Brother International 2011 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... The Group started in 1908 as a repair business for sewing machines in Japan. Today, we provide a broad array of products and services, including not only sewing machines but also information and communications equipment such as All-in-Ones and printers, machine tools, and online karaoke, throughout...

  • Page 3
    ... of Changes in Equity ...· Consolidated Statements of Cash Flows ...· Notes to Consolidated Financial Statements ...· Independent Auditors' Report ...· Investor Information / Board of Directors, Auditors and Executive Officers ...· Global Network ...2 4 5 6 10 12 14 17 19 20 21 22 23 55...

  • Page 4
    ...One Black-and-white laser printer Labeling system P& H Personal & Home Net Sales by Business Segment (FY2010) The Personal & Home (P&H) business encompasses Brother's sewing products and services including home sewing and embroidery machines. Its mission is to offer the customer Brother sewing...

  • Page 5
    ... Garment printer Machine tool N&C Network & Contents Net Sales by Business Segment (FY2010) The Network & Contents (N&C) business provides online karaoke systems for business use and also pursues new customer value by offering services and products for various industries, including the health...

  • Page 6
    ...212.5 372.6 59.1 220.5 80 60 25 24.0 18.0 24.5 50 40 30 45.8 20 15 40 10 20 0 5 0 24.5 20 10 0 The Americas Europe Asia and Others Japan 0 2009 2010 2011 2009* 2010 2011 Total assets (left) Owners' equity (left) Owners' equity ratio (right) Dividends per share (left) Payout ratio...

  • Page 7
    ...2011 due to the impact of the earthquake and other factors, we will strive to carry out our growth strategies again by dedicating all-out efforts to the new mid-term business strategy "CS B2015" launched in April 2011. Representative Director & President Toshikazu Koike Brother Annual Report 2011...

  • Page 8
    ...become a world-class manufacturer by developing outstanding proprietary technologies To embody Brother's motto, "At your side," throughout our corporate culture Global Vision 21 2 3 The Brother Group has been formulating mid-term business strategies as a roadmap for achieving Global Vision 21. In...

  • Page 9
    ... Black-and-White laser All-in-One / Printer Color laser All-in-One / Printer Established area Low Home SOHO Small and medium businesses Corporate *Laser products include LED models. Electronic Stationery We will further consolidate our position as No.1 in the global market for labeling systems...

  • Page 10
    ... to offer more competitive products by setting up a new factory for home sewing machines near Ho Chi Minh City, Vietnam, and optimizing the three production bases of the new factory and two other manufacturing facilities in Taiwan and Zhuhai, China. Professional area New product Embroidery sewing...

  • Page 11
    ... commercially viable through proactive M&A and alliances. Priority Strategy for the Management Base Accelerate "True Globalization" Development We will reinforce a R&D company set up in Hangzhou, China, and actively promote the development of advanced technologies mainly in Japan. Manufacturing...

  • Page 12
    .... 2009 2010 2011 The Americas Europe Asia and Others Japan Line-up of products and services Printing & Solutions Personal & Home MFC-9970CDW Color laser All-in-One MFC-J6710DW A3 Color All-in-One PT-2730 Labeling system PR-1000 Commercial embroidery machine 10 Brother Annual Report 2011

  • Page 13
    ... mostly of net sales of Japan, net sales by market is omitted. Machinery & Solution Network & Contents KE-430F Electronic direct drive lockstitch bar tacker TC-S2DN CNC tapping center CROSSO Online karaoke system EXERMUSIC Music distribution service for jogging Brother Annual Report 2011 11

  • Page 14
    ... of Security Trade Control Product Liability Committee Information Management Committee Safety, Health and Disaster Prevention Committee Environmental Committee Auditing Strategy Meeting Executive Officers Headquarters Departments / Personal & Home Company / Machinery & Solution Company * For...

  • Page 15
    ... the execution of duties by the managing director. Having established the Internal Audit Department, the internal auditing staff (eight members) under the direction of the representative director and president, inspect risk-related conditions affecting the headquarters, internal and Group companies...

  • Page 16
    ...markets. The Brother Group believes that its liquidity on hand, including open commitment lines of credit, and sound corporate finance structure, on top of its ability to generate cash flows from operating activities, make it possible to secure working capital as well as funds for capital investment...

