ANNUAL REPORT 2009
ShinMaywa ShinMaywa ShinMaywa Industries, Ltd. ShinMaywa Industries, Ltd. ANNUAL REPORT 2009 ShinMaywa Year ended March 31, 2009 ShinMaywa Industries, Ltd. ShinMaywa ShinMaywa Industries, Ltd. ShinMaywa ShinMaywa ShinMaywa Industries, Ltd. ShinMaywa Industries, Ltd.
ShinMaywa ShinMaywa Industries, Ltd. www.shinmaywa.co.jp 09.09
005_0301401372109.indd 1 2009/09/10 18:18:54 ShinMaywa ShinMaywa Industries, Ltd. Company Overview (As of March 31, 2009)
Company Profile Company Name ShinMaywa Industries, Ltd. Head Office 1-1 Shinmeiwa-cho, Takarazuka-shi, Hyogo 665-8550, Japan Paid-in Capital 15,981,967,991 yen Founded November 5, 1949 President Tadashi Kaneki Category of Business Transportation Equipment Number of Employees Consolidated 3,883 / Non-consolidated 2,010 Number of Affiliated Companies 23
Profile Breakdown of Shareholders 2009 has a special significance for us because it is the 60th year since weTr easury Stocks 16.65% (1) “Contributing to Society adopted the ShinMaywa name. However, our history stretches back to 191819,933,888 shares when our forerunner, Japan’s first aircraft manufacturer, was founded. Stock Information Financial Institutions 21.14% In 1928 the spirit of that enterprise passed to Kawanishi Aircraft Company, (42) through Excellent Technologies 25,305,791 shares Total Number of SharesLtd., Authorized which built 300,000,000 world-class aircraft shares incorporating state-of-the-art technology Total Number of Total Number of Sharesof Issued that era. 119,727,565 shares Shares Issued: Financial Instruments Firms 0.32% (40) as well as Superior Subsequently, we capitalized on the technologies119,727,565 and expertise shares 384,537 shares Number of Shares per Unit 1,000 shares Number of accumulated through aircraft production by applying them in two new Other Companies 14.16% Shareholders: Number of Shareholders 10,459 (119) Products and Services” business fields, namely, special purpose trucks and industrial10,459 machinery, 16,958,377 shares in which we gained a strong presence. The establishment of SHIN MEIWA Foreign Institutions and Individuals 22.18% INDUSTRY CO.,LTD. in 1949 paved the way for the resumption of the aircraft(128) 26,551,917 shares business. Thus, the present-day ShinMaywa is a contender in these three fields. Japanese Individuals and Others 25.55% The ShinMaywa Group is characterized by its diverse business portfolio.(10,129) The unifying theme of our activities is that they share the goal articulated30,593,055 in shares our corporate philosophy of “contributing to society through excellent Major Shareholderstechnologies as well as superior products and services”. In all our business CONTENTS activities and products, we endeavor to give shape to our customers’ needs Number of Shares Shareholding Ratio Order Name of Shareholders Profile 1 and aspirations by deploying our accumulated technologicalHeld prowess. (%) Disclaimer Due to the highly specialized nature of our work, most of our products are At a Glance 2 1 SANSHIN CO., LTD. 9,293,065 9.31 Caution Concerning Forward-Looking Statements Treasury Stocks 16.59% 2 Japan Trusteebuilt Services to order Bank, and Ltd.hence (Trust manufactured Account) in relatively limited8,273,000 quantities. (1) 8.29 Financial Highlights 3 This annual report contains forward-looking statements—that is, 19,863,697 shares 3 The Master TrustHowever, Bank these of Japan, products Ltd. are (Trust made Account) to fulfill key social purposes5,681,000 and the 5.69 statements related to future, not past, events. Such statements Featured Interview 4 4 Japan Trustee Services Bank, Ltd. (Trust Account 4G) 4,308,000 Financial4.32 Institutions 19.82% are in accordance with management’s present plans, strategies significant market shares of many ShinMaywa Group products are a testimony (45) and outlook, based on management’s judgment in light of 5 Hitachi, Ltd. 4,000,337 23,727,8404.01 shares Review of Operations by Segment 8 to their high quality and superior after-sales service. information currently available. These forward-looking 6 ShinMaywa Employees' Stock Ownership 3,327,471 3.33 Our mission is to develop businesses and create productsTotal that deliver Strategies for Sustained Growth statements involve potential risks and uncertainties, and 7 State Street Bank and Trust Company 505019 2,979,000 2.99 Financial Instruments Firms 0.67% outstanding value to our customers based on engineering(10,737) excellence (53) of the ShinMaywa Group 15 ShinMaywa offers no guarantee as to their accuracy and Trust & Custody Services Bank, Ltd. 119,727,565 805,928 shares reliability. It should be noted that the Company’s actual 8 unaffected by fashion. We are resolved to remain true to this2,647,000 tradition. 2.65 (Securities Investment Trust Account) Other Companies 13.46% Corporate Governance 18 performance may differ materially from that expressed in the shares Inspired by the celebration of our 60th anniversary,100% the ShinMaywa Group (116) forward-looking statements herein, owing to various factors. 9 CBNYDFA International Cap Value Portfolio 2,597,000 2.6016,118,316 shares Financial Section 20 will continue to devote itself to enhancing its corporate value. These factors include future economic conditions, competition in The Chase Manhattan Bank, N.A. London Secs Lending 10 2,428,000 Foreign2.43 Institutions and Individuals 24.87% Report of Independent Auditors 21 the industry, market demand, exchange rates, other social and Omnibus Account (137) economic circumstances and contingencies. 29,770,579 shares Company Overview 53 Japanese Individuals and Others 24.59% (10,385) Note: The Company holds 19,933,888 treasury stocks, but it has been excluded from the above list of major shareholders. 29,441,205 shares 1 53
010_0301401372109.indd005_0301401372109.indd 1-12 2009/09/162009/09/10 16:52:39 18:18:57 At a Glance Financial Highlights
Contribution of Each Segment to Net Sales The ShinMaywa Group has four business Net Sales Operating Income Net Income / Earnings per Share segments: aircraft, special purpose truck, Net Income Earnings per Share industrial machinery, and construction & Millions of yen Millions of yen Millions of yen yen 150,000 144,451 8,000 4,000 3,840 80 138,959 Construction & Others others. 129,681 3,643 Construction & Others The breakdown of the net sales for fiscal 127,992 127,777 7. 0% Aircraft 9.0% 120,000 6,050 3,051 Aircraft 2008 is as shown in the pie charts. Sales of 6,000 3,000 60 20.6% 19.3% 5,298 5,008 the special purpose truck and industrial 4,854 2,450 90,000 Industrial Machinery Industrial Machinery FY2008 machinery segments accounted for FY2007 4,000 2,000 38.43 40 approximately 70% of net sales, with the 35.36 36.4% 138,959 36.9% 127,777 60,000 Millions of yen 28.12 Millions of yen remaining sales coming from aircraft and 24.53 Special Purpose Truck construction & others segments. 2,000 1,000 20 Special Purpose Truck 30,000 36.0% Net sales were approximately 10% lower 968 34.8% 26 0.27 than in the previous fiscal year, but the 0 0 0 0 ’08’07’06’05’04 (FY) ’08’07’06’05’04 (FY) ’08’07’06’05’04 (FY) (Millions of yen) proportion of sales contributed by each 200,000 segment did not change significantly. Return on Equity Total Assets Net Assets /Net Assets per Share 150,000
Net Assets Net Assets per Share % Millions of yen Millions of yen yen 100,000 144,206 10 150,000 141,192 100,000 1,000 140,388 Aircraft Segment 132,079 125,900 82,947 82,925 50,000 81,147 Sales: 24,613 million yen (-14%) 8 120,000 80,000 78,419 800 75,523 808.16 814.56 783.47 Steel Business Operating loss: 526 million yen (-1,419 million yen) 753.96 797.49 Material Recycling Business 0 ’05 ’06 ’07 (FY) Major products: US-2 STOL Search and Rescue Amphibian, 6 90,000 60,000 600 Other Business Components for Boeing 777 and Gulfstream G550 4.7 4.8 3.9 4 60,000 40,000 400 3.0 Special Purpose Truck Segment 2 30,000 20,000 200 Sales: 44,483 million yen (-11%) 0.0 0 0 0 0 Operating income: 422 million yen (-2,647 million yen) ’08’07’06’05’04 (FY) ’08’07’06’05’04 (FY) ’08’07’06’05’04 (FY) Major products: Rear Dump Body and Tipping Gear, Detachable Container System, Arm Hinge Type Tail Gate Lifter, Refuse Collector Business Results During fiscal 2008 the impact of the financial crisis originating in the United States and the appreciation of the yen greatly Industrial Machinery Segment exceeding forecasts pushed the Japanese economy into recession amid slumping exports, plummeting capital spending, Sales: 47,175 million yen (-7%) and declining personal consumption. Operating income: 3,255 million yen (+158 million yen) In these circumstances, the ShinMaywa Group worked to minimize the adverse impact of this sharp deterioration of the Major products: Pumps and related products, Elevator Type Car business environment by implementing emergency measures to squeeze costs out of the business. Looking to the future, Parking System, Automatic Wire Terminating the Group stepped up development of new products and expanded its network of offices in overseas markets. The Group Machines, Refuse Transfer Station System also endeavored to increase corporate value by, for example, withdrawing from unprofitable businesses and concentrating management resources on core activities. Construction & Others Despite these efforts, orders declined 24.5% year on year to ¥111,302 million and net sales decreased 8.0% to Sales: 11,504 million yen (+18%) 0 0 0 ¥127,777 million. While the industrial machinery segment maintained a robust’05 performance, ’06 ’07 ’08 this could not’05 fully ’06 offset ’07 ’08 ’05 ’06 ’07 ’08 ’05 ’06 ’07 ’08 Operating income: 298 million yen (-97 million yen) (FY) (FY) (FY) (FY) plummeting demand for the products of the special purpose truck segment and the decline in earnings of the aircraft segment due to appreciation of the yen. With regard to profits, although the emergency measures did have a positive impact, ordinary income declined 78.8% (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 150,000 150,000 4,000 4,000 year on year to ¥996 million and net income plunged 98.9% to ¥26 million owing to the recording of a 144,451loss on valuation 3,840 0,000 138,959 of investment securities attributable to sluggish stock markets. 12,595 000,000 9,747 00,000
Note: The Company’s fiscal year is from April 1 to March 31. Fiscal 2008 is a fiscal year from April 1, 2008, to March 31, 2009 (from page 2 to page 19). 120,000 120,000 3,000 3,000 54,791 2 50,529 00,000 3 2,450 0,000 90,000 90,000 0,000 0,000
010_0301401372109.indd 2-3 2009/09/16 16:52:40 2,000 2,000
60,000 60,000
52,446 50,110 00,000
1,000 1,000 30,000 30,000
24,616 28,572 00,000
0 0 0 0 ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) Featured Interview
ShinMaywa Industries’ 60th anniversary —Toward the Creation of Value in the Global Markets—
November 2009 marks ShinMaywa Industries’ 60th The worldwide recession that originated in the United Celebrating the 60th anniversary anniversary. In Japan, when a person turns sixty States in September 2008 was a severe blow to the It will be 60 years since we became ShinMaywa, but we can ShinMaywa Group. Since the performance of our businesses years old, we use the word “kanreki”, which refers trace our history back through more than nine decades. is closely linked with construction demand and capital not only to the completion of his or her first 60-year We started out as an aircraft manufacturer. In the post- investment, sales stalled. This coupled with the appreciation cycle but also to the commencement of the second war period in Japan as infrastructure development got of the yen, resulted in significant declines in both sales and phase of a person’s life. It is an auspicious juncture underway and economic growth took off, ShinMaywa profits for fiscal 2008 compared with the previous cycle. in the life of a person and so it represents a launched the special purpose truck business and entered the The special purpose truck business was affected the industrial machinery field by deploying in these new most. Orders for dump trucks and other mainstay products milestone in the history of a company. domains technologies originally cultivated through aircraft abruptly lost momentum in October 2008. Similarly, in the Therefore, this is an opportune time for production. industrial machinery business, orders for Thin Film Coating ShinMaywa to reflect on its history, review its At present, our principal business segments are aircraft, System and Automatic Wire Terminating Machine (products underlying technological expertise and identify special purpose truck, and industrial machinery. Although closely linked with the automotive market) fell far short of opportunities for further growth. our businesses are relatively modest in scale, we derive expectations. Furthermore, even in the aircraft business, strength from having been a pioneer in each field, the which is less subject to turbulence in the economic climate, In this interview, President Tadashi Kaneki, who breadth of our product portfolio, and the large market international sales were substantially below what we had is charting the course of the ShinMaywa Group, shares our products command. Indeed, we offer more than anticipated owing to a two-month strike at Boeing and the discusses the principal issues concerning the Group 200 types of products in the special purpose truck segment appreciation of the Japanese currency. and the road ahead. alone. Nonetheless, light began to appear at the end of the I believe that customer-oriented manufacturing enables tunnel. The impact of our company-wide initiative to reform us to maintain our competitive advantage amid fierce production systems, SHIP (ShinMaywa Innovation for competition with specialist manufacturers. I also believe that Productivity), is becoming evident at workplaces. For our continuous efforts to endow our products with example, the amount of overtime worked at certain plants functions and quality that satisfy market needs have inspired has been halved. In another positive development, orders customer confidence in the ShinMaywa Group. This is what substantially increased for the CNW series, Hiefficiency and ultimately underpins our strong presence in various markets. Good Particles Passage Performance Submersible Pump, Although our business segments may appear to have products for which we have high expectations. These pumps little in common with one another at first glance, they do received public recognition in the form of an award for their
Tadashi Kaneki, President and Chief Executive Officer, giving an interview share underlying fundamental technologies. The Group energy-conserving performance. pursues an integrated approach from product development and manufacturing to services in each business.
