Due within one year ¥ 625 ¥ 468 $ 4,764Due after one year ¥1,096 ¥ 628 $ 6,393Total ¥1,722 ¥1,097 $11,168
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9. Income Taxes Breakdown of deferred tax assets and deferred tax liabilities by their main occurrence causes is as follows:
Year ended March 31,
Millions of yenThousands of
dollars
2008 2009 2009Deferred tax assets:
Tax loss carry forwards ¥ 735 ¥ 988 $ 10,058Accrued expenses 1,529 903 9,193Directors’ and corporate auditors’ retirement benefits 509 534 5,436Valuation loss on investment securities 845 — —Write-down of inventories 105 — —Employees’ retirement benefits 22 887 9,030Unrealized gain on available-for-sale securities 8 — —Other 1,904 552 5,619
Subtotal 5,661 3,867 39,367Valuation allowance (743) (1,807) (18,396)
Deferred tax assets 4,918 2,059 20,961
Deferred tax liabilities:Unrealized gain on available-for-sale securities (2,457) (1,125) (11,453)Prepaid pension cost (1,256) (1,305) (13,285)Tax depreciation over book (490) (311) (3,166)Other (192) 42 428
Deferred tax liabilities (4,397) (2,699) (27,476)Net deferred tax assets (liabilities) ¥ 520 ¥ (640) $ (6,515)
10. Retained Earnings and Per Share DataIn accordance with the Japanese Corporation Law, dividends and the related appropriations of retained earnings may be approved by the shareholders or resolved by the board of directors after the end of each fiscal year. The dividends and the related appropriations of retained earnings are not reflected in the financial statements at the end of such fiscal years but recorded at the time they are approved or become effective. However, dividends per share shown in the accompanying consolidated statements of income are included in the periods to which they are applicable.
Net income (loss) per share is based on the weighted average number of shares of common stock outstanding during each period.
Cash dividends per share are based on cash dividends declared as applicable to the respective periods.Diluted net income per share is not disclosed because potentially dilutive securities were not issued for the fiscal
years ended March 31, 2008 and 2009.
11. Segment Information
1) Geographical segment information For the year ended March 31, 2008 (Millions of yen)
Japan Asia America Europe Subtotal Eliminations Total
Net sales:
External customers ¥ 62,964 ¥27,837 ¥26,113 ¥15,824 ¥132,739 — ¥132,739
Intersegment 74,416 4,973 716 98 80,206 ¥ (80,206) —
Total 137,381 32,811 26,829 15,923 212,945 (80,206) 132,739
Operating expenses 128,708 30,001 24,861 15,161 198,733 (80,594) 118,138
Operating income (loss) ¥ 8,672 ¥ 2,810 ¥ 1,968 ¥ 761 ¥ 14,212 ¥ 388 ¥ 14,600
Total assets ¥160,606 ¥29,412 ¥21,485 ¥11,793 ¥223,297 ¥ (51,645) ¥171,652
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For the year ended March 31, 2009 (Millions of yen)
Japan Asia America Europe Subtotal Eliminations Total
Net sales:
External customers ¥ 42,484 ¥19,397 ¥26,154 ¥12,319 ¥100,355 — ¥100,355
Intersegment 61,501 4,074 479 51 66,107 ¥ (66,107) —
Total 103,986 23,471 26,633 12,370 166,462 (66,107) 100,355
Operating expenses 106,331 23,686 25,161 11,922 167,101 (66,484) 100,617
Operating income (loss) ¥ (2,345) ¥ (214) ¥ 1,472 ¥ 448 ¥ (639) ¥ 377 ¥ (262)
Total assets ¥151,714 ¥21,716 ¥17,255 ¥ 8,812 ¥199,498 ¥ (40,353) ¥159,145
For the year ended March 31, 2009 (Thousands of dollars)
Japan Asia America Europe Subtotal Eliminations TotalNet sales:
External customers $ 432,495 $197,465 $266,253 $125,410 $1,021,633 — $1,021,633Intersegment 626,092 41,474 4,876 519 672,982 $(672,982) —Total 1,058,597 238,939 271,129 125,929 1,694,615 (672,982) 1,021,633
Operating expenses 1,082,470 241,128 256,144 121,368 1,701,120 (676,820) 1,024,300Operating income (loss) $ (23,873) $ (2,179) $ 14,985 $ 4,561 $ (6,505) $ 3,838 $ (2,667)Total assets $1,544,477 $221,073 $175,659 $ 89,708 $2,030,927 $(410,801) $1,620,126
Effective from April 1, 2008, as described in Note 2(f), the Company and its domestic subsidiaries adopted “Accounting Standard for Measurement of Inventories”. As a result, operating loss in Japan segment increased by ¥160 million ($1,629 thousand).
As described in Note 2(d), the average rates of exchange in effect during the year have been applied to revenue and expense accounts of the consolidated overseas subsidiaries. As a result of this change, operating loss in the Asia segment increased by ¥17 million ($173 thousand), and operating income in the America segment and in the Europe segment increased by ¥280 million ($2,850 thousand) and ¥510 million ($5,192 thousand), respectively.
Effective from April 1, 2008, as described in Note 2(q), the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”. As a result, operating income of eliminations decreased by ¥47 million ($478 thousand).