  • Page 17
    ... market share, adversely affecting Group performance. (2) Acquisition of Human Resources The Brother Group places a special emphasis on research and development, aiming to differentiate its products from its competitors' through the accumulation of technology and expertise. However, competition...

  • Page 18
    ... returns on investment, which could adversely affect Group performance and financial conditions. (11) Natural Disasters and Other Threats The majority of the Brother Group's manufacturing and sales facilities is located overseas. Our main manufacturing facilities are in China, Malaysia and Vietnam...

  • Page 19
    ..., Ltd. and Consolidated Subsidiaries March 31, 2011 and 2010 C onsolidated Balance Sheets Thousands of U.S. Dollars (Note 1) Millions of Yen 2011 ASSETS CURRENT ASSETS: Cash and cash equivalents (Note 16) Time deposits Marketable securities (Notes 4 and 16) Receivables (Note 16): Trade notes and...

  • Page 20
    ... Dollars (Note 1) Millions of Yen 2011 LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term borrowings (Notes 8 and 16) Current portion of long-term debt (Notes 8 and 16) Payables (Note 16): Trade notes and accounts Unconsolidated subsidiaries and associated companies Other Income taxes payable...

  • Page 21
    ...,181 309,205 (6,915) 316,120 PER SHARE OF COMMON STOCK (Note 20): Basic net income Diluted net income Cash dividends applicable to the year See notes to consolidated financial statements. Yen ¥ 98.03 97.91 24.00 ¥ 73.34 73.28 18.00 U.S. Dollars $ 1.18 1.18 0.29 Brother Annual Report 2011 19

  • Page 22
    ... TO (Note 19): Owners of the parent Minority interests See notes to consolidated financial statements. 2011 $ 309,205 (8,133) (14,361) (108,205) 277 (130,422) $ 178,783 ¥ 25,664 (675) (1,192) (8,981) 23 (10,825) ¥ 14,839 ¥ 15,413 (574) $ 185,699 (6,916) 20 Brother Annual Report 2011

  • Page 23
    ... 2010 Adjustment of retained earnings due to change in scope of consolidation Decrease due to split-off type of corporate divestiture Net income Cash dividends, ¥ 22.00 per share Acquisition of treasury stock Sale of treasury stock Net increase in stock acquisition rights Net decrease in unrealized...

  • Page 24
    ... in investing activities FINANCING ACTIVITIES: Increase (decrease) in short-term borrowings, net Repayments of long-term debt Repayments of lease obligations Cash dividends paid Increase in treasury stock, net Other - net Net cash used in financing activities EFFECT OF FOREIGN CURRENCY EXCHANGE RATE...

  • Page 25
    ... BROTHER INDUSTRIES, LTD. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥83 to $1, the approximate rate of exchange at March 31, 2011...

  • Page 26
    ... (U.K.) Ltd. Brother Finance (U.K.) Plc Taiwan Brother Industries, Ltd. Zhuhai Brother Industries, Co., Ltd. Brother Corporation (Asia) Ltd. Brother Industries Technology (Malaysia) Sdn. Bhd. Brother International (Aust.) Pty. Ltd. Brother International Singapore Pte. Ltd. Brother Machinery Xian Co...

  • Page 27
    ..., "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements." The new task force prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under...

  • Page 28
    ...Cash equivalents include time deposits and investment trust, all of which mature or become due within three months of the date of acquisition. (7) Inventories Inventories are stated at the lower of cost or market. Cost is determined by the average method by the Company and consolidated manufacturing...

  • Page 29
    ...other finance leases were permitted to be accounted for as operating lease transactions if certain "as if sold" information is disclosed in the note to the lessor's financial statements. The revised accounting standard requires that all finance leases that deem to transfer Brother Annual Report 2011...

  • Page 30
    ... into Japanese yen at the average exchange rate during the year. (23) Derivative and Hedging Activities The Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts, interest rate swaps and...

  • Page 31
    ... Corp., both wholly-owned consolidated subsidiaries b. Detail of the business involved Xing Inc.: Sales of commercial karaoke machine, management of karaoke house and service of karaoke contents BMB Corp.: Sales and development of commercial karaoke machine, and management of karaoke house c. Date...

  • Page 32
    ... Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries For the Years ended March 31, 2011 and 2010 Furthermore, the group pursues the growth of the whole group by strengthening the ability of contents development and entering into a new business field, using the expanded...