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010_0301401372109.indd 4-5 2009/09/16 16:52:41 Featured Interview
Long-term management plan: already have the largest market share. Furthermore, we received an order for a refuse transfer “Value Up 200!” In Japan, with the aim of focusing resources on core station system for Shanghai. We have already started Shortly after we had set new targets in the “Value Up 200!” businesses, on June 1st, 2009, ShinMaywa Industries construction of this system with the aim of completing it long-term management plan in July 2008, the worldwide absorbed ShinMaywa Engineering, Ltd. which designs, sells before Shanghai Expo. Capitalizing on this project, we will recession struck. This underlined the necessity of enhancing and maintains mechanical car parking systems. As a result, step up overseas marketing of our environmental systems. intrinsic corporate value, the action theme of “Value Up the operations of the two companies are now fully 200!” integrated. This merger is intended to increase ShinMaywa’s ShinMaywa’s vision for the future There is a large disparity between the management competitive advantage in the industry. Moreover, while the targets we initially set and current profit levels. However, as I Japanese market is expected to shrink, the merger will Throughout its history, ShinMaywa has evolved by have already mentioned, our initiatives have started to bear strengthen our ability to seize opportunities in promising advancing into new business fields whenever an fruit. Moreover, there are various other measures that we markets overseas. opportunity arose. Our development is based on are considering or are already implementing. Therefore, we These are examples of what we are doing to achieve the technological expertise, which brings about a realization of intend to revise the management targets once the economic vision articulated by “Value Up 200!” Going forward, we will the requirements of our customers; and service capabilities, climate stabilizes, but continue working on the action continue to closely monitor the operating environment and which enable us to maintain the performance and safety of theme, enhancement of intrinsic corporate value, without apply a flexible management style in line with the current our products. Recognition that our business is a any major changes. times. combination of products and services allows us to identify aspects of products requiring improvement as well as new Keep challenging in fiscal 2009 to accomplish customer needs. The plan-do-check-action (PDCA) cycle not Growth strategies “Value Up 200!” only enables us to maintain the position we have cultivated As an initiative to enhance intrinsic corporate value, we are Since there is little prospect of a decisive recovery of the in the market over the years but also leads to further laying the foundations for business expansion overseas. business environment in fiscal 2009, the ShinMaywa Group development of the business. While strong demand for Kailash ShinMaywa Industries Ltd., established in Pune, will work to secure orders and sales, which are the sources environmentally friendly, high value-added products has India, in June 2009, will manufacture and sell special of profits, while endeavoring to reduce fixed costs. emerged in Japan in recent years, ShinMaywa’s existing purpose trucks in that country whose economy is expected Let me comment on our priorities in each business. In products retain great appeal in many overseas markets. to continue growing dramatically. Depending on the region, the aircraft business, while executing projects for the Aspiring to be an enterprise that fully utilizes its we pursue overseas development of the special purpose Ministry of Defense as planned, we are working to secure technological expertise and management resources in the truck business either through exports or local production. more orders for components for the new aircraft that will global marketplace to create new value, we will strive to Regarding local production, our immediate task is to get the follow the Boeing 787. make “ShinMaywa” synonymous with these qualities joint-venture companies recently established in India and In the special purpose truck business, we expect a around the world. Chongqing, China, on track as soon as possible. greater decline in domestic demand than in the previous We have also established a new joint-venture company fiscal year amid intensifying competition with industry peers. The current economic recession, whose depth has exceeded for industrial machinery in Singapore, ShinMaywa JEL In fiscal 2009, we will work to increase the ratio of in-house anything we had anticipated, has dealt our business a Aerotech Pte. Ltd., which will design and manufacture production based on a review of personnel deployment and severe blow. However, this ordeal has been imposed equally Aircraft Passenger Boarding Bridges in addition to providing capital investment, while striving to increase our market on virtually every manufacturer. I am determined to fulfill after-sales services in response to boosting demand for share in order to improve profitability. my responsibilities at the helm of ShinMaywa based on the these products in Asia. Our principal objective in establishing In the industrial machinery business, our priority is to conviction that our future success hinges on the extent to this local subsidiary is to differentiate ShinMaywa from commercialize a stream of hit products comparable to the which the initiatives I have referred to take root and nourish European and American competitors by adding cost CNW series of submersible pumps so that we are in a our intrinsic corporate vitality before the economy bottoms Tadashi Kaneki competitiveness to our brand power in Asia, where we position to advance rapidly once the market recovers. out and a decisive recovery gets underway. President and Chief Executive Officer
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010_0301401372109.indd 6-7 2009/09/16 16:52:42 Review of Operations by Segment
Key Policies in the “Value Up 200!” ShinMaywa Delivers First Production Type of Long-term Management Plan “US-2” STOL Search and Rescue Amphibian to Japan’s Ministry of Defense ● Establish a mass-production system for the Boeing 787 Main Wing Spar In February 2009, we completed delivery of the first produc- ● Ensure steady earnings for the production of commercial aircraft tion type of “US-2” STOL Search and Rescue Amphibian to components the Ministry of Defense of Japan. A successor to the “US- ● Develop basic technologies for future opportunities 1A” STOL Search and Rescue Amphibian, the “US-2” is an Make full use of the Company’s originality in aircraft aircraft capable of taking off from, and landing on, water component manufacturing and the ground. The navy-blue themed “US-2” is about Aircraft 33m long, with a cruising range of approximately 4,700 km. Composition of the Segment The “US-2” carried out its first overseas dispatch in May Line of Business 2009, when it participated in the ASEAN Regional Forum The aircraft business can be categorized into domestic and overhaul the aircraft. * Aircraft Division, ShinMaywa Industries, Ltd.: Design, (ARF) Voluntary Demonstration of Response on Disaster overseas businesses. Our major overseas customers are The Boeing Company production, sales and overhaul of aircraft and related Relief. Our principal customer in Japan is the Ministry of Defense. and Gulfstream Aerospace Corporation, which are both based components The Company is the prime contractor of the STOL Search and in the United States. We produce components for the * ShinMaywa Iwakuni Aircraft Maintenance, Ltd.: Repair, Rescue Amphibian that is capable of taking off and landing in commercial aircraft manufactured by these two companies. remodeling and maintenance of STOL Search and Rescue the open sea or on land. Our current mainstay product is the Boeing 777 Wing-To- Amphibians The Japan Maritime Self-Defense Force (JMSDF), which Body Fairing, whose production involves processing composite * ShinMaywa (California), Ltd.: Procurement of materials for currently has seven STOL Search and Rescue Amphibians, materials. Since our first shipment in 1992, we have delivered aircraft-related products normally places an order for an amphibian whenever one is more than 800 fairings to Boeing. decommissioned. Recently, the JMSDF ordered the US-2 The Company has been awarded the contract for Main model, which we developed in 2004, as a replacement for the Wing Spar for the 787 aircraft currently being developed by former US-1A model. Boeing. We are establishing a mass-production system for this In addition to manufacturing the STOL Search and component, which is bigger and plays a more important role Rescue Amphibian, the Company is also contracted to than our current product for the Boeing 777. First production type of “ US-2”
Business Environment in Fiscal 2008 Sales Operating Income Business Results for Fiscal 2008 Japan: The Company delivered the first production type (third including prototypes) Japanese Market (business with the Ministry of Defense) (Millions of yen) (Millions of yen) of the US-2 STOL Search and Rescue Amphibian to the Ministry of Defense in February 30,000 28,572 1,200 ● An order was received for periodic repair work for the STOL Search and Rescue Amphibian. 981 1,003 2009. (Sales of this product are booked on a percentage-of-completion basis.) 24,616 24,613 893 ● Sales of manufacturing and periodic repair work of the STOL Search and Rescue Amphibian 20,849 20,688 628 Overseas: Owing to the impact of strikes at Boeing, the Company halted 20,000 600 declined from the previous fiscal year. manufacturing of the Boeing 777 Wing-to-Body Fairing, the mainstay product, for Overseas Market (commercial aircraft) -526 two months. Furthermore, sharp appreciation of the yen continued: whereas the 10,000 0 ● Orders for the Boeing 787 Main Wing Spar declined. average exchange rate for fiscal 2008 was 101 yen to the U.S. dollar, it was 113 yen ● Sales of the Boeing 777 Wing-To-Body Fairing declined owing to discontinuation of work
to the U.S. dollar for the previous fiscal year. 0 -600 caused by strikes at Boeing. ’04 ’05 ’06 ’07 ’08 (FY) ’04 ’05 ’06 ’07 ’08 (FY) ● Orders for components for the Gulfstream G550 business jet declined. Although the delivered quantity increased, owing to the appreciation of the yen, sales remained at roughly the same level as the previous fiscal year.
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010_0301401372109.indd 8-9 2009/09/16 16:52:44 (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 150,000 150,000 4,000 4,000 144,451 3,840 0,000 138,959 12,595 000,000 9,747 00,000
120,000 120,000 3,000 3,000
54,791 50,529 00,000 2,450 0,000 90,000 90,000 0,000 0,000
2,000 2,000
60,000 60,000
52,446 50,110 00,000
1,000 1,000 30,000 30,000
24,616 28,572 00,000
0 0 0 0 ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) Review of Operations by Segment
Key Policies in the “Value Up 200!” Joint Venture Established in India
Long-term Management Plan In June 2009, ShinMaywa established two joint ventures
● Improve profitability by production rationalization outside of Japan. Kailash ShinMaywa Industries Limited is ● Expand sales by advancing aggressively into overseas markets responsible for the manufacturing and sales of our special (export & local production) purpose trucks in India. This joint venture is expected to ● Broaden the business portfolio by forming joint ventures and accelerate the ShinMaywa Group’s drive to increase our entering new markets overseas sales ratio, and as such will serve as our point of contact in the Asian market, which promises high growth. Special Purpose Truck Composition of the Segment * Special Purpose Truck Division, ShinMaywa Industries, Ltd.: Design, production and sales of special purpose trucks Line of Business * ShinMaywa Auto Engineering, Ltd.: Maintenance and after-sales Our special purpose truck segment produces functional units Japanese market, we have been exporting special purpose service for special purpose trucks and sales of related for various purposes and mounts them on truck bodies trucks for a long time. In recent years, we have exported components and pre-owned special purpose trucks produced by chassis manufacturers. dump trucks and refuse collectors to the Middle East and * Iwafuji Industrial Co., Ltd.: Production and sales of forestry Although there are many categories of special purpose Africa. machinery, environmental equipment and special purpose trucks trucks, the Company focuses on three categories: ShinMaywa was the first company in Japan to produce * Thai ShinMaywa Co., Ltd.: Production and sales of components construction-related vehicles (e.g. Rear Dump Body and special purpose trucks and maintains high market shares in all for special purpose trucks
Tipping Gear and Direct Drive Type Concrete Mixing Drum), its product categories. This success is attributable to two key * Chongqing Endurance & ShinMaywa Industries, Ltd.: Production, Signing ceremony in India environment-related vehicles (e.g. Crushing and Compacting strengths: customer-oriented production of high-quality, sales, maintenance, and repair of special purpose trucks and Type Refuse Collector and Detachable Container System), and durable products and superior product maintenance with a environmental systems distribution-related vehicles (e.g. Arm Hinge Type Tail Gate 24-hour service system. Lifter and Petroleum Tank). We produce special purpose trucks at three factories in Japan. Although approximately 80% of our sales are in the
Business Environment in Fiscal 2008 Sales Operating Income Business Results for Fiscal 2008 Construction-related vehicles: Orders for Rear Dump Body and Tipping Gear fell Manufacturing and sales of truck bodies etc.: (Millions of yen) (Millions of yen) substantially owing to stagnant construction demand attributable to the economic 60,000 4,000 In regard to environment-related vehicles, sales of Rear Dump Body and Tipping Gear 52,446 3,588 3,481 48,205 50,110 downturn. 50,000 44,483 2,979 3,069 remained at about the same level as the previous year but sales of construction and 41,212 3,000 Overseas markets: Demand declined because of appreciation of the yen and the 40,000 distribution-related vehicles declined substantially. impact of the economic downturn. 30,000 2,000 Maintenance and repair business: Whereas decreases in sales of components and 20,000 Forestry machinery: Our strong performance reflected promotion of forestry 1,000 revenues from service operations etc. were slight, sales of pre-owned special purpose 10,000 maintenance that accelerated the shift to greater mechanization. 422 trucks, which tend to be linked to sales of new trucks, greatly decreased. 0 0 ’04 ’05 ’06 ’07 ’08 (FY) ’04 ’05 ’06 ’07 ’08 (FY) Forestry machinery: Both orders and sales were robust owing to the contribution throughout the year from Iwafuji Industrial Co., Ltd., which became a consolidated subsidiary in November 2007.
