P. 1
Annual Report

Annual Report

|Views: 46|Likes:
Published by Ashraf_Elzieny

More info:

Published by: Ashraf_Elzieny on Mar 06, 2010
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

09/22/2010

pdf

text

original

ANNUAL REPORT

Year Ended March 31, 2004

PROFILE

Makino Milling Machine Co., Ltd. is a manufacturer of advanced machine tools, founded in May 1937. Its corporate mission is to contribute to the development of industry in Japan and around the world by quickly discerning and responding to industrial trends with technological innovation. Makino’s state-of-the-art machine tools and machining technologies are used in the manufacturing systems of companies in a wide range of industries. Working with local partners possessing strong technical capabilities, Makino has built an extensive sales network in the United States, Europe and Asia, capable of responding to changes in global machine tool demand and structural changes in manufacturing operations. Major products lines: Machining centers, Numerical control (NC) electrical discharge machines (EDM), Milling machines and other products

FIVE-YEAR FINANCIAL SUMMARY
Makino Milling Machine Co., Ltd. and its consolidated subsidiaries Years ended March 31
Thousands of U.S. dollars

Millions of yen

2000 Net Sales Net Income (Loss) Total Shareholders’ Equity Total Assets ¥ 69,179 (2,053) 53,961 129,874

2001 ¥ 84,360 655 51,508 138,003

2002 ¥ 75,660 (784) 50,060 133,278
Yen

2003 ¥ 65,889 (2,727) 45,216 113,806

2004 ¥ 83,835 1,920 46,662 134,050

2004 $ 790,896 18,113 440,208 1,264,623
U.S. dollars

Net Income (Loss) per Share Basic Diluted Number of Employees ¥(22) — 2,319 ¥7 — 2,405 ¥(8) — 2,422 ¥(30) — 2,428 ¥20 16.12 2,583 $0.19 0.15

Note: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥106=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2004.

CONTENTS
TO OUR SHAREHOLDERS AND INVESTORS ................................. 1 FINANCIAL REVIEW .................................................................... 3 CONSOLIDATED BALANCE SHEETS............................................. 4 CONSOLIDATED STATEMENTS OF INCOME ................................ 6 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY ......... 7 CONSOLIDATED STATEMENTS OF CASH FLOWS................................ 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................. 9 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......16 BOARD OF DIRECTORS AND CORPORATE AUDITORS .................17 CORPORATE DATA.....................................................................17

TO OUR SHAREHOLDERS AND INVESTORS

Business Environment
The global economy during fiscal 2003 (April 1, 2003 to March 31, 2004) was stalled in the early part of the year, due to the effects of the war in Iraq and the outbreak of severe acute respiratory syndrome (SARS). Although the U.S. economy demonstrated a mild recovery from the summer, recovery in Europe was slowed as a result of controls on appreciation of the euro. Asia, however, after the containment of SARS, experienced recovery with strong growth, led by China. The Japanese economy recovered slightly, but showed signs of temporary stagnation. However, the economy regained its vigor, and the recovery trend is continuing.

In the parts machining market, the introduction of ’a61, a model of our horizontal machining centers, completed the series lineup (a51, a61, a71 and a81), allowing us to acquire new customers in the automotive and construction machinery industries. In particular, numerous orders were received from the construction machinery industry, which is performing strongly. In the aircraft industry, we received orders from the U.S. and Europe for ’MAG4, and ’MAG3, five-axis machining centers, used for machining of structure parts. We have expected growth in this area. Also, the ultrahigh-speed five-axis machining center ’A66E-5XD, developed to process engine parts, is the first machine applying a linear motor in the rotating table portion, vastly improving production efficiency. Global expansion in the automotive industry has generated aggressive capital investment, and Makino Milling Machine has acquired large-volume orders for automobile engine and transmission processing lines, particularly in Asia. Our subsidiary Makino J Co. Ltd., which mainly produces its product in this field, is appraised in the market. In the die and mold industry, we have developed ’V22, a vertical machining center to process micro molds for the IT sector, which enables focusing on processing of mainstay mobile phones, connectors, semiconductors, memory devices and so on. In the large mold field, we have introduced ’MCC2516, and ’MCC3018, models of horizontal machining centers, which are ideally suited to create the large, high-precision molds required for flat-screen televisions and automobile instrument panels. In the microscopic, ultra-precision machining field, which is beginning to overlap with the nanotechnology field, many companies have adopted ’HYPER2J, a cutting machine that is able to machine extremely micro shapes and provide ultra-fine finishing, and ’UPJ2, an ultraprecision, fully automatic wire electric discharge machine (EDM).