  • Page 33
    ... of Yen Thousands of U.S. Dollars 2011 Merchandise and Finished products Work in process Raw materials and supplies Total ¥ ¥ 49,500 8,067 14,689 72,256 ¥ ¥ 2010 46,327 6,224 12,189 64,740 $ $ 2011 596,385 97,193 176,976 870,554 6. Long-lived Assets The Group reviewed their long-lived assets...

  • Page 34
    ... Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries For the Years ended March 31, 2011 and 2010 In addition, the carrying amounts, changes in such balances and market prices of such properties are as follows: Millions of Yen Carrying amount April 1, 2010 Increase...

  • Page 35
    ... service benefit Net asset Prepaid pension cost Liability for employees' retirement benefits ¥ ¥ (50,134) 42,447 11,621 1,158 5,092 12,620 (7,528) ¥ ¥ 2010 (52,374) 44,610 14,395 (257) 6,374 13,406 (7,032) $ $ 2011 (604,024) 511,410 140,012 13,951 61,349 152,048 (90,699) Brother Annual Report...

  • Page 36
    ... to Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries For the Years ended March 31, 2011 and 2010 The components of net periodic benefit costs for the years ended March 31, 2011 and 2010 were as follows: Millions of Yen Thousands of U.S. Dollars 2011 2010...

  • Page 37
    ... 2011 were as follows: Stock Option Persons Granted Number of Options granted Date of Grant Exercise Price Exercise Period 2007 Stock Option 6 directors 46,000 shares Mar 19, 2007 ¥1 ($0.01) ¥1 ($0.01) ¥1 ($0.01) ¥1 ($0.01) ¥1 ($0.01) 30 years starting on the following day of stock option...

  • Page 38
    ... used to measure fair value of 2011 Stock Option (executive officers) Estimate method: Black-Scholes option pricing model Volatility of stock price: 40.06% Estimated remaining outstanding period: 9 years Estimated dividend rate: 1.50% Interest rate with risk free: 1.12% 36 Brother Annual Report 2011

  • Page 39
    ... in valuation allowance Tax effect not recognized on retained earnings of foreign subsidiaries Other - net Actual effective tax rate 40.10% 6.40 (1.24) (7.36) (4.10) (0.23) (10.32) 1.76 (0.35) 24.66% 2010 40.50% 1.93 (0.84) (10.30) (0.91) (0.15) (3.90) - (0.87) 25.46% Brother Annual Report 2011 37

  • Page 40
    ..., interest expense and other information of finance leases that do not transfer ownership of the leased property to the lessee on an "as if capitalized" basis was as follows: March 31, 2011 Millions of Yen Buildings and Structures Furniture and Fixtures Machinery and Vehicles Total Acquisition cost...

  • Page 41
    ... date and were accounted for as operating leases at March 31, 2011 and 2010 were as follows: Millions of Yen Thousands of U.S. Dollars 2011 Finance leases: Due within one year Due after one year Total ¥ ¥ 795 154 949 ¥ ¥ 2010 2,630 2,105 4,735 $ $ 2011 9,579 1,855 11,434 39 Brother Annual...

  • Page 42
    ...customers by each business administration department to identify the default risk of customers in the early stage. With respect to held-to-maturity financial investments, the Group manages its exposure to credit risk by limiting its funding to high credit rating bonds in accordance with its internal...

  • Page 43
    ...option contracts may be used to hedge foreign exchange risk resulting from the forecasted transaction expected to occur within one year. For the year ended March 31, 2010, interest-rate swaps were used to manage exposure to market risks from changes in interest rates of loan payables. The executions...

  • Page 44
    ... changed significantly since the date of lease inception. Income taxes payable The carrying values of income taxes payable approximate fair value because of their short maturities. Derivatives The information of the fair value for derivatives is included in Note 17. 42 Brother Annual Report 2011

  • Page 45
    ... Carrying amount of financial instruments whose fair value cannot be reliably determined Millions of Yen Thousands of U.S. Dollars 2011 Equity securities that do not have a quoted market price in an active market Investments in limited liability partnerships that do not have a quoted market price...

  • Page 46
    ... financial institutions with high credit ratings, the Group does not anticipate any losses arising from credit risk. Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate the authorization and credit limit amount. The contract...