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010_0301401372109.indd 10-11 2009/09/16 16:52:46 (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 150,000 150,000 4,000 4,000 144,451 3,840 0,000 138,959 12,595 000,000 9,747 00,000
120,000 120,000 3,000 3,000
54,791 50,529 00,000 2,450 0,000 90,000 90,000 0,000 0,000
2,000 2,000
60,000 60,000
52,446 50,110 00,000
1,000 1,000 30,000 30,000
24,616 28,572 00,000
0 0 0 0 ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) Review of Operations by Segment
Key Policies in the “Value Up 200!” * ShinMaywa Waste Technology, Ltd.: Installation, maintenance and repair of refuse disposal facilities Long-term Management Plan * MELTEC, Ltd.: Intermediate treatment and recycling of incinerated ● Make continued efforts to develop and commercialize new and ash of industrial and non-industrial wastes improved products that will be the drivers of growth ● Execute full-scale entry to overseas markets (e.g. production satisfying export specifications, consideration of M&A and Development of the New Automatic Wire alliances) Terminating Machine “TRD 401” for the ● Create production processes capable of flexibly responding to Automotive Market fluctuations in demand The “TRD 401” reduces the switchover time to about one- sixth of that needed with its conventional counterparts, Composition of the Segment while at the same time achieving enhanced safety and pro- cessing accuracy. Going * Industrial Machinery Systems Division, ShinMaywa forward, we will aim to Industries, Ltd.: Design, production and sales of pumps and receive more orders related products and mechatronics products from Europe and North * Environmental Systems Division, ShinMaywa Industries, Industrial Machinery America. Ltd.: Design, engineering and sales of Environmental Systems Line of Business * ShinMaywa Engineering, Ltd.: Design, sales, maintenance and Our industrial machinery segment handles products and company performs maintenance and refurbishment to ensure improvement, etc. of Car Parking Systems (absorbed into “TRD 401” systems that contribute to rationalization and labor-saving of the stable operation of car parking systems. ShinMaywa Industries on June 1, 2009) production facilities etc. There are four product categories: Mechatronics Equipment: The Company designs, develops * ShinMaywa Aqua Technology Services, Ltd.: Installation, ShinMaywa Receives an Order for the Refuse Water Treatment Equipment, Car Parking Systems, and sells Automatic Wire Terminating Machines, Direct Drive maintenance and repair of pumps and related products Transfer Station System (compaction / transfer Mechatronics Equipment, and Environmental Systems. Motors, Thin Film Coating Systems, etc., focusing on * ShinMaywa (Asia) Pte. Ltd.: Sales and maintenance of industrial Water Treatment Equipment: Principal products are equipment that contributes to automation of production machinery and environmental systems facility) from Shanghai, the Largest of its Kind equipment utilized in sewage treatment plants and at civil facilities and enhances added value. Aircraft Passenger * ShinMaywa (America), Ltd.: Sales and maintenance of industrial in China engineering and construction sites. The Company offers the Boarding Bridges equipped with automatic control functions machinery ShinMaywa was chosen by the municipal government of equipment and systems required to swiftly convey the effluent are included in this category. * ShinMaywa (Shanghai) Trading Co., Ltd.: Services for and sales of Shanghai as a supplier for its refuse transfer station system discharged from homes and industry to final treatment Environmental Systems: The Company develops refuse industrial machinery and assembly of Automatic Wire Terminating which, after reducing volume in an efficient manner through facilities. recycling and treatment technologies, including those for Machines the use of waterways, transports general waste to landfill Car Parking Systems: The Company designs and sells car systematization of treatment processes from refuse collection * ShinMaywa (Bangkok) Co., Ltd.: Maintenance, repair, installation, sites. For a target completion in time for the Shanghai Expo parking systems equipped with an elevator mechanism or a to storage and transfer facilities, and safe and highly efficient etc. of Automatic Wire Terminating Machines and Aircraft in 2010, construction work is underway through concerted rotary and vertical mechanism, ranging from systems for treatment plants etc. Passenger Boarding Bridges efforts between a local corporation and ShinMaywa. detached houses to those for condominiums. In addition, the
Business Environment Sales Operating Income Business Results for Fiscal 2008 Coating Systems declined. Regarding Automatic Wire Terminating in Fiscal 2008 Water Treatment Equipment: Both orders and sales declined. Machines, despite an increase in sales, orders declined substantially. (Millions(Millions of yen) of yen) (Millions(Millions of yen) of yen) ● Robust sales of Car Parking Systems 60,00060,000 54,79154,791 5,0005,000 Although the CNW Series and CNWX Series, Hiefficiency and Sales of Aircraft Passenger Boarding Bridges increased owing to 51,11451,114 4,4544,454 49,20649,206 50,52950,529 47,175 47,175 were maintained. 50,00050,000 4,0004,000 Good Particles Passage Performance Submersible Pump made a completion of a large project in Japan and other factors. 3,2953,295 3,2553,255 ● Sales of Mechatronics Equipment and 40,00040,000 3,0973,097 significant contribution, demand for systems for public works was Withdrawal from the beauty and medical equipment business in 3,0003,000 2,6952,695 Environmental Systems were lackluster 30,00030,000 sluggish. fiscal 2008 contributed to improved profitability. Profitability of Car 2,0002,000 owing to deterioration of markets, 20,00020,000 Car Parking Systems: Sales increased despite a decline in orders Parking Systems improved. As a result, despite lower sales, overall 10,00010,000 1,0001,000 postponement of orders, etc. for new projects. Revenues from repair services remained at the operating income increased for this product category. 0 0 0 0 ’04’04 ’05 ’05 ’06 ’06 ’07’07 ’08 (FY) ’08 (FY) ’04’04 ’05 ’05 ’06 ’06 ’07’07 ’08 (FY) ’08 (FY) same level as the previous year. Environmental Systems: Both orders for and deliveries of the Mechatronics Equipment: Both orders for and sales of Thin Film mainstay refuse transfer and sorting facilities declined.
12 13
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(Millions(Millions of yen) of yen) (Millions(Millions of yen) of yen) (Millions(Millions of yen) of yen) (Millions(Millions of yen) of yen) 150,000150,000 150,000150,000 4,0004,000 4,0004,000 144,451144,451 3,8403,840 0,0000,000 138,959138,959 12,59512,595 000,000000,000 9,7479,74700,00000,000
120,000120,000 120,000120,000 3,0003,000 3,0003,000
54,79154,79150,52950,52900,00000,000 2,4502,450 0,0000,000 90,00090,000 90,00090,000 0,0000,000 0,0000,000
2,0002,000 2,0002,000
60,00060,000 60,00060,000
52,44652,44650,11050,11000,00000,000
1,0001,000 1,0001,000 30,00030,000 30,00030,000
24,61624,61628,57228,57200,00000,000
0 0 0 0 0 0 0 0 ’07’07 ’08 ’08 ’09 (FY) ’09 (FY) ’07’07 ’08 ’08 ’09 (FY) ’09 (FY) ’07’07 ’08 ’08 ’09 (FY) ’09 (FY) ’07’07 ’08 ’08 ’09 (FY) ’09 (FY) Review of Operations by Segment Strategies for Sustained Growth of the ShinMaywa Group
Special Purpose Truck Business Sano Plant
Hiroshima Plant
Construction & Others Products: Rear Dump Body and Tipping Gear for large dump trucks, Detachable Container System, Line of Business Composition of the Segment and Direct Drive Type Concrete Mixing Drum This segment comprises three subsidiaries: Maywa Komuten, * Maywa Komuten, Ltd.: Construction, civil engineering, electrical Products: Ltd. carries out construction and civil engineering work under engineering, work related to water supply and drainage, and Refuse Collector and Vacuum Loader contract, ShinMaywa Shoji, Ltd. is engaged in real estate and work related to air conditioning temporary personnel services, and ShinMaywa Soft * ShinMaywa Shoji, Ltd.: Real estate and temporary personnel
Technologies, Ltd. develops and designs computer systems services Samukawa Plant under contract. * ShinMaywa Soft Technologies, Ltd.: Development of computer November 2009 marks ShinMaywa Industries’ 60th Anniversary. systems Not only were we the first company to manufacture special purpose trucks in Japan, but we have maintained our leadership in this business field. We provide many kinds of special purpose trucks. Our special purpose trucks are categorized Sales into three fields: construction, distribution and environment. Business Environment in Fiscal 2008 Products: Construction-related: Despite deterioration of the construction market, sales (Millions of yen) (Millions of yen) In order to maintain our focus on meeting the various needs of our Rear Dump Body and Tipping Gear for 14,816 489 small dump trucks and Tail Gate Lifters 15,000 500 customers, most of our special purpose trucks are built to order. However, the increased because sales of several projects were booked in fiscal 2008, and not in 12,595 11,580 11,504 395 12,000 400 375 performance of this business is exposed to the risk of short-term fluctuations due fiscal 2007 as originally scheduled, owing to revisions to the Building Standards Act. 9,747 298 9,000 300 to changes in the economic and regulatory environments. In recent years, we have aimed at enhancing the stability of the performance Business Results for Fiscal 2008 6,000 200 of this business by capitalizing on our ability to provide highly customized Construction-related: Although orders for construction work declined, sales 3,000 100 66 products, while also striving to increase the ratio of overseas sales and achieve increased owing to a large project. Orders for construction work declined because of 0 0 ’04 ’05 ’06 ’07 ’08 (FY) ’04 ’05 ’06 ’07 ’08 (FY) intensifying competition and cancellation and postponement of projects triggered by major cost savings. However, among our businesses, this one has been the most deterioration of the construction market. On the other hand, sales increased because severely affected by the global recession that struck last year. Therefore, we Operating Income of work that was postponed until fiscal 2008 owing to the impact of the revisions to recognize that now is the time to step up our efforts while putting in place a (Millions of yen) (Millions of yen) system enabling us to bring our capabilities into full play in the global the Building Standards Act. 14,816 489 15,000 500 Temporary personnel services: Both orders and sales declined12,595 in line with the marketplace. 11,504 395 12,000 11,580 400 375 decline in demand for temporary workers. 9,747 This special feature presents the future direction of the special purpose truck (Millions of yen) (Millions of yen) 298 (Millions of yen) (Millions of yen) 9,000 300 150,000 150,000 4,000 business4,000 toward sustained growth. Let’s start by looking at the trend of our 144,451 3,840 0,000 6,000 200 138,959 business performance. Then, we will show you the Group’s strategies for both 12,595 000,000 9,747 00,000 3,000 100 66 the Japanese market, which is expected to show little or no growth, and the 120,000 120,000 0 0 promising overseas markets, which offer opportunities for expansion. ’04 ’05 ’06 ’07 ’08 (FY) ’04 ’05 ’06 ’07 ’08 (FY)3,000 3,000
54,791 50,529 00,000 2,450 0,000 14 90,000 90,000 0,000 0,000 15
2,000 2,000
010_0301401372109.indd 14-15 2009/09/16 16:52:48 60,000 60,000
52,446 50,110 00,000 (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 150,000 150,000 4,000 4,000 144,451 3,840 0,000 1,000 1,000 138,959 12,595 000,00030,000 30,000 9,747 00,000
120,000 120,000 24,616 28,572 00,000 3,000 3,000 0 0 0 0 54,791 50,529 00,000 ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) 2,450 0,000 90,000 90,000 0,000 0,000
2,000 2,000
60,000 60,000
52,446 50,110 00,000
1,000 1,000 30,000 30,000
24,616 28,572 00,000
0 0 0 0 ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) ’07 ’08 ’09 (FY) Strategies for Sustained Growth of the ShinMaywa Group Special Purpose Truck Business
Strategies for the Special Purpose Truck Business in Japanese Market Cost reductions allow us to provide products meeting Whereas the special purpose truck business is highly customer specifications at attractive prices. We are dependent on subcontractors, we are working to increase the The indicator used to forecast the trend of the Company’s Although there are indications that the economy may be implementing SHIP, a company-wide production innovation ratio of in-house production in order to reduce variable costs special purpose truck business is the demand for standard bottoming out, demand for standard trucks in Japan, and initiative, whose benefits are already becoming evident. as a part of our drive to reduce costs. trucks of 4 tons or heavier. This figure is an effective indicator therefore also the associated demand for special purpose because approximately 20% of standard trucks are serving as trucks, is unlikely to resume a vigorous upward trend in view special purpose trucks and the trend has been evident in the of the country’s aging society coupled with a falling birth rate Strategies for the Special Purpose Truck Business in Overseas Markets past. and its mature infrastructure. Although our special purpose In recent years, the sharpest decline in demand occurred trucks include environment-related and distribution-related The measures implemented in the Japanese market will also adjacent areas. We intend to ensure the success of this in fiscal 2002. Following the bursting of the IT bubble, the vehicles contributing to the quality of life and the efficiency of be our strengths abroad. expansion by offering high-quality, durable products built to Japanese economy cooled dramatically, leading to the transportation, further growth in demand for construction- While the domestic market for construction-related robust specifications that fulfill local requirements. collapse of demand for construction-related vehicles, which related vehicles, which account for the largest proportion of vehicles is mature, there are plenty of opportunities overseas, In regions where demand is rising, success hinges on the accounts for approximately 40% of sales of special purpose our sales, is not in prospect in Japan where infrastructure is where demand for these vehicles is expected to rise rapidly. ability to offer products at much lower prices than in Japan. trucks. already at an advanced level. Therefore, our growth strategies for the special purpose truck For these markets, we must establish a business model based We responded by reducing the Group’s special purpose In these circumstances, our two priorities for the Japanese business are weighted toward overseas markets. on local production and sales of trucks whose specifications truck factories from five to three while downsizing the