Brother International 2012 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ...delivering high-quality products and services. "At your side." represents the wishes of the Brother Group. With the "At your side." motto in mind, the Brother Group fulfills its commitment to our planet, and helps global customers achieve new lifestyles and work styles with its products and services...

  • Page 3
    Brother at a Glance Global Network Financial Highlights Message from the Management Special Feature: Mid-Term Business Strategy "CS B2015" Enters Second Year Review of Operations Corporate Governance Investor Information / Board of Directors, Auditors and Executive Officers 3 6 8 9 10 13 15 17 ...

  • Page 4
    ...work groups, shops and business offices to make the most of their limited work spaces. Color laser All-in-One Color laser printer Black-and-white laser printer Electronic stationery Our labeling systems, which enable users to easily create and print labels, are widely used in both homes and offices...

  • Page 5
    ... machine Commercial embroidery machine Net Sales by Business Segment (FY2011) M&S Machinery & Solution The Machinery & Solution (M&S) business offers customers energy-saving industrial sewing machines that provide an ease of use and high-quality sewing capabilities, as well as machine tools...

  • Page 6
    ...The Network & Contents (N&C) business provides online karaoke systems for business use. It also pursues new customer value by offering services and products suitable for various industries, including health and education, leveraging the contents and distribution technologies developed for the online...

  • Page 7
    ... and regions (as of July 2012). Overseas sales account for about 80% of the group's total sales. We operate business on a global basis and aim to enhance the global network through a globalized management infrastructure of manufacturing/developing and human resources, all of which are essential...

  • Page 8
    ... (AUST.) PTY. LTD. BROTHER INTERNATIONAL SINGAPORE PTE. LTD. BROTHER INTERNATIONAL (NZ) LTD. BROTHER INTERNATIONAL (GULF) FZE BROTHER SALES, LTD. BROTHER INTERNATIONAL (GULF) FZE (Turkey Branch) BROTHER COMMERCIAL (THAILAND) LTD. XING INC. STANDARD CORP. BETOP STAFF, LTD. BROTHER FINANCE (JAPAN...

  • Page 9
    ... Basic net income Equity Cash dividends ¥ 104.82 763.94...80 36.1 26.6 80 300 60 40 10 20 0 0 100 20 200 73.0 60 231.4 40 10 20 5 0 18.0 0 0 2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012 Net income (left) Net income per share (right...

  • Page 10
    ... for communications and printing equipment as well as machine tools. In terms of profitability, the online karaoke business posted an improvement in earnings, but the impact from exchange rates, rising research and development costs and an increase in corporate income tax and other taxes owing to...

  • Page 11
    ...global company with high profitability Global Vision 21 become a world-class manufacturer by developing 2 To outstanding proprietary technologies embody Brother's motto, "At your side," throughout our 3 To corporate culture Machinery & Solution Business (Industrial Sewing Machines / Machine Tools...

  • Page 12
    ... party Web services O Product support O Template services New services Web conferencing for printing O Video storage services O Document storage services Smartphones/ Tablet PCs PC Portal Site Documents Existing hardware New hardware by the Network Imaging Device (NID) Photos Printers/All...

  • Page 13
    ... new home sewing machine factory constructed near Ho Chi Minh City, Vietnam, commenced operations in April 2012, while the new factory for the Printing & Solutions Business located in the Philippines and the new factory for consolidating multiple manufacturing facilities of the Machinery & Solutions...

  • Page 14
    ...17.2% The Americas 20 2.6 3.0 48.1% Europe 1.8 10 1.5 22.7% 0 2010 2011 2012 0 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-1000e Commercial embroidery machine 13

  • Page 15
    ... in sales resulted in a second consecutive operating loss. 0.6 -0.0 -2.7 2010 2011 2012 3 0 -3 Line-up of products and services Machinery & Solution Network & Contents KE-430F Electronic direct drive lockstitch bar tacker TC-S2DN CNC tapping center JOYSOUND