Fiscal Year 2003 Results
Along with the recovery in the Japan and overseas markets, our net sales rose 27.2% from the previous fiscal year, to ¥83,835 million. Operating income was ¥3,416 million, while net income totaled ¥1,920 million. We consider the return of profit to shareholders by means of stable and continual dividends to be part of our basic business philosophy. Cash dividends at the end of the year, therefore, in consideration of our earnings performance, have been set at ¥5.00 per share.

Market Overview
The U.S. economy, in which parts machining and the aircraft industry are important markets, began a gradual recovery trend. Despite short periods of stagnation, from early autumn the economy had recovered its strength. By the beginning of 2004, a feeling of stability in the economic outlook increased. The machine tool industry is showing signs of recovery. Preferential taxation also offered incentives.

1

Using our proprietary technology development, we have aggressively introduced new, high-value-added products, working to expand our sales. In terms of production, we continue to focus on innovation in production methods at our domestic factories, and enhancing cost competitiveness through greater overseas production and purchasing.

Priorities for Management
In order to build a structure that is able to promptly respond to market changes, and to establish a solid corporate structure able to maintain profitability in a difficult business environment, we are pressing forward with the following measures: 1) strengthen product development capabilities; 2) pursue innovation in the production structure; 3) expand and cultivate overseas business; and 4) pioneer growth fields. I wish to offer my appreciation to all shareholders and investors for their continued support. July 2004

Outlook for Fiscal Year 2004
The global economy is expected to remain relatively stable, but there are many causes for concern, such as the situation in the Middle East and the state of exchange rates, so a lack of transparency will remain. Despite this business environment, capital investment worldwide is beginning to emerge from its slow growth period. Japan, Asia and the U.S., in order to enhance their international competitiveness, are increasing their capital investments in a bid to enhance productivity and precision, and we expect this trend to continue during fiscal year 2004, ending March 31, 2005. Europe is lagging behind, but is also showing this same trend. We forecast net sales of ¥96.4 billion, operating income of ¥7.3 billion, and net income of ¥4.4 billion.

Jiro Makino President

Corporate Governance
Makino Milling Machine, while enhancing its corporate competitiveness and increasing the speed of management decisions, recognizes that auditing of management, from the standpoint of increasing its transparency, is an important issue. Accordingly, we have implemented the following measures. The Board of Directors, composed of nine members, meets once a month to decide important matters, assess the status of operations, and quickly implement management decisions. We have adopted the auditing system, consisting of three auditors*, one of which is an outside auditor. They attend important meetings, and conduct aggressive auditing. * The number of auditors was raised to four on June 24,
2004, with two as outside auditors.

2

FINANCIAL REVIEW

Sales and Earnings
Net sales during the fiscal year under review totaled ¥83,835 million, an increase of 27.2% from the previous fiscal year. The main reasons for this rise, by machine type, were strong sales of machining centers, which accounted for 60% of total sales, increasing 26.5% from the previous year to ¥48,771 million. Sales of electric discharge machines (EDM), milling machines and other types of machinery also rose. Cost of sales increased along with net sales, rising 25.4% to ¥62,164 million. However, a decrease in raw material costs and other expenses improved the cost of sales ratio by 1.0 percentage point, from 75.2% to 74.2%. Selling, general and administrative expenses such as freight, stowage and installation expenses, increased along with net sales, rising 3.9% to ¥18,255 million. As a result, operating income for the fiscal year under review was ¥3,416 million, compared to an operating loss the previous fiscal year of ¥1,247 million. As a result, net income amounted to ¥1,920 million, compared to a net loss the previous fiscal year of ¥2,727 million. Net income per share was ¥20.49, compared to net loss per share of ¥29.86 the previous fiscal year. Cash dividends were ¥5.00 per share. Geographic Segment Overview Net sales in Europe declined, but rose in Japan, Asia and the United States. In terms of operating income/loss, operating losses were recorded in Europe and the U.S., but Japan returned to profitability with operating income of ¥2,705 million, and in Asia operating income surged from ¥543 million the previous fiscal year to ¥1,354 million.

