ANNUAL REPORT

FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 2009
managements 5 year business plans. For the calculation of the terminal or residual value for the period beyond the discrete
projections, the Company used the Gordon Growth Model. The resulting residual values were validated by comparing the implied
EBITDA valuation multiples with currently applicable market multiples.
The present value of estimated future cash flows and residual cash flows was determined using the WACC of a group of comparable
publicly traded companies. The calculation utilized (a) a peer group average as pre-tax required cost of debt, except for CME for which
the effective interest rate on its debt was used as a proxy for the cost of debt and (b) the industry debt-to-capital ratio and the
observed median of betas in the group.
The main assumptions used in determining the recoverable amount of the various CGU's can be summarized as follows:
(In %) 2009 2008
Growth rate WACC Growth rate WACC
Asahi Tec 0.0 7.1 1.6 8.5
CME 1.0 11.0 4.0 6.2
HIT 1.0 8.9 1.0 8.8
Metaldyne 2.5 21.0 3.0 12.5
Niles 0.0 8.3 0.5 6.4
The calculations of the value in use have been based on judgments, estimates and assumptions. The calculations are particularly
sensitive to above key assumptions. Any change in interest rates, risk premiums, long-term growth rates and actual operating
performance, could have a material adverse impact on the concluded recoverable amounts. The conclusions of the income based
approach were corroborated by the market multiple approach for comparable publicly traded companies.
16.2.3. Impairment testing for intangible assets other than goodwill
In view the economic downturn and its impact on the consolidated subsidiaries’ projected future cash flows, an impairment test has
been performed on certain intangible assets.
The Company recorded an aggregate impairment charge of JPY 44,467 million on certain intangible assets of HIT (JPY 25,186 million),
Metaldyne (JPY 14,892 million) and CME (JPY 4,398 million). The impairment charges related to various intangible assets and resulted
from the calculation of their value in use, which was determined using the Gordon Growth model. The main assumptions can be
summarized as follows :
CME
HIT
2009 2008
Growth rate WACC Growth rate WACC
Between 0%
and (7.0)%
Between 2.5%
and (2.0)%
Metaldyne 2.5%
Between 7.9%
and 11.4%
Between 15.0%
and 21.0%
9.0% 0% 9.0%
3%
- -
Between 12.0%
and 13.5%
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