market are to maintain a large market share and reduce costs. In recent years, our emphasis on the export of finished meet local needs. Recently, we have established joint-venture workforce. Although an overall large increase in demand is not trucks completed in Japan has led to increasing overseas companies in China and India to manufacture and sell special As shown in the graph, in fiscal 2003 demand for expected, since special purpose trucks are indispensable for sales, primarily in the Middle East and Africa. In fiscal 2008, purpose trucks for those two large and growing markets. standard trucks sharply increased compared with the previous maintaining and improving infrastructure, demand will never we exported special purpose trucks to about 70 countries. Accordingly, the new role of Thai ShinMaywa Co., Ltd. is to year, and the special purpose truck segment’s sales and profit cease. Therefore, we believe that maintaining a large market However, the overseas sales ratio declined from the level of ensure stable supply of core components to these companies. increased at an even greater rate. This surge was attributable share will allow us to strengthen our position in the industry. the previous fiscal year because the appreciation of the yen Endeavoring to strike a balance between exports of to a rapid increase in replacement demand triggered by the For this purpose, product attractiveness and differentiation placed us at a competitive disadvantage vis-à-vis European finished trucks and local production, we aim to accelerate exhaust gas regulations that came into force in Japan in from competitors’ offerings are crucially important. We are manufacturers and the steep decline in oil prices undermined penetration of the ShinMaywa brand in overseas markets. October 2003. The increase in demand associated with the striving to enrich and refine our products by endowing them the financial position of importers. Once the economy regulatory change continued for approximately four years, with attributes attuned to market needs, namely, low noise, recovers, we will expand our sales territories to encompass during which the special purpose truck segment underpinned energy saving, and light weight (greater loading capacity), so the Group’s performance. that we can win repeat orders. Fiscal 2008 Overseas Sales: This advantage was wiped out by the global recession Top Five Countries (Millions of yen) precipitated by the collapse of Lehman Brothers in October
2008. Similar to what happened in fiscal 2002, orders and ShinMaywa’s Sales of Special Purpose Trucks and Demand for Standard Trucks in Japan ShinMaywa’s Sales of Special Purpose Trucks and sales evaporated, with construction-related vehicles, the Mongolia 295 Overseas Sales mainstay of our sales, being hit particularly hard. As a result, (Millions of yen) (Units) (Millions of yen) 60,000 117,101 120,000 Iraq 60,000 the special purpose truck business recorded big drops in sales 105,495 1,159 99,516 52,446 Algeria 449 52,446 and operating income. Demand for standard trucks in fiscal 50,110 Millions of yen 50,110 Millions of yen 50,000 48,205 100,000 50,000 48,205 46,110 144,451 46,110 144,451 2008 was 63,000 units, which is nearly half the figure for 105,427 44,483 120000 (1,444,510) 138,959 44,483 120000 (1,444,510) 138,959 (1,389,590)Sudan000,000 646 (1,389,590) 000,000 41,212 129,681 (0,000,000) 41,212 129,681 (0,000,000) (1,296,810) fiscal 2003. As the figure is expected to further decline to 40,000 85,114 80,000 40,000 (1,296,810) 78,735 100000 100000 52,000 units for fiscal 2009, we expect the severe business 31,713 31,713 environment to continue. 30,000 62,961 60,000 80000 30,000 80000
60000 60000 20,000 40,000 20,000
40000 40000
10,000 20,000 10,000 8,229 6,285 20000 5,478 4,977 20000 Australia 314 2,656 930 1,503 0 0 0 0 0 ’09’08’07’06’05 ’09’08’07’06’05 ’02 ’03 ’04 ’05 ’06 ’07 ’08 (FY) ’02 ’03 ’04 ’05 ’06 ’07 ’08 (FY) ShinMaywa’s sales of special purpose trucks (Millions of yen) ShinMaywa’s sales of special purpose trucks (Millions of yen) Demand for standard trucks in Japan (Units) Overseas sales of special purpose trucks (Millions of yen)
16 17 (%) (%) 10 10 010_0301401372109.indd 16-17 2009/09/16 16:52:48 0.0 0.0 8 8
0.0 0.0 0.0 0.0 6 6 0.0 0.0 0.0 0.0
4 4
2 2
0 0 ’09’08’07’06’05 (FY) ’09’08’07’06’05 (FY) Corporate Governance
Basic Philosophy Regarding Corporate Governance ASG replaced Ernst & Young ShinNihon, whose contract with the Company expired at the closure of the 85th In regard to corporate governance, the ShinMaywa Group places top priority on conducting corporate annual general meeting of shareholders. By providing accurate management information to its accounting auditor, activities in compliance with relevant laws and regulations, social norms and common sense, while ensuring the Company has established an environment in which the auditor can conduct accounting audits from a fair management transparency and rationality, in order to improve our corporate value. standpoint. As part of our compliance efforts, we have stipulated a standard of ethics in order to provide guidelines which ShinMaywa’s Approach to Corporate Governance ensure all employees conform with laws and regulations, social norms and common sense. ShinMaywa also works Taking into account the business style and scale of ShinMaywa, the company has adopted a corporate auditing to promote awareness of compliance and establish various related programs, such as the “ShinMaywa Ethics Day” system, and introduced an Executive Officer system. The latter is intended to strengthen management functions by and “Corporate Ethics Month”. Furthermore, in order to clarify the responsibility for centralized control of transferring individual business management authority to Executive Officers, in order to speed up decision making compliance and CSR implementation, as well as quality assurance of products and services the “CSR and Quality and clarify management responsibilities. The executive officer system also aims to enhance governance by ensuring Assurance Division” was established, which in turn is evaluated and inspected by the “Corporate Ethics Expert that directors (the Board of Directors) concentrate on assessing individual business operations from company-wide Committee” that was formed primarily with members from outside the company. This committee also put together perspectives, as well as decision making and the supervision of management resource allocation. a system for providing counseling and advice. Furthermore, ShinMaywa has set the terms of office for Directors and Executive Officers at one year, in order to A corporate ethics consultation section (corporate ethics helpline) was also created in order to eliminate facilitate management assessment and clarification of management responsibilities. At the same time the compliance risk through early problem detection and selfgovernance. Management Personnel Committee was established, as an advisory body to the President, to further improve the transparency and appropriateness of personnel affairs and compensation. The majority of these committee members are experts from outside the Company (lawyers and university professors) and Outside Directors. Currently ShinMaywa has six Directors (two from outside the Company) who attend the monthly Board of Director’s meetings to decide on important management subjects. The Board also monitors the performance of its Board of Directors Directors as deemed appropriate. ShinMaywa has concluded in its articles of association that the number of President and Chief Executive Officer Tadashi Kaneki Directors shall be eight or less. ShinMaywa has thirteen Executive Officers, including five managers from respective divisions, who focus on the implementation of specific projects. These Executive Officers are members of the Management Committee, an Board Director and Senior Vice Yoshihiro Onishi advisory body to the President that, in President and Executive Officer
principle, meets twice a month to discuss General meeting of shareholders Board Directors and Executive Officers Keisuke Endo important matters related to the Masao Mizuta management of ShinMaywa. Board of Corporate Auditors Independent Auditors There are five Corporate Auditors, (Corporate Auditors and Outside Auditors) (Audit Corporation) Board Directors Koichi Takatsuka *1 three of whom are Outside Auditors who, Nobutane Yamamoto *1 in addition to attending the Board of Directors’ meetings and other important Senior Vice President and Executive Masachika Matsuoka Board of Directors (Directors and Outside Directors) in-house meetings, perform their duties Officer by listening to business reports from Vice Presidents and Executive Officers Takashi Sugano Directors and employees, and inspecting Corporate Ethics Expert Committee Management Personnel Committee Yoshifumi Fujiwara final-approval documents. (Outside Directors and Experts) Representative (Outside Directors and Experts) Director Mikiaki Kato The Company has appointed Grant (President and Management Committee Thornton Taiyo ASG as the Company’s CSR and Quality Assurance CEO) (Directors and Executive Officers) Division Executive Officers Masaharu Ishii accounting auditor. Grant Thornton Taiyo Yasushi Ihara Taku Ikeda Respective division heads Internal Audit Division Jitsuo Nakane (Executive Officers and Employees) (Internal Audit Office) Tomoya Teramoto Hiroichi Sano Corporate Ethics Helpline Internal Reporting Section (Internal Reporting System) (Office of the President) Corporate Auditors Norio Maki Isao Nishimura External Reporting Office Takao Koyama *2 (Law Firm) Yuka Shimokobe *2 An overview of the Company’s management system Kyozo Hayashi *2
*1 Outside Director *2 Outside Auditor
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Consolidated Five-year Summary ShinMaywa Industries, Ltd. and Consolidated Subsidiaries Years ended March 31, 2005, 2006, 2007, 2008 and 2009 Thousands of Millions of yen U.S. dollars 2005 2006 2007 2008 2009 2009 For the year: Net sales ¥127,992 ¥129,681 ¥144,451 ¥138,959 ¥127,777 $1,303,847 Net income 3,051 3,643 3,840 2,450 26 265 Net cash (used in) provided by 11,264 (3,876) (1,930) 6,498 (2,021) (20,622) operating activities Net cash used in investing activities (2,383) (5,486) (3,352) (4,183) (3,330) (33,980) Net cash provided by (used in) (9,959) 832 2,943 (1,054) 4,919 50,194 financing activities Cash and cash equivalents at end of 20,850 12,371 10,099 11,333 10,794 110,143 the year
At year-end: Total net assets 75,523 78,419 82,947 82,925 81,147 828,031 Total assets 125,900 132,079 141,192 144,206 140,388 1,432,531
Yen U.S. dollars Per share amounts:
Net assets per share ¥ 753.96 ¥ 783.47 ¥ 808.16 ¥ 814.56 ¥ 797.49 $ 8.14 Net income per share 28.12 35.36 38.43 24.53 0.27 0.00
Ratios: Capital adequacy ratio (%) 60.0 59.4 57.1 56.4 56.7 – Rate of return on equity capital (%) 3.9 4.7 4.8 3.0 0.0 – Price earnings ratio (multiple) 17.64 18.98 15.87 12.56 766.67 –
Other: Number of employees 3,706 3,773 3,761 3,954 3,883 –
Notes: 1. U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of ¥98 = US$1.00, the approximate rate prevailing on March 31, 2009.
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Consolidated Balance Seets ShinMaywa Industries, Ltd. and Consolidated Subsidiaries Years ended March 31, 2009 and 2008
Millions of yen Thousands of Millions of yen Thousands of U.S. dollars (Note 3) U.S. dollars (Note 3) 2009 2008 2009 2008 2009 2008 2009 2008 Liabilities and Net assets Assets Current liabilities: Current assets: Trade notes and accounts payable ¥ 18,494 ¥ 25,186 $ 188,714 $ 257,000 Short-term bank loans (Note 7) 6,000 – 61,224 – Cash and deposits (Note 4) ¥ 10,794 ¥ 11,337 $ 110,143 $ 115,684 Current portion of long-term debt (Note 7) 2,000 – 20,408 – Accrued expenses 5,053 6,963 51,561 71,051 Trade notes and accounts receivable 47,271 51,577 482,357 526,296 Accrued income taxes (Note 9) 1,014 1,010 10,347 10,306 Allowance for doubtful receivables (95) (126) (969) (1,286) Accrued bonuses for directors 46 152 469 1,551 Provision for product warranty 103 109 1,051 1,112 Inventories (Note 5) 42,409 41,411 432,745 422,561 Provision for losses on construction contracts 1,502 896 15,327 9,143 Other current liabilities 5,433 4,723 55,439 48,194 Deferred income taxes (Note 9) 2,329 2,651 23,765 27,051 Total current liabilities 39,647 39,042 404,561 398,388 Prepaid expenses and other current assets 1,305 1,232 13,316 12,571 Long-term liabilities: Long-term debt (Note 7) 4,323 6,000 44,112 61,224 Total current assets 104,016 108,083 1,061,388 1,102,888 Accrued retirement benefits for employees (Note 8) 8,081 8,848 82,459 90,286 Accrued retirement benefits for directors and corporate auditors 669 823 6,827 8,398 Property, plant and equipment (Note 14): Deferred income taxes (Note 9) 223 317 2,276 3,235 Land (Note 11) 5,730 5,782 58,469 59,000 Deferred income taxes on land revaluation reserve (Note 11) 62 62 633 633 Negative goodwill 531 678 5,418 6,918 Buildings and structures 36,055 36,021 367,908 367,561 Other long-term liabilities 5,701 5,509 58,173 56,214
Machinery, equipment and vehicles 35,957 34,463 366,908 351,663 Total long-term liabilities 19,593 22,238 199,929 226,918 Total liabilities 59,240 61,281 604,490 625,316 Construction in progress 720 496 7,347 5,061 Contingent liabilities (Note 10) Net assets: 78,464 76,763 800,653 783,296 Shareholders’ equity (Note 12):
Less accumulated depreciation and impairment loss (53,188) (50,729) (542,735) (517,643) Common stock Authorized – 300,000,000 shares Property, plant and equipment, net 25,276 26,034 257,918 265,653 Issued – 119,727,565 shares at March 31, 2009 and 2008 15,981 15,981 163,071 163,071 Capital surplus 15,737 15,739 160,582 160,602 Investments and long-term loans receivable: Retained earnings (Note 20) 56,549 57,524 577,031 586,980
Investments in an unconsolidated subsidiary and affiliates 381 202 3,888 2,061 Less treasury common stock, at cost; 19,933,888 shares at March 31, 2009 and (8,194) (8,175) (83,612) (83,418) Investment securities (Note 6) 2,371 3,331 24,194 33,990 19,862,697 shares at March 31, 2008 Total shareholders’ equity 80,074 81,070 817,082 827,245 Long-term loans receivable 4 13 41 133 Valuation and translation adjustments: Total investments and long-term loans receivable 2,757 3,546 28,133 36,184 Unrealized gain on securities (Note 6) 158 673 1,612 6,867 Land revaluation reserve (Note 11) (389) (389) (3,969) (3,969) Deferred income taxes (Note 9) 4,569 2,834 46,622 28,918 Translation adjustments (259) (8) (2,643) (82) Total valuation and translation adjustments: (490) 275 (5,000) 2,806 Other assets (Note 14) 3,768 3,707 38,449 37,827 Minority interests 1,563 1,579 15,949 16,112 Total assets ¥140,388 ¥144,206 $1,432,531 $1,471,490 Total net assets 81,147 82,925 828,031 846,173 Total liabilities and net assets ¥140,388 ¥144,206 $1,432,531 $1,471,490
The accompanying notes are an integral part of these statements.
