Annual Report - Makita Corporation Global Site

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15. COMMITMENTS AND CONTINGENT LIABILITIES At March 31, 2009, the Company was contingently liable as a guarantor for housing and education loans to employees in the amount of ¥8 million ($81 thousand). The Company will be required to satisfy the outstanding loan commitments of certain employees in the event those employees are not able to fulfill their repayment obligations. The fair value of the liabilities for the Company’s obligations under the guarantees described above as of March 31, 2009, was insignificant. At March 31, 2009, Makita was contingently liable as a guarantor for the borrowings of the union organized by customers in the amount of ¥93 million ($939 thousand). The fair value of the liabilities for Makita’s obligations under the guarantees described above as of March 31, 2009, was insignificant. Makita’s purchase obligations, mainly for raw materials, were ¥9,261 million ($93,545 thousand) as of March 31, 2009. At March 31, 2009, Makita was contingently liable in connection with discounts of notes receivable in the amount of ¥481 million ($4,859 thousand). Makita is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on Makita’s consolidated financial position, results of operations, or cash flows. Makita made rental payments of ¥1,881 million, ¥2,132 million and ¥2,207 million ($22,293 thousand) under cancelable and noncancelable operating lease agreements for offices, warehouses, automobiles and office equipment during the years ended March 31, 2007, 2008 and 2009, respectively. The minimum rental payments required under noncancelable operating lease agreements as of March 31, 2009, were as follows: Yen U.S. dollars Year ending March 31, (millions) (thousands) 2010 ¥ 681 $ 6,879 2011 503 5,081 2012 319 3,222 2013 242 2,444 2014 175 1,768 2015 and thereafter 283 2,859 ¥ 2,203 $ 22,253 Makita generally guarantees the performance of products delivered and services rendered for a certain period or term. Estimates for product warranty cost are made based on historical warranty claim experience. The change in accrued product warranty cost for the years ended March 31, 2007, 2008 and 2009 was summarized as follows: Yen U.S. dollars (millions) (thousands) 2007 2008 2009 2009 Balance at beginning of year ¥ 928 ¥ 1,306 ¥ 1,964 $ 19,838 Addition 1,476 2,117 1,648 16,646 Utilization ( 1,163 ) ( 1,357 ) ( 1,593 ) (16,091 ) Foreign exchange impact 65 (102 ) (342 ) (3,454 ) Balance at end of year ¥ 1,306 ¥ 1,964 ¥ 1,677 $ 16,939 F-36
16. FAIR VALUE MEASUREMENTS In this fiscal year, Makita adopted SFAS No. 157, “Fair Value Measurements”, for all financial assets and liabilities and for nonfinancial assets and liabilities that are recognized or disclosed at fair value in an entity’s financial statements on recurring basis (at least annually). SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value as follows: Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs are listed below. 1. Inputs are quoted prices for similar assets or liabilities in active markets, 2. Inputs are quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, 3. Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 - Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable, which reflect the reporting entity’s own assumptions about the assumptions that market participants would use in establishing a price. The following table presents our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2009 consistent with the fair value hierarchy provisions of SFAS No. 157. As of March 31, 2009 Yen (millions) Assets: Available-for-sale securities Level 1 Level 2 Level 3 ¥ 38,609 ¥ - ¥ - Derivatives - 119 - Liabilities: Derivatives ¥ - ¥ (1,288) ¥ - As of March 31, 2009 U.S. dollars (thousands) Assets: Available-for-sale securities Level 1 Level 2 Level 3 $ 389,989 $ - $ - Derivatives - 1,202 - Liabilities: Derivatives $ - $ (13,010) $ - Level 1: Available-for-sale securities are comprised principally of investment in trusts and marketable equity securities, which are valued using an unadjusted quoted market price in active markets with sufficient volume and frequency of transactions. Level 2: Derivatives are comprised principally of foreign currency contracts and currency swaps, which are estimated by obtaining quotes and other relevant information from brokers. F-37
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UNITED STATES SECURITIES AND EXCHAN
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Indicate by check mark whether the
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Exchange rates (Japanese yen amount
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In particular, currency exchange ra
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Makita may not be able to protect i
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Item 4. Information on the Company
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Products The following table sets f
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Principal Markets, Distribution and
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In recent years, in the U.S. power
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C. Organizational structure As of M
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Item 4A. Unresolved Staff Comments
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Currency Fluctuations Makita is aff
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In Asia, sales were favorable in th
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As the Company operates using only
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FY2008 compared to FY2007 Net Sales
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Selling, General and Administrative
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CRITICAL ACCOUNTING POLICIES As dis
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performs comprehensive market resea
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For the balance of deferred income
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Maintaining the level of Makita’s
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Makita also expects a longer period
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FY2008 Cash Flows Net cash provided
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Makita has developed the Optimum Ch
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G. Safe harbor All information is n
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Shinichiro Tomita Current Position:
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The Company had an unfunded retirem
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The total number of shares of the C
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To the knowledge of the Company, it
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According to this basic policy, the
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C. Markets See Item 9.A. D. Selling
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The Companies Act specifically requ
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Restriction on dividends from Surpl
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than 8 weeks from the day of such d
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purchase price or any other conside
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however, affect transactions betwee
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Japanese Taxation The following is
Page 85 and 86: treated as U.S. source ordinary inc
Page 87 and 88: A Non-U.S. Holder generally will no
Page 89 and 90: Item 11. Quantitative and Qualitati
Page 91 and 92: PART II Item 13. Defaults, Dividend
Page 93 and 94: Report of Independent Registered Pu
Page 95 and 96: The Board of Statutory Auditors of
Page 97 and 98: position of the chief executive off
Page 99 and 100: of the voting rights represented at
Page 101 and 102: Makita Corporation and Subsidiaries
Page 103 and 104: MAKITA CORPORATION AND SUBSIDIARIES
Page 109 and 110: 1. DESCRIPTION OF BUSINESS MAKITA C
Page 111 and 112: (g) Property, Plant and Equipment a
Page 113 and 114: (p) Impairment of Long-Lived Assets
Page 115 and 116: are accounted for under SFAS No. 13
Page 117 and 118: Yen (millions) Gross Unrealized Hol
Page 119 and 120: The following table shows the gross
Page 121 and 122: Maturities of debt securities class
Page 123 and 124: 9. INCOME TAXES Income before incom
Page 125 and 126: Significant components of deferred
Page 127 and 128: 10. RETIREMENT AND TERMINATION BENE
Page 129 and 130: Measurement date The Company uses a
Page 131 and 132: 11. SHORT-TERM BORROWINGS AND LONG-
Page 133 and 134: 13. OTHER COMPREHENSIVE INCOME (LOS
Page 135: 14. U.S. dollars (thousands) Tax be
Page 139 and 140: The amount of gain or (loss) recogn
Page 141 and 142: (f) Limitation The fair value estim
Page 143 and 144: There are no individually material
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