  • Page 47
    ...Yen Mexican Peso Korean Won Indonesia Rupiah Taiwan Dollars Buying: U.S. Dollars Euro Pound Sterling Currency option contracts: Selling: Call Euro (Option fee) Swiss Franc (Option fee) Buying: Call Euro (Option fee) Yen (Option fee) Interest rate swaps: (fixed rate...) Brother Annual Report 2011 45

  • Page 48
    ... Financial Statements (Thousands of U.S. Dollars) Brother Industries, Ltd. and Consolidated Subsidiaries For the Years ended March 31, 2011 and 2010 At March 31, 2011 Foreign currency forward contracts: U.S. Dollars Pound Sterling Thailand Baht Yen Mexican Peso Korean Won Indonesia Rupiah Taiwan...

  • Page 49
    ... Korean Won Indonesia Rupiah Taiwan Dollars Buying: Taiwan Dollars Interest rate swaps: (fixed rate payment, floating rate receipt) Hedged Item Contract Amount Contract Amount due after One Year Fair Value Receivables Receivables Receivables Receivables Receivables Receivables Investment...

  • Page 50
    ... Net income available to common shareholders Effect of dilutive securities Stock acquisition rights Diluted EPS Net income for computation ¥ 19,629 267,880 ¥ 73.28 228 ¥ 19,629 267,652 ¥ 73.34 ¥ 26,238 267,973 ¥ 97.91 $ 1.18 328 ¥ 26,238 267,645 ¥ 98.03 $ 1.18 48 Brother Annual Report 2011

  • Page 51
    ...'s management is being performed in order to decide how resources are allocated among the Group. The Group consists of the four segments "Printing & Solutions," "Personal & Home," "Machinery & Solution" and "Network & Contents," in which the Group formulates and implements Brother Annual Report 2011...

  • Page 52
    ... Policies." 3. Information about sales, profit (loss), assets, liabilities and other items is as follows: Millions of Yen 2011 Reportable segment Printing & Solutions Personal & Home Machinery & Solution Network & Contents Others Total Reconciliation Consolidated Sales Sales to external customers...

  • Page 53
    ...6,058,193 Note: Sales are classified in countries or regions based on location of customers. (b) Property, plant and equipment Millions of Yen 2011 Japan China Asia and others Americas Europe Total ¥ 46,676 ¥ 7,822 ¥ 5,419 ¥ 4,963 ¥ 3,280 ¥ 68,160 Brother Annual Report 2011 51

  • Page 54
    ... Thousands of U.S. Dollars 2011 Japan China Asia and others Americas Europe Total $ 562,361 $ 94,241 $ 65,289 $ 59,795 $ 39,519 $ 821,205 5. Information about impairment losses of assets Millions of Yen 2011 Printing & Solutions Personal & Home Machinery & Solution Network & Contents...

  • Page 55
    ... printers, fax machines, electronic stationeries and typewriters. "Personal & Home" consists of sales and production of home sewing machines. "Machinery & Solution" consists of sales and production of industrial sewing machines and machine tools. "Others" consists of online karaoke, information...

  • Page 56
    ... amounted to ¥357,975 million for the year ended March 31, 2010. The following is a breakdown of sales to foreign customers by region for the year ended March 31, 2010: Millions of Yen 2010 Americas Europe Asia and Others Total ¥ ¥ 143,140 144,792 70,043 357,975 54 Brother Annual Report 2011

  • Page 57
    Brother Annual Report 2011 55

  • Page 58
    ...Headquarters Foundation nvestor Information Brother Industries, Ltd. 15-1, Naeshiro-cho, Mizuho-ku, Nagoya 467-8561, Japan Telephone : +81-52-824-2075 Facsimile : +81-52-811-6826 URL : http://www.brother.com Subsidiaries and Affiliated Companies 62 Number of Group Employees 29,873 Stock Exchange...

  • Page 59
    ... Technology (Malaysia) Sdn. Bhd. · Brother Industries (U.S.A.) Inc. · Brother Industries (U.K.) Ltd. · Brother Industries (Slovakia) s.r.o. · Taiwan Brother Industries, Ltd. · Zhuhai Brother Industries, Co., Ltd. · Brother Machinery Xian Co., Ltd. (As of June 30, 2011) Brother Annual Report...

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