22 23
012_0301401372109.indd 22-23 2009/09/16 16:54:38 Financial Section
Consolidated Statements of Income Consolidated Statements of Changes in Net Assets ShinMaywa Industries, Ltd. and Consolidated Subsidiaries ShinMaywa Industries, Ltd. and Consolidated Subsidiaries Years ended March 31, 2009 and 2008 Years ended March 31, 2009 and 2008
Millions of yen Thousands of Shareholders' Equity Valuation and translation adjustments U.S. dollars (Note 3) Treasury 2009 2008 2009 2008 Number of common Unrealized Land shares of Common Capital Retained stock, at gain on revaluation Translation Minority Total net Net sales ¥127,777 ¥138,959 $1,303,847 $1,417,949 common stock stock surplus earnings cost securities reserve adjustments interests assets Millions of yen Cost of sales (Notes 5 and 15) 110,698 116,198 1,129,571 1,185,694 Balance at March 31, 2007 119,727,565 ¥15,981 ¥15,739 ¥55,990 ¥(8,152) ¥1,401 ¥(306) ¥ 90 ¥2,202 ¥82,947 Gross profit 17,079 22,760 174,276 232,245 Disposal of treasury stock – – 0 – 3 – – – – 3 Acquisition of treasury stock – – – – (27) – – – – (27) Dividends paid – – – (999) – – – – – (999) Selling, general and administrative expenses (Notes 13 and 15) 16,111 17,752 164,398 181,143 Net income for the year – – – 2,450 – – – – – 2,450 Operating income 968 5,008 9,878 51,102 Net changes in items other than those in – – – 82 – (728) (82) (98) (623) (1,450) shareholders’ equity Other income (expenses): Balance at March 31, 2008 119,727,565 15,981 15,739 57,524 (8,175) 673 (389) (8) 1,579 82,925 Disposal of Interest and dividend income 76 73 776 745 treasury stock – – (2) (3) 15 – – – – 9 Acquisition of Interest expense (103) (80) (1,051) (816) treasury stock – – – – (33) – – – – (33) Dividends paid – – – (998) – – – – – (998) Amortization of negative goodwill 146 52 1,490 531 Net income for the year – – – 26 – – – – – 26 Net changes in Equity in losses of an unconsolidated subsidiary and affiliates (60) (37) (612) (378) items other than those in – – – – – (514) – (251) (16) (782) Restructuring losses (Note 8) (18) (333) (184) (3,398) shareholders’ equity Balance at Impairment losses on other securities (Note 6) (291) (117) (2,969) (1,194) March 31, 2009 119,727,565 ¥15,981 ¥15,737 ¥56,549 ¥(8,194) ¥ 158 ¥(389) ¥(259) ¥1,563 ¥81,147
Other, net (Note 14) (102) (331) (1,041) (3,378)
(353) (774) (3,602) (7,898)
Income before income taxes and minority interests 615 4,233 6,276 43,194
Income taxes (Note 9):
Current 1,723 1,523 17,582 15,541
Deferred (1,150) 201 (11,735) 2,051
Minority interests 15 57 153 582
Net income ¥ 26 ¥ 2,450 $ 265 $ 25,000
The accompanying notes are an integral part of these statements.
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Consolidated Statements of Cash Flows ShinMaywa Industries, Ltd. and Consolidated Subsidiaries Years ended March 31, 2009 and 2008
Shareholders' Equity Valuation and translation Millions of yen Thousands of adjustments U.S. dollars (Note 3) Treasury common Unrealized Land 2009 2008 2009 2008 Common Capital Retained stock, at gain on revaluation Translation Minority Total net Operating activities stock surplus earnings cost securities reserve adjustments interests assets Thousands of U.S. dollars (Note 3) Income before income taxes and minority interests ¥ 615 ¥ 4,233 $ 6,276 $ 43,194 Balance at Depreciation and amortization 3,929 3,733 40,092 38,092 March 31, 2007 $163,071 $160,602 $571,327 $(83,184) $14,296 $(3,122) $ 918 $22,469 $846,398 Disposal of Equity in losses of an unconsolidated subsidiary and affiliates 60 37 612 378 treasury stock – 0 – 31 – – – – 31 Impairment losses on other securities 291 117 2,969 1,194 Acquisition of – – – (276) – – – – (276) treasury stock Decrease in accrued retirement benefits for employees, (919) (393) (9,378) (4,010) Dividends paid – – (10,194) – – – – – (10,194) directors and corporate auditors Net income for the year – – 25,000 – – – – – 25,000 Interest and dividend income (76) (73) (776) (745) Net changes in Interest expense 103 80 1,051 816 items other than those in – – 837 – (7,429) (837) 1,000 (6,357) (14,795) Decrease in trade notes and accounts receivable 4,199 6,610 42,847 67,449 shareholders’ equity Increase in inventories (1,025) (7,618) (10,459) (77,735) Balance at March 31, 2008 163,071 160,602 586,980 (83,418) 6,867 (3,969) (82) 16,112 846,173 (Decrease) increase in trade notes and accounts payable (6,582) 464 (67,163) 4,735 Disposal of Other, net (666) 1,587 (6,796) 16,194 treasury stock – (20) (31) 153 – – – – (92) Acquisition of (72) 8,779 (735) 89,582 treasury stock – – – (337) – – – – (337) Interest and dividends received 77 72 786 735 Dividends paid – – (10,184) – – – – – (10,184) Net income for Interest paid (103) (80) (1,051) (816) the year – – 265 – – – – – 265 Net changes in Income taxes paid (1,923) (2,272) (19,622) (23,184) items other than those in – – – – (5,245) – (2,561) (163) (7,979) Net cash (used in) provided by operating activities (2,021) 6,498 (20,622) 66,306 shareholders’ equity Investing activities Balance at Purchases of property, plant and equipment (2,427) (2,306) (24,765) (23,531) March 31, 2009 $163,071 $160,582 $577,031 $(83,612) $ 1,612 $(3,969) $(2,643) $15,949 $828,031 Purchases of intangible assets (429) (507) (4,378) (5,173) The accompanying notes are an integral part of these statements. Purchases of consolidated subsidiary’s stock accompanied by changes – (1,095) – (11,173) in scope of consolidation (Note 4) Purchases of consolidated subsidiary’s stocks from minority (0) (331) (0) (3,378) shareholders Other, net (473) 57 (4,827) 582 Net cash used in investing activities (3,330) (4,183) (33,980) (42,684) Financing activities Increase in short-term bank loans 6,000 – 61,224 – Acquisition of treasury stock, net (24) (23) (245) (235) Dividends paid (998) (999) (10,184) (10,194) Dividends paid to minority shareholders (21) (32) (214) (327) Other, net (36) – (367) – Net cash provided by (used in) financing activities 4,919 (1,054) 50,194 (10,755) Effect of exchange rate changes on cash and cash equivalents (106) (26) (1,082) (265) Net (decrease) increase in cash and cash equivalents (538) 1,233 (5,490) 12,582 Cash and cash equivalents at beginning of the year 11,333 10,099 115,643 103,051 Cash and cash equivalents at end of the year (Note 4) ¥10,794 ¥11,333 $110,143 $115,643
The accompanying notes are an integral part of these statements. 26 27
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Notes to Consolidated Financial Statements ShinMaywa Industries, Ltd. and Consolidated Subsidiaries Years ended March 31, 2009 and 2008
1. Summary of Significant Accounting Policies (d) Foreign currency translation
All monetary assets and liabilities, regardless of whether they are short-term or long-term, denominated in foreign (a) Basis of presentation currencies are translated into yen at the exchange rates prevailing as of the fiscal year end, and the resulting gain and ShinMaywa Industries, Ltd. (the “Company”) and its domestic consolidated subsidiaries maintain their books of account loss are included in income. in conformity with the financial accounting standards of Japan, and its overseas consolidated subsidiaries maintain their Balance sheet accounts and revenue and expense accounts of the overseas consolidated subsidiaries are translated books of account in conformity with those of their countries of domicile. into yen at the exchange rates prevailing as of the fiscal year end, except for the components of net assets excluding The accompanying consolidated financial statements have been compiled from the consolidated financial minority interests which are translated at their historical exchange rates. Translation adjustments are presented as a statements prepared by the Company as required under the Financial Instruments and Exchange Act of Japan and, component of valuation and translation adjustments and minority interests. therefore, have been prepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards. (e) Cash equivalents As permitted by the Financial Instruments and Exchange Act, amounts of less than one million yen have been For the purpose of the consolidated statements of cash flows, all highly liquid investments with a maturity of three omitted. As a result, the totals shown in the accompanying consolidated financial statements (both in yen and in U.S. months or less when purchased are considered cash equivalents. dollars) do not necessarily agree with the sums of the individual amounts.
(f) Securities (b) Scope of Consolidation Securities are generally classified into three categories: trading, held-to-maturity or other securities. Securities held by The consolidated financial statements included the accounts of the Company and its 20 subsidiaries for the years ended the Company and its consolidated subsidiaries are all classified as other securities. Marketable securities classified as March 31, 2009 and 2008. Investments in one subsidiary and 2 affiliates are accounted for by the equity method for other securities are carried at fair value with any changes in unrealized gain or loss, net of the applicable income taxes, the years ended March 31, 2009 and 2008. included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method. (c) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include the accounts of the Company and significant companies (g) Inventories controlled directly or indirectly by the Company. Companies over which the Company exercises significant influence in Inventories are stated principally at the lower of cost, cost being determined by the moving average method, or net terms of their operating and financial policies have been included in the consolidated financial statements on an equity selling value. basis. All significant intercompany balances and transactions have been eliminated in consolidation. The balance sheet date of certain consolidated subsidiaries is December 31. Any significant differences in (Change in accounting policy of the Company and its consolidated subsidiaries) intercompany accounts and transactions arising from intervening intercompany transactions during the period from Effective the year ended March 31, 2009, the Company and its consolidated subsidiaries adopted the “Accounting January 1 through March 31 have been adjusted, if necessary. Standard for Measurement of Inventories” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 9 issued on July 5, 2006). This standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net selling value, which is defined as the selling price less incremental estimated manufacturing costs and estimated direct selling expenses. As a result of this change, operating income and income before income taxes and minority interests decreased by ¥133 million ($1,357 thousand) for the year ended March 31, 2009 compared with the corresponding amounts which would have been recorded under the previous method. The effect of this change on segment information is described in Note 19.
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(h) Property, plant and equipment (Additional Information) Effective the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries reviewed the Depreciation of property, plant and equipment is computed by the declining-balance method, except that certain foreign utilization status of tangible fixed assets and changed the useful lives of certain assets based on the revised Corporation subsidiaries apply the straight-line method. The Company and its principal domestic consolidated subsidiaries apply Tax Law. As a result of this change, operating income and income before income taxes and minority interests decreased useful lives and residual value of the respective assets as prescribed by the Corporation Tax Law for accounting purposes. by ¥109 million ($1,112 thousand) for the year ended March 31, 2009 compared with the corresponding amounts Leased assets under lease transactions that do not transfer ownership of the leased assets to the lessee are which would have been recorded under the previous method. The effect of this change on segment information is depreciated over the respective lease periods by the straight-line method to a nil residual value. Finance leases described in Note 19. commencing prior to April 1, 2008 that do not transfer ownership of the leased assets to the lessee are accounted for as Effective the year ended March 31, 2008, depreciation of tangible fixed assets acquired on or before March 31, operating lease transactions as permitted by the revised accounting standard. 2007, which have been depreciated to their respective allowable limits, is calculated by a method which depreciates the Property, plant and equipment and intangible fixed assets are reviewed for impairment whenever events or residual value by the straight-line method over five years to memorandum value. As the result of this change, operating changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is income and income before income taxes and minority interests decreased by ¥153 million ($1,561 thousand) for the recognized if certain indicators of asset impairment exist and the book value of an asset exceeds the undiscounted sum year ended March 31, 2008 compared with the corresponding amounts which would had been recorded under the of future cash flows of the asset and is measured as the excess of the book value over the higher of (1) the fair market previous method. value of the asset, net of disposition costs, and (2) the present value of future cash flows arising from ongoing utilization of the asset and from disposal of the asset after use. (i) Allowance for doubtful receivables Business assets of the Company and its consolidated subsidiaries are grouped at its management accounting units for impairment testing. However, the Company and its consolidated subsidiaries determine whether an asset is An allowance for doubtful receivables is provided at an amount calculated based on historical experience, while specific impaired on an individual asset basis for leased assets and when the business asset is deemed idle or it is scheduled to allowances for doubtful receivables are provided for the estimated amounts considered to be uncollectible after be disposed of. reviewing individual collectibility.