2) Overseas sales
Millions of yenThousands of dollars
2008 2009 2009Overseas sales
America ¥ 26,861 ¥ 26,071 $ 265,408 Europe 17,398 13,888 141,382 Asia 38,039 25,291 257,467 Other 3,069 2,167 22,060 Total ¥ 85,368 ¥ 67,418 $ 686,328
Consolidated sales ¥132,739 ¥100,355 $1,021,633 Proportion of overseas sales to consolidated sales 64.3% 67.2% 67.2%
As described in Note 2(d), the average rates of exchange in effect during the year have been applied to revenue and expense accounts of the consolidated overseas subsidiaries. As a result of this change, sales in America, Europe, Asia and Other increased by ¥592 million ($6,027 thousand), ¥1,139 million ($11,595 thousand), ¥1,546 million ($15,739 thousand) and ¥9 million ($92 thousand), respectively.
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
Makino Milling Machine Co., Ltd.
GYOSEI & CO.
We have audited the accompanying consolidated balance sheets of Makino Milling Machine Co., Ltd. and
subsidiaries (the “Company”) as of March 31, 2009 and 2008, and the related consolidated statements of income,
changes in net assets and cash flows for the years then ended, all expressed in Japanese yen. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the financial statements based on our audits.
We conducted our audits in accordance with auditing standards, generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of March 31, 2009 and 2008, and the results of their operations and their cash
flows for the years then ended in conformity with accounting principles generally accepted in Japan.
As discussed in Note 2(f) to the consolidated financial statements, effective March 31, 2009, the Company adopted
Accounting Standards Board of Japan Statement No.9, “Accounting Standard for Measurement of Inventories”.
As discussed in Note 2(q) to the consolidated financial statements, effective April 1, 2008, the Company adopted
Practical Issues Task Force No.18, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries
for Consolidated Financial Statements”.
As discussed in Note 2(d) to the consolidated financial statements, effective March 31, 2009, the Company
changed its method of accounting for translating revenue and expense accounts of its foreign subsidiaries recorded in
local currencies into Japanese yen, from using exchange rates effective at the balance sheet date to average exchange
rates during the year.
The United States dollar amounts shown in the consolidated financial statements referred to above have been
translated solely for convenience. We have reviewed this translation and, in our opinion, the United States dollar
amounts in the accompanying consolidated financial statements have been translated from Japanese yen on the basis set
forth in Note 3.
June 19, 2009
Tokyo, Japan
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BOARD OF DIRECTORS AND CORPORATE AUDITORS
President Jiro Makino
Executive Vice President, Director Shun Makino
Vice President, Director Eiichi Hososhima
Director Takeo Minosawa
Director Akio Koumura
Director Tatsuaki Aiba
Director Shingo Suzuki
Director Yasuyuki Tamura
Director Toshiyuki Nagano
Corporate Auditor Eiji Fukui
Corporate Auditor Hirohisa Ozawa
Corporate Auditor Kouichi Suzuki
As of June 19, 2009
CORPORATE DATA
Makino Milling Machine Co., Ltd.
Date of Foundation May 1, 1937
Paid-in Capital ¥19,263 million
Activities Manufacture, sale and export of machine tools
Head Office 3-19, Nakane 2-chome, Meguro-ku, Tokyo 152-8578, Japan
Phone : +81-3-3717-1151
Fax : +81-3-3725-2105
Research Laboratory Atsugi (Kanagawa)
Domestic Works Atsugi (Kanagawa), Fuji-Katsuyama (Yamanashi)
Overseas Works MAKINO ASIA PTE. LTD. (Singapore)
MAKINO CHINA CO., LTD (China)
MAKINO INDIA PRIVATE LIMITED (India)
Sales & Service Offices Tokyo, Osaka, Nagoya, and other 15 offices
Overseas Sales & Service Offices
U.S.A., Germany, Singapore, Korea, China, India, and others
Consolidated Subsidiaries
MAKINO ASIA PTE. LTD.
MAKINO RESOURCE DEVELOPMENT PTE.LTD.
MAKINO INC.
MAKINO Europe GmbH
MAKINO J Co., Ltd.
MAKINO DENSO Co., Ltd.
MAKINO TECHNICAL SERVICE Co., Ltd.
KANTO BUSSAN Co., Ltd.
Makino Giken Co., Ltd.
Makino Logistics Co., Ltd.
As of June 30, 2009
INDIA
CHINA
Head QuterPlantTechnical CenterSales & Service Office
NORTH AMERICA
EUROPE
ASIA
MAKINO ASIA PTE LTD (Singapore)http://www.makino.com.sg/
MAKINO China Co., Ltd.http://www.makino.com.cn/
MAKINO INDIA PRIVATE LIMITEDhttp://makinoindia.co.in/
MAKINO INC.http://www.makino.com/
Makino Europe GmbHhttp://www.makino.de
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GLOBAL NETWORK
INDIA
CHINA
Head QuterPlantTechnical CenterSales & Service Office
NORTH AMERICA
EUROPE
ASIA
MAKINO ASIA PTE LTD (Singapore)http://www.makino.com.sg/
MAKINO China Co., Ltd.http://www.makino.com.cn/
MAKINO INDIA PRIVATE LIMITEDhttp://makinoindia.co.in/
MAKINO INC.http://www.makino.com/
Makino Europe GmbHhttp://www.makino.de
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3-19, Nakane 2-chome, Meguro-ku, Tokyo 152-8578, JapanPhone : +81-3-3717-1151Fax : +81-3-3725-2105URL : http://www.makino.co.jp/
Printed in Japan
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