an issue of zero coupon convertible bonds and an increase in long-term debt, along with a rise in accounts payable that followed the increase in production. Interest-bearing debt rose from ¥41,962 million at the end of the previous fiscal year to ¥52,957 million, along with the issue of zero coupon convertible bonds of ¥11,500 million due 2008, and loans from banks and insurance company increased ¥8,417 million despite redemption of convertible bonds of ¥9,748 million due 2003. Shareholders’ equity increased ¥1,446 million from the end of the previous fiscal year to ¥46,662 million. However, the shareholders’ equity ratio declined, from 39.7% at the end of the previous fiscal year to 34.8%, due to the issuance of zero coupon convertible bonds due 2008 and an increase in long-term debt of ¥22,655 million.

Cash Flows
Although the adjustment of an increase in trade receivables was ¥7,282 million and the increase in inventories was ¥3,736 million, income before income taxes and minority interests was ¥3,447 million and there was an adjustment of an increase in notes and accounts payable of ¥5,992 million. Therefore, cash provided by operating activities during the fiscal year under review totaled ¥153 million. Cash used in investing activities totaled ¥1,183 million, due to acquisitions of property, plant and equipment of ¥1,478 million. Cash provided by financing activities totaled ¥12,194 million. Against expenditures for redemption of the unsecured convertible bonds of ¥9,748 million and expenditures for repayment of long-term debt totaling ¥4,496 million, an increase in loans provided ¥13,000 million, and ¥11,500 million was provided by the issue of zero coupon convertible bonds due 2008. As a result, cash and cash equivalents at the end of the fiscal year under review totaled ¥21,915 million.

Financial Position
Total assets at the end of the fiscal year under review increased ¥20,244 million from the end of the previous fiscal year to ¥134,050 million. The main reasons were increases in current assets such as notes and accounts payable and inventories, reflecting the rise in sales. Total liabilities rose ¥18,829 million from the end of the previous fiscal year to ¥84,095 million, due mainly to

3

4

5

6

7

8

9

10

11

12

13

14

15

16

BOARD OF DIRECTORS AND CORPORATE AUDITORS
President Managing Director Managing Director Director Director Director Director Director Director Corporate Auditor Corporate Auditor Corporate Auditor Corporate Auditor Jiro Makino Makoto Sato Shun Makino Susumu Ogasawara Takao Kobayashi Ken Nobuhara Naohiko Tokunaga Eiichi Hososhima Tsuyoshi Ema Takatoshi Watanabe Eiji Fukui Hirohisa Ozawa Kouichi Suzuki
As of June 24, 2004

CORPORATE DATA
Makino Milling Machine Co., Ltd. Date of Foundation Paid-in Capital Activities Head Office May 1, 1937 ¥7,864 million Manufacture, sale and export of machine tools 3-19, Nakane 2-chome, Meguro-ku, Tokyo 152-8578, Japan Phone : +81-3-3717-1151 Fax Domestic Works : +81-3-3725-2105 Research Laboratory Atsugi (Kanagawa) Atsugi (Kanagawa), Fuji-Katsuyama (Yamanashi) Sales & Service Offices Tokyo, Osaka, Nagoya, and other 17 offices Overseas Sales & Service Offices U.S.A., Germany, Singapore, Korea, China, and others Consolidated Subsidiaries MAKINO ASIA PTE. LTD. MAKINO RESOURCE DEVELOPMENT PTE.LTD. MAKINO INC. MAKINO GmbH MAKINO J Co., Ltd. MAKINO DENSO Co., Ltd. MAKINO TECHNICAL SERVICE Co., Ltd. KANTO BUSSAN Co., Ltd.
As of June 30, 2004

17

3-19, Nakane 2-chome, Meguro-ku, Tokyo 152-8578, Japan Phone : +81-3-3717-1151 Fax : +81-3-3725-2105 URL : http://www.makino.co.jp/

Printed in Japan

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->