(Changes in accounting policy of the Company and its consolidated subsidiaries) (j) Accrued bonuses for directors Under the previous accounting standard, finance leases that transfer ownership of the leased assets to the lessee were Accrued bonuses for directors are provided for payments of bonuses to directors based on estimated amounts. to be capitalized, however, other finance leases that do not transfer ownership to the lessee were permitted to be
accounted for as operating lease transactions if certain “as if capitalized” information was disclosed in the notes to the (k) Provision for product warranty lessee’s financial statements. However, effective the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have adopted “Accounting Standard for Lease Transactions” (ASBJ Statement No. 13 originally For payments of the after-sales service expense of the product and the repair cost of the completed work, provision for issued by the First Committee of the Business Accounting Council on June 17, 1993 and revised on March 30, 2007) product warranty is provided based on past experience. and “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16 originally issued by the Accounting System Committee of the Japanese Institute of Certified Public Accountants on January 18, 1994 and (l) Provision for losses on construction contracts revised on March 30, 2007). The revised accounting standard requires that all finance lease transactions shall be With regard to construction contracts that have not yet been delivered and are with high probability of generating losses capitalized recognizing leased assets and lease obligations in the balance sheet. The Company and its consolidated at the end of the fiscal year, and where it is possible to reasonably estimate the amount of such losses, the estimated subsidiaries adopted the revised accounting standard and account for all finance lease arrangements which have been amount of losses to be incurred is provided as provision for losses on construction contracts. entered into on or after April 1, 2008 as if they have been purchased or sold under ordinary buy or sell transactions. The effect of this change was immaterial for the year ended March 31, 2009. Effective the year ended March 31, 2008, depreciation of tangible fixed assets acquired on or after April 1, 2007 have been calculated in accordance with the revised Corporation Tax Law. The application of the provisions of the revised Corporation Tax Law had an immaterial effect on net income for the year ended March 31, 2008 compared with the corresponding amount which would had been recorded if the previous method had been followed.
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(m) Retirement benefits (q) Derivative financial instruments
Accrued retirement benefits for employees are provided principally at an amount calculated based on the retirement Derivatives are stated at fair value. benefit obligation and the fair value of the pension plan assets at the balance sheet dates, as adjusted for unrecognized actuarial gain or loss and unrecognized prior service cost. The retirement benefit obligation is attributed to each period (r) Revenue recognition by the straight-line method over the estimated remaining years of service of the eligible employees. Revenues from production of STOL Search and Rescue Amphibians are recognized by the percentage-of-completion Actuarial gain and loss are amortized in the year following the year in which the gain or loss is recognized method. Revenues from production of waste treatment facilities with contracted amounts exceeding ¥400 million and primarily by the straight-line method over a period of 13 years which falls within the average remaining years of service production periods exceeding one year are also recognized by the percentage-of-completion method. Sales recognized of the eligible employees. by the percentage-of-completion method amounted to ¥6,198 million ($63,245 thousand) and ¥7,445 million ($75,969 Prior service cost is amortized as incurred by the straight-line method over a period of 13 years which falls within thousand) for the years ended March 31, 2009 and 2008, respectively. the average remaining years of service of the eligible employees. Certain domestic consolidated subsidiaries have adopted a simplified method for calculating their retirement (s) Consumption taxes benefit obligation which is permitted under the accounting standard for retirement benefits. In addition, subject to the shareholders’ approval, directors and corporate auditors of the Company and its All amounts in the accompanying financial statements are stated exclusive of consumption tax. Non-deductible consolidated subsidiaries are customarily entitled to lump-sum payments of retirement benefits. Provision for retirement consumption taxes paid by a domestic consolidated subsidiary which can not be reduced from consumption taxes benefits for those officers has been made at estimated amounts under the internal rules of the Company and its received in accordance with the Consumption Tax Law of Japan are charged to income as incurred. consolidated subsidiaries. (t) Goodwill and negative goodwill (n) Income taxes Goodwill or negative goodwill, the differences between the cost and the underlying equity in net assets at the respective Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases dates of acquisition of the consolidated subsidiaries, is amortized over the period of 5 years except for the immaterial of the assets and liabilities, and are measured using the enacted tax rates and laws which will be in effect when the differences which are charged or credited to income as incurred. differences are expected to reverse.
(o) Research and development costs 2. Change in Accounting Policy
Research and development costs are charged to income as incurred and are included in cost of sales and selling, general Effective the year ended March 31, 2009, the Company and its consolidated subsidiaries applied “Practical Solution on and administrative expenses. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements” (ASBJ Practical Issues Task Force No.18 issued on May 17, 2006) and made necessary adjustments in the consolidation process. (p) Amounts per share The effect of this change was immaterial. Net income per share is computed based on the net income available for distribution to shareholders of common stock and the weighted-average number of shares of common stock outstanding during the year. Amounts per share of net assets are computed based on net assets available for distribution to the shareholders and the number of shares of common stock outstanding at the year end.
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3. U.S. Dollar Amounts 5. Inventories
The translations of yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan Inventories at March 31, 2009 and 2008 consisted of the following: and have been made for both 2009 and 2008, as a matter of arithmetic computation only, at the rate of ¥98 = U.S.$1.00, the approximate rate of exchange in effect on March 31, 2009. The translations should not be construed as a Millions of yen Thousands of U.S. dollars representation that yen have been, could have been, or could in the future be, converted into U.S. dollars at the above or 2009 2008 2009 2008 any other rate. Finished goods ¥ 2,191 ¥ 2,519 $ 22,357 $ 25,704 Work in process 28,753 27,989 293,398 285,602 Raw materials and supplies 11,253 10,340 114,827 105,510 4. Supplementary Cash Flow Information Real estate for sale 211 562 2,153 5,735 ¥42,409 ¥41,411 $432,745 $422,561 Information related to cash and cash equivalents as of March 31, 2009 and 2008 is as follows: A loss on devaluation of inventories in the amount of ¥281 million ($2,867 thousand) is recorded under cost of sales Millions of yen Thousands of for the year ended March 31, 2009. U.S. dollars 2009 2008 2009 2008 Cash and deposits ¥10,794 ¥11,337 $110,143 $115,684 6. Securities Time deposits with deposit terms of more than – (4) – (41) three months a) Information with respect to marketable securities classified as other securities as of March 31, 2009 and 2008 are as Cash and cash equivalents at end of the year ¥10,794 ¥11,333 $110,143 $115,643 follows: The following shows a breakdown of assets and liabilities at the initial consolidation of the subsidiary initially March 31, 2009 consolidated in the year ended March 31, 2008 through stock acquisition and the relationship between net expenditure and Carrying Unrealized gain Carrying Unrealized gain Acquisition cost amount (loss) Acquisition cost amount (loss) cost for the acquisition of the subsidiary: Millions of yen Thousands of U.S. dollars Securities whose fair value Millions of yen Thousands of exceeds their acquisition U.S. dollars cost: 2008 Equity securities ¥ 798 ¥1,237 ¥ 438 $ 8,143 $12,622 $ 4,469 Current assets ¥ 2,841 $ 28,990 Bonds and debentures – – – – – – Other securities – – – – – – Fixed assets 832 8,490 ¥ 798 ¥1,237 ¥ 438 $ 8,143 $12,622 $ 4,469 Current liabilities (1,269) (12,949) Securities whose acquisition Long-term liabilities (607) (6,194) cost exceeds their fair value:
Negative goodwill (422) (4,306) Equity securities ¥ 676 ¥ 508 ¥(167) $ 6,898 $ 5,184 $(1,704) Bonds and debentures – – – – – – Acquisition cost of shares 1,374 14,020 Other securities – – – – – – Cash and cash equivalents of the acquired company (279) (2,847) ¥ 676 ¥ 508 ¥(167) $ 6,898 $ 5,184 $(1,704) Net expenditure for consolidated subsidiary stock ¥ 1,095 $ 11,173 ¥1,475 ¥1,745 ¥ 270 $15,051 $17,806 $ 2,755
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March 31, 2008 7. Short-Term Bank Loans and Long-Term Debt Carrying Unrealized gain Carrying Unrealized gain Acquisition cost amount (loss) Acquisition cost amount (loss) Short-term bank loans at March 31, 2009 represent loans on deeds from banks with the weighted-average interest rate of Millions of yen Thousands of U.S. dollars 0.92%. Securities whose fair value exceeds their acquisition Long-term debt at March 31, 2009 and 2008 consisted of the following: cost: Equity securities ¥ 932 ¥2,247 ¥1,314 $ 9,510 $22,929 $13,408 Millions of yen Thousands of Bonds and debentures – – – – – – U.S. dollars Other securities – – – – – – 2009 2008 2009 2008 ¥ 932 ¥2,247 ¥1,314 $ 9,510 $22,929 $13,408 Unsecured loans due through 2011 with weighted-average interest rates of 1.11% at Securities whose acquisition March 31, 2009 and 1.27% at March 31, 2008 ¥ 6,000 ¥6,000 $ 61,224 $61,224 cost exceeds their fair value: Lease obligations due through 2015 323 – 3,296 – Equity securities ¥ 625 ¥ 458 ¥(167) $ 6,378 $ 4,673 $(1,704) 6,323 6,000 64,520 61,224 Bonds and debentures – – – – – – Less current portion (2,000) – (20,408) – Other securities – – – – – – ¥ 4,323 ¥6,000 $ 44,112 $61,224 ¥ 625 ¥ 458 ¥(167) $ 6,378 $ 4,673 $(1,704) ¥1,557 ¥2,705 ¥1,147 $15,888 $27,602 $11,704 The aggregate annual maturities of long-term debt subsequent to March 31, 2009 are as follows:
The impairment losses associated with the fair market value determination of marketable securities classified as other Years ending March 31, (Millions of yen) (Thousands of U.S. dollars) securities are ¥291 million ($2,969 thousand) and ¥117 million ($1,194 thousand) for the years ended March 31, 2009 and 2010 ¥2,078 $21,204 2008, respectively. 2011 2,073 21,153 Impairment losses are recorded for securities whose fair value has declined by 50% or more or for those which have 2012 2,072 21,142 declined within a range of 30% or more, but less than 50% if the decline is deemed to be irrecoverable. 2013 68 694 2014 29 296 b) The aggregate book value of securities with no available fair value as of March 31, 2009 and 2008 are as follows: 2015 0 0 Total ¥6,323 $64,520 Millions of yen Thousands of U.S. dollars Lease obligations of ¥78 million ($796 thousand) as of March 31, 2009 whose maturity dates are in the year ending 2009 2008 2009 2008 March 31, 2010 are included in the long-term debt of ¥4,323 million ($44,112 thousand) presented in the consolidated Unlisted stocks ¥625 ¥626 $6,378 $6,388 balance sheet as of March 31, 2009.
8. Retirement Benefit Plans for Employees
The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., corporate pension plans, tax- qualified pension plans and lump-sum payment plans, covering substantially all their employees. Eligible employees, upon termination of employment, are entitled to lump-sum or annuity payments, the amounts of which are determined by reference to their basic rates of pay, length of service, and the conditions under which termination occurs. The certain consolidated subsidiaries participate in the multi-employer welfare pension fund plan.
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The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the The assumptions used in the accounting for the above plans were as follows: consolidated balance sheets at March 31, 2009 and 2008 for the Company’s and the consolidated subsidiaries’ defined benefit plans: 2009 2008 Discount rate 2.0% 2.0% Millions of yen Thousands of Expected rates of return on plan assets 1.4% 2.2% U.S. dollars 2009 2008 2009 2008 Certain subsidiaries contributed ¥39 million ($398 thousand) to the multi-employer welfare pension fund plan for the Retirement benefit obligation ¥(23,976) ¥(24,519) $(244,653) $(250,194) year ended March 31, 2009, which was not included in the table of retirement benefit expenses above. The funded status of Plan assets at fair value 12,139 13,368 123,867 136,408 the multi-employer welfare pension fund plan as of March 31, 2009 and 2008 is as follows: Unfunded retirement benefit obligation (11,836) (11,150) (120,776) (113,776) Unrecognized actuarial loss 4,586 2,863 46,796 29,214 2009 2008 2009 2008 Unrecognized prior service cost (132) (128) (1,347) (1,306) (Millions of yen) (Thousands of U.S. dollars) Net retirement benefit obligation (7,383) (8,416) (75,337) (85,878) Plan assets ¥ 83,238 ¥97,361 $ 849,367 $ 993,480 Prepaid pension cost 698 432 7,122 4,408 Projected benefit obligation 104,244 99,244 1,063,714 1,012,694 Accrued retirement benefits ¥ (8,081) ¥ (8,848) $ (82,459) $ (90,286) recorded by pension fund Unfunded status ¥(21,006) ¥(1,883) $(214,347) $ (19,214) Certain domestic consolidated subsidiaries have adopted a simplified method for calculating their retirement benefit obligation which is permitted under the accounting standard for retirement benefits. The Company’s contribution percentage for the multi-employer welfare pension fund plan was 0.7% for the years The components of retirement benefit expenses for the years ended March 31, 2009 and 2008 are outlined as follows: March 31, 2009 and 2008. This percentage does not agree with the actual share percentage of the consolidated subsidiaries to the pension plan. Millions of yen Thousands of The unfunded status of the multi-employer welfare plan mainly represented past service liabilities of ¥20,380 million U.S. dollars ($207,959 thousand) and unfunded amounts of ¥625 million ($6,378 thousand) as of March 31, 2009. The unfunded 2009 2008 2009 2008 status as of March 31, 2008 mainly represented past service liabilities of ¥20,838 million ($212,633 thousand) offset by a Service cost ¥1,064 ¥1,304 $10,857 $13,306 funded surplus amount of ¥18,955 million ($193,418 thousand). Past service liabilities are amortized with interest by the Interest cost 459 463 4,684 4,724 straight-line method over a period of 20 years. Special retirement benefit expenses of ¥13 million ($133 thousand) and ¥5 Expected return on plan assets (182) (284) (1,857) (2,898) million ($51 thousand) were charged to consolidated income for the years ended March 31, 2009 and 2008, respectively. Amortization of actuarial loss 402 329 4,102 3,357 Amortization of prior service cost 3 3 31 31 Total ¥1,746 ¥1,816 $17,816 $18,531 9. Income Taxes Retirement benefit expenses of certain domestic consolidated subsidiaries, which have been calculated by a simplified
method, are included in service cost in the above table. Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise corporation tax, inhabitants’ In addition to the above, a consolidated subsidiary had recorded additional severance benefits of ¥104 million ($1,061 taxes and enterprise tax, which, in the aggregate, resulted in a statutory tax rate of approximately 40.6% for both 2009 and thousand) as a component of restructuring losses for the year ended March 31, 2008. 2008. Income taxes of the overseas consolidated subsidiaries are based generally on the tax rates applicable in their countries of incorporation.
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The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities 10. Contingent Liabilities at March 31, 2009 and 2008 are summarized as follows: At March 31, 2009, the Company and its consolidated subsidiaries were contingently liable as follows: Millions of yen Thousands of U.S. dollars Millions of yen Thousands 2009 2008 2009 2008 of U.S. dollars Deferred tax assets: As endorsers of trade notes ¥24 $245 Net operating loss carryforwards ¥ 1,649 ¥ 695 $ 16,827 $ 7,092 receivable endorsed to vendors Accrued retirement benefits for employees 2,917 3,333 29,765 34,010 Accrued bonuses 790 1,094 8,061 11,163 Accrued retirement benefits for directors and 273 336 2,786 3,429 corporate auditors 11. Land Revaluation Loss on impairment of fixed assets 356 360 3,633 3,673 Depreciation and amortization 359 334 3,663 3,408 Provision for losses on construction contracts 610 371 6,224 3,786 Pursuant to the “Law Concerning the Revaluation of Land,” land used for a consolidated subsidiary’s business operations Other 1,786 2,248 18,224 22,939 was revalued on March 31, 2000. The income tax effect of the difference between the book value and the revalued 8,743 8,775 89,214 89,541 amounts have been presented under liabilities as “Deferred income taxes on land revaluation reserve” and the remaining Valuation allowance (1,491) (1,811) (15,214) (18,480) balances have been presented under valuation and translation adjustments as “Land revaluation reserve” in the 7,251 6,964 73,990 71,061 accompanying consolidated balance sheets. Deferred tax liabilities: Revaluation of the land was determined based on the property tax assessment values in accordance with Paragraph 3, Deferred gain on sales of property, plant and 187 973 1,908 9,929 equipment Article 2 of the “Enforcement Ordinance Concerning Land Revaluation.” Unrealized gain on securities 110 466 1,122 4,755 The carrying value of the land after revaluation exceeded its fair value by ¥166 million ($1,694 thousand) and ¥220 Negative goodwill 274 351 2,796 3,582 million ($2,245 thousand) at March 31, 2009 and 2008, respectively. Other 3 3 31 31 575 1,794 5,867 18,306 Net deferred tax assets ¥ 6,676 ¥ 5,169 $ 68,122 $ 52,745 12. Shareholders’ Equity The effective tax rate reflected in the consolidated statement of income for the year ended March 31, 2009 differs
from the statutory tax rate for the following reasons: The Corporation Law of Japan provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the 2009 capital reserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the Statutory tax rate 40.6 % common stock account. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Expenses not deductible for tax purposes 20.1 Directors if certain conditions are met, but neither the capital reserve nor the legal reserve is available for distributions. Revenues not taxable for tax purposes (2.1) The company’s legal reserve was ¥2,128 million ($21,714 thousand) at March 31, 2009 and 2008. Per capital portion of inhabitants’ taxes 24.3 Changes in valuation allowance 27.0 Amortization of negative goodwill (9.7) Tax credit (4.5) Other (2.5) Effective tax rate 93.2 %
As the difference between the statutory tax rate and the effective tax rate was less than 5% of the statutory tax rate, the disclosure of the tax rate reconciliation has been omitted for the year ended March 31, 2008.
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Movements in treasury stock during the years ended March 31, 2009 and 2008 are summarized as follows: 13. Selling, General and Administrative Expenses
Number of shares Selling, general and administrative expenses consist primarily of the following for the year ended March 31, 2009 and 2008: 2009
March 31, 2008 Increase Decrease March 31, 2009 Thousands Millions of yen Treasury stock 19,862,697 109,267 38,076 19,933,888 of U.S. dollars 2009 2008 2009 2008 Employees salaries and allowances ¥5,957 ¥6,298 $60,786 $64,265 2008 Provision of allowance for doubtful receivable 37 38 378 388 March 31, 2007 Increase Decrease March 31, 2008 Accrued bonuses for directors 46 152 469 1,551 Treasury stock 19,815,023 56,945 9,271 19,862,697 Retirement benefit expenses 436 462 4,449 4,714 Provision for directors’ and corporate auditors’ Dividends paid in the years ended March 31, 2009 and 2008 are as follows: 188 212 1,918 2,163 retirement benefits
Resolution 2009 2008 Annual general meeting Board of directors Annual general meeting Board of directors 14. Impairment Loss on Fixed Assets of shareholders held on meeting held on October of shareholders held on meeting held on October June 26, 2008 28, 2008 June 27, 2007 26, 2007 Class of shares Common stock Common stock Common stock Common stock Impairment loss on fixed assets, a component of “other, net” included in other expanses in the consolidated statements of Total cash dividends income for the years ended March 31, 2009 and 2008 is as follows: (Millions of yen) ¥ 499 ¥ 499 ¥ 499 ¥ 499 (Thousands of (Millions of yen) (Thousands of $5,092 $5,092 $5,092 $5,092 U.S. dollars) U.S. dollars) Cash dividends Location Usage Category 2009 per share Nishinomiya-city, Maintenance and Land, buildings and (Yen) ¥ 5 ¥ 5 ¥ 5 ¥ 5 Hyogo service for special structures, machinery, ¥39 $398 purpose trucks equipment and vehicles (U.S. dollars) $ 0.05 $ 0.05 $ 0.05 $ 0.05 Record date March 31, 2008 September 30, 2008 March 31, 2007 September 30, 2007 Effective date June 27, 2008 December 1, 2008 June 28, 2007 December 3, 2007 (Millions of yen) (Thousands of U.S. dollars) Dividends whose record date falls in the year ended March 31, 2009 or 2008, but whose effective date falls in the Location Usage Category 2008 following year are as follows: Yawata-city, Kyoto Management of parking Buildings and structures, and other facilities machinery, equipment, ¥30 $306 vehicle and other assets Resolution 2009 2008 Annual general meeting Annual general meeting Equipment for maintenance and service for special purpose trucks were written down to the recoverable amounts and of shareholders to be held of shareholders held on June 25, 2009 on June 26, 2008 impairment loss was recorded for the year ended March 31, 2009 since they were to be sold. The recoverable amounts of Class of shares Common stock Common stock these assets were measured at net selling value, which was computed at expected selling value less estimated disposal costs. Total cash dividends A consolidated subsidiary recognized impairment losses for management of parking facilities for the year ended March (Millions of yen) ¥ 498 ¥ 499 31, 2008 because operating loss had occurred continuously due to low utilization of these facilities. The carrying amount of (Thousands of U.S. dollars) $5,082 $5,092 those assets was written down to a nil recoverable value and impairment losses were recorded. Cash dividends per share (Yen) ¥ 5 ¥ 5 (U.S. dollars) $ 0.05 $ 0.05 Record date March 31, 2009 March 31, 2008 Effective date June 26, 2009 June 27, 2008
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Breakdown of the impairment loss by asset type for the years ended March 31, 2009 and 2008 are as follows: The following pro forma amounts represent the acquisition costs, accumulated depreciation, impairment of assets and net book value of the leased assets as of March 31, 2009 and 2008, which would have been reflected in the (Millions of yen) (Thousands of consolidated balance sheets if finance lease accounting had been applied to the finance leases currently accounted for as U.S. dollars) operating leases: 2009 2008 2009 2008 Land ¥22 ¥ – $224 $ – March 31, 2009 Buildings and structures 13 10 133 102 Accumulated Accumulated Machinery, equipment and vehicles 3 3 31 31 Acquisition Accumulated impairment Net book Acquisition Accumulated impairment Net book Other assets – 16 – 163 costs depreciation loss value costs depreciation loss value Total ¥39 ¥30 $398 $306 (Millions of yen) (Thousands of U.S. dollars) Machinery, equipment and vehicles ¥2,049 ¥1,222 ¥9 ¥817 $20,908 $12,469 $92 $8,337 Other assets 36 26 – 10 367 265 – 102 15. Research and Development Expenses Total ¥2,086 ¥1,249 ¥9 ¥828 $21,286 $12,745 $92 $8,449
Research and development expenses included in manufacturing cost and selling, general and administrative expenses for the March 31, 2008 years ended March 31, 2009 and 2008 amounted to ¥1,737 million ($17,724 thousand) and ¥2,007 million ($20,480 Accumulated Accumulated thousand), respectively. Acquisition Accumulated impairment Net book Acquisition Accumulated impairment Net book costs depreciation loss value costs depreciation loss value (Millions of yen) (Thousands of U.S. dollars) Machinery, 16. Amounts per Share equipment and vehicles ¥2,794 ¥1,453 ¥37 ¥1,304 $28,510 $14,827 $378 $13,306 Amounts per share are summarized as follows: Other assets 65 36 – 28 663 367 – 286 Total ¥2,860 ¥1,490 ¥37 ¥1,333 $29,184 $15,204 $378 $13,602
Year ended March 31, Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated 2009 2008 2009 2008 financial statements amounted to ¥572 million ($5,837 thousand) and ¥629 million ($6,418 thousand) for the years (Yen) (U.S. dollars) ended March 31, 2009 and 2008, respectively. Depreciation of the leased assets computed by the straight-line method Net income ¥ 0.27 ¥ 24.53 $0.00 $0.25 over the respective lease terms and the interest portion included in the lease payments amounted to ¥510 million Net assets: ($5,204 thousand) and ¥22 million ($224 thousand), respectively, for the year ended March 31, 2009, and ¥600 million Basic 797.49 814.56 8.14 8.31 Diluted – – – – ($6,122 thousand) and ¥30 million ($306 thousand), respectively, for the year ended March 31, 2008. Loss on impairment of leased assets amounted to ¥9 million ($92 thousand) for the year ended March 31, 2008. Reversal of Diluted net income per share has not been presented because there were no potentially dilutive shares at March 31, reserve for loss on impairment of finance leases amounted to ¥8 million ($82 thousand) and ¥10 million ($102 thousand) 2009 and 2008. for the years ended March 31, 2009 and 2008, respectively. Future minimum lease payments subsequent to March 31, 2009 for finance lease transactions accounted for as operating leases are summarized as follows: 17. Leases Year ending March 31, (Millions of yen) (Thousands of U.S. dollars) a) Lessees’ Accounting 2010 ¥365 $3,724 2011 and thereafter 507 5,173 1. Finance leases which commencing on or before March 31, 2008 that do not transfer ownership of the leased assets to Total ¥872 $8,898 lessee
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Reserve for loss on impairment of finance leases accounted for as operating leases which is included in other long- Future minimum lease income subsequent to March 31, 2009 from finance leases accounted for as operating leases is term liabilities, amounted to ¥2 million ($20 thousand) and ¥11 million ($112 thousand) at March 31, 2009 and 2008, summarized as follows: respectively. Future minimum lease payments subsequent to March 31, 2009 for operating leases are summarized as follows: Year ending March 31, (Millions of yen) (Thousands of U.S. dollars) 2010 ¥4 $41 Year ending March 31, (Millions of yen) (Thousands of U.S. dollars) 2011 and thereafter 4 41 2010 ¥33 $337 Total ¥9 $92 2011 and thereafter 19 194 Total ¥53 $541 Future minimum lease income include related interest.
2. Finance leases that do not transfer ownership of the leased assets to the lessee 18. Derivatives With respect to the contents of the leased assets, these are mainly production facilities for aircraft business and vehicles for operational use as tangible fixed assets. The Company is exposed to market risk from fluctuation in foreign currency exchange rates and enters into derivative Depreciation method of the leased assets are described in Note 1 (h). instruments in order to reduce such risk. The Company does not hold or issue derivative financial instruments for the purpose of speculative trading. b) Lessors’ Accounting The forward foreign exchange contracts have aimed to decrease fluctuation of earnings and cash flow by the change in the exchange rates in usual operating transaction, the export of the product, the purchase of materials etc. Therefore, the Finance leases commencing on or before March 31, 2008 that do not transfer ownership of the leased assets to lessee forward foreign exchange contracts have been made reasonably in accordance with internal policies within the range of existing assets and liabilities in foreign currencies, the payments scheduled in the future, and the forecasted income. The following amounts represent the acquisition costs, accumulated depreciation and net book value of the leased Derivatives are subject to market risk and credit risk. Market risk is the exposure created by potential fluctuations in assets relating to finance leases accounted for as operating leases at March 31, 2009 and 2008: market conditions, including in changes in foreign exchange rates. Credit risk is the possibility that a loss may result from a counterparty’s failure to perform according to the terms and conditions of contract. March 31, 2009 Because the counterparties to those derivative contracts are limited to major domestic financial institutions with high Accumulated Accumulated Acquisition costs depreciation Net book value Acquisition costs depreciation Net book value credit ratings, the Company do not anticipate any losses arising credit risk. (Millions of yen) (Thousands of U.S. dollars) Derivative transactions have been made in accordance with internal policies which regulate the authorization and Machinery, credit limit amounts, and the accounting section has managed it collectively. equipment, vehicles ¥19 ¥14 ¥4 $194 $143 $41
March 31, 2008 Accumulated Accumulated Acquisition costs depreciation Net book value Acquisition costs depreciation Net book value (Millions of yen) (Thousands of U.S. dollars) Machinery, equipment, vehicles ¥28 ¥20 ¥7 $286 $204 $71
Lease income relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to ¥4 million ($41 thousand) and ¥10 million ($102 thousand) for the years ended March 31, 2009 and 2008, respectively. Depreciation of the assets leased under finance leases accounted for as operating leases amounted to ¥3 million ($31 thousand) and ¥5 million ($51 thousand) for the years ended March 31, 2009 and 2008, respectively.
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The contract or notional amounts of the derivative financial instruments held at March 31, 2009 and 2008 are 19. Segment Information summarized as follows: The Company and consolidated subsidiaries are primarily engaged in the manufacture and sales of transportation equipment March 31, 2009 and machinery, and also conduct operations in the construction and other services sectors. Contracts due The business segment information of the Company and consolidated subsidiaries for the years ended March 31, 2009 After Fair (Loss) Within one year one year value Gain and 2008 are summarized as follows: (Millions of yen) Year ended March 31, 2009 Forward foreign exchange contracts: To sell foreign currencies ¥ 2,403 ¥– ¥ 2,482 ¥ (79) Business segment U.S. dollars To buy foreign currencies Special Industrial Eliminations ¥ 76 ¥– ¥ 77 ¥ 0 Singaporean dollars Aircraft purpose trucks machinery Construction Other and corporate Consolidated Total ¥ (78) (Millions of yen) (Thousands of U.S. dollars) I. Net sales, operating expenses, operating income (loss) Net sales: Forward foreign exchange contracts: To sell foreign currencies $24,520 $– $25,327 $(806) Customers ¥24,613 ¥44,483 ¥47,175 ¥10,858 ¥ 646 ¥ – ¥127,777 U.S. dollars Inter-segment – 239 24 737 1,768 (2,770) – To buy foreign currencies 24,613 44,723 47,199 11,596 2,414 (2,770) 127,777 $ 776 $– $ 786 $ 0 Singaporean dollars Operating expenses 25,140 44,301 43,944 11,519 2,193 (288) 126,809 Total $(796) Operating income (loss) ¥ (526) ¥ 422 ¥ 3,255 ¥ 77 ¥ 221 ¥(2,481) ¥ 968 II. Assets, depreciation, impairment loss on fixed assets, capital expenditures March 31, 2008 Assets ¥48,439 ¥29,766 ¥39,252 ¥10,464 ¥2,609 ¥ 9,855 ¥140,388 Contracts due Depreciation 1,383 1,099 1,025 65 165 284 4,022 After Fair Impairment loss Within one year one year value Gain on fixed assets – 39 – – – – 39 (Millions of yen) Capital Forward foreign exchange contracts: expenditures 953 1,037 805 9 99 155 3,061 To sell foreign currencies ¥ 1,976 ¥– ¥ 1,794 ¥ 181 U.S. dollars (Thousands of U.S. dollars) (Thousands of U.S. dollars) I. Net sales, operating expenses, operating income (loss) Forward foreign exchange contracts: Net sales: To sell foreign currencies $20,163 $– $18,306 $1,847 Customers $251,153 $453,908 $481,378 $110,796 $ 6,592 $ – $1,303,847 U.S. dollars Inter-segment – 2,439 245 7,520 18,041 (28,265) – 251,153 456,357 481,622 118,327 24,633 (28,265) 1,303,847 Operating expenses 256,531 452,051 448,408 117,541 22,378 (2,939) 1,293,969 Operating income (loss) $ (5,367) $ 4,306 $ 33,214 $ 786 $ 2,255 $(25,316) $ 9,878 II. Assets, depreciation, impairment loss on fixed assets, capital expenditures Assets $494,276 $303,735 $400,531 $106,776 $26,622 $100,561 $1,432,531 Depreciation 14,112 11,214 10,459 663 1,684 2,898 41,041 Impairment loss on fixed assets – 398 – – – – 398 Capital expenditures 9,724 10,582 8,214 92 1,010 1,582 31,235
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Year ended March 31, 2008 As described in Note 1(h), effective the year ended March 31, 2009, the Company and its domestic consolidated Business segment subsidiaries reviewed the utilization status of tangible fixed assets and changed the useful lives of certain assets based on the revised Corporation Tax Law. As a result of this change, operating expenses of “Special purpose trucks,” “Industrial Special Industrial Eliminations machinery,” “Other” and “Eliminations and corporate” for the year ended March 31, 2009 increased by ¥58 million ($592 Aircraft purpose trucks machinery Construction Other and corporate Consolidated (Millions of yen) thousand), ¥6 million ($61 thousand), ¥10 million ($102 thousand) and ¥1 million ($10 thousand), respectively, and the I. Net sales, operating expenses, operating income respective operating income decreased by the same amounts, and operating expenses of “Aircraft” for the year ended Net sales: March 31, 2009 increased by ¥33 million ($337 thousand) and the respective operating loss increased by the same amounts Customers ¥28,572 ¥50,110 ¥50,529 ¥ 9,039 ¥ 707 ¥ – ¥138,959 compared with the corresponding amounts which would have recorded under the previous method. Inter-segment – 299 34 574 1,753 (2,661) – 28,572 50,409 50,563 9,613 2,461 (2,661) 138,959 The disclosure of geographic segment information for the years ended March 31, 2009 and 2008 has been omitted Operating because more than 90% of total consolidated sales were recorded in Japan and more than 90% of total assets were located expenses 27,679 47,340 47,465 9,455 2,223 (213) 133,951 in Japan. Operating income ¥ 893 ¥ 3,069 ¥ 3,097 ¥ 158 ¥ 237 ¥(2,448) ¥ 5,008 II. Assets, depreciation, impairment loss on fixed assets, capital expenditures Overseas sales, which include export sales of the Company and its domestic consolidated subsidiaries and sales (other Assets ¥44,204 ¥36,255 ¥39,867 ¥10,591 ¥2,574 ¥10,713 ¥144,206 than exports to Japan) of the foreign consolidated subsidiaries, for the years ended March 31, 2009 and 2008 are Depreciation 1,344 937 1,026 69 153 296 3,827 summarized as follows: Impairment loss on fixed assets – – 30 – – – 30 Capital Year ended March 31, 2009 expenditures 373 636 607 6 123 205 1,952 Asia North America Other areas Total (Millions of yen) (Thousands of U.S. dollars) Overseas sales ¥ 3,282 ¥ 10,819 ¥ 6,070 ¥ 20,172 I. Net sales, operating expenses, operating income Consolidated net sales – – – 127,777 Net sales: Customers $291,551 $511,327 $515,602 $ 92,235 $ 7,214 $ – $1,417,949 (Thousands of U.S. dollars) Inter-segment – 3,051 347 5,857 17,888 (27,153) – Overseas sales $33,490 $110,398 $61,939 $ 205,837 291,551 514,378 515,949 98,092 25,112 (27,153) 1,417,949 Consolidated net sales – – – 1,303,847 Operating Overseas sales as a percentage of expenses 282,439 483,061 484,337 96,480 22,684 (2,173) 1,366,847 consolidated sales 2.6% 8.5% 4.7% 15.8% Operating income $ 9,112 $ 31,316 $ 31,602 $ 1,612 $ 2,418 $(24,980) $ 51,102 II. Assets, depreciation, impairment loss on fixed assets, capital expenditures Assets $451,061 $369,949 $406,806 $108,071 $26,265 $109,316 $1,471,490 Year ended March 31, 2008 Depreciation 13,714 9,561 10,469 704 1,561 3,020 39,051 Asia North America Other areas Total Impairment loss (Millions of yen) on fixed assets – – 306 – – – 306 Overseas sales ¥ 4,043 ¥ 11,707 ¥ 7,695 ¥ 23,446 Capital expenditures 3,806 6,490 6,194 61 1,255 2,092 19,918 Consolidated net sales – – – 138,959 (Thousands of U.S. dollars) Overseas sales $41,255 $119,459 $78,520 $ 239,245 As described in Note 1(g), effective the year ended March 31, 2009, the Company and its consolidated subsidiaries Consolidated net sales – – – 1,417,949 adopted a new accounting standard for measurement of inventories. As a result of this change, operating expenses of Overseas sales as a percentage of ”Aircraft” for the year ended March 31, 2009 increased by ¥133 million ($1,357 thousand) and the respective operating loss consolidated sales 2.9% 8.4% 5.6% 16.9% increased by the same amounts compared with the corresponding amounts which would have been recorded under the previous method.
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Company Profile Company Name ShinMaywa Industries, Ltd. 20. Subsequent Event Head Office 1-1 Shinmeiwa-cho, Takarazuka-shi, Hyogo 665-8550, Japan Paid-in Capital 15,981,967,991 yen The following appropriations of retained earnings of the Company, which have not been reflected in the accompanying Founded November 5, 1949 President Tadashi Kaneki consolidated financial statements for the year ended March 31, 2009, was proposed upon resolution at the meeting of the Category of Business Transportation Equipment Board of Directors held on May 21, 2009 and is subject to approval at a shareholders’ meeting to be held on June 25, 2009: Number of Employees Consolidated 3,883 / Non-consolidated 2,010 Number of Affiliated Companies 23 (Millions of yen) (Thousands of U.S. dollars) Cash dividends (¥5.00 = U.S.$0.05per share) ¥498 $5,082
Breakdown of Shareholders Treasury Stocks 16.65% (1) “Contributing to Society 19,933,888 shares Financial Institutions 21.14% Stock Information (42) through Excellent Technologies 25,305,791 shares Total Number of Shares Authorized 300,000,000 shares Total Number of Total Number of Shares Issued 119,727,565 shares Shares Issued: Financial Instruments Firms 0.32% (40) as well as Superior 119,727,565 shares 384,537 shares Number of Shares per Unit 1,000 shares Number of Other Companies 14.16% Shareholders: Number of Shareholders 10,459 (119) Products and Services” 10,459 16,958,377 shares
Foreign Institutions and Individuals 22.18% (128) 26,551,917 shares
Japanese Individuals and Others 25.55% (10,129) 30,593,055 shares
Major Shareholders CONTENTS Number of Shares Shareholding Ratio Profile 1 Order Name of Shareholders Disclaimer Held (%) At a Glance 2 1 SANSHIN CO., LTD. 9,293,065 9.31 Caution Concerning Forward-Looking Statements Treasury Stocks 16.59% 2 Japan Trustee Services Bank, Ltd. (Trust Account) 8,273,000 (1) 8.29 Financial Highlights 3 This annual report contains forward-looking statements—that is, 19,863,697 shares 3 The Master Trust Bank of Japan, Ltd. (Trust Account) 5,681,000 5.69 statements related to future, not past, events. Such statements Featured Interview 4 4 Japan Trustee Services Bank, Ltd. (Trust Account 4G) 4,308,000 Financial4.32 Institutions 19.82% are in accordance with management’s present plans, strategies (45) and outlook, based on management’s judgment in light of 5 Hitachi, Ltd. 4,000,337 23,727,8404.01 shares Review of Operations by Segment 8 information currently available. These forward-looking 6 ShinMaywa Employees' Stock Ownership 3,327,471 3.33 Total Strategies for Sustained Growth statements involve potential risks and uncertainties, and 7 State Street Bank and Trust Company 505019 2,979,000 2.99 Financial Instruments Firms 0.67% (10,737) (53) of the ShinMaywa Group 15 ShinMaywa offers no guarantee as to their accuracy and Trust & Custody Services Bank, Ltd. 119,727,565 805,928 shares reliability. It should be noted that the Company’s actual 8 2,647,000 2.65 Corporate Governance 18 (Securities Investment Trust Account) shares Other Companies 13.46% performance may differ materially from that expressed in the (116) 9 CBNYDFA International Cap Value Portfolio 100%2,597,000 2.60 Financial Section 20 forward-looking statements herein, owing to various factors. 16,118,316 shares These factors include future economic conditions, competition in The Chase Manhattan Bank, N.A. London Secs Lending 10 2,428,000 Foreign2.43 Institutions and Individuals 24.87% Report of Independent Auditors 21 the industry, market demand, exchange rates, other social and Omnibus Account (137) economic circumstances and contingencies. 29,770,579 shares Company Overview 53 Japanese Individuals and Others 24.59% (10,385) Note: The Company holds 19,933,888 treasury stocks, but it has been excluded from the above list of major shareholders. 29,441,205 shares 52 53
005_0301401372109.indd012_0301401372109.indd 2 52-53 2009/09/102009/09/16 18:18:5716:54:40 ANNUAL REPORT 2009
ShinMaywa ShinMaywa ShinMaywa Industries, Ltd. ShinMaywa Industries, Ltd. ANNUAL REPORT 2009 ShinMaywa Year ended March 31, 2009 ShinMaywa Industries, Ltd. ShinMaywa ShinMaywa Industries, Ltd. ShinMaywa ShinMaywa ShinMaywa Industries, Ltd. ShinMaywa Industries, Ltd.
ShinMaywa ShinMaywa Industries, Ltd. www.shinmaywa.co.jp 09.09
005_0301401372109.indd 1 2009/09/10 18:18:54 ShinMaywa ShinMaywa Industries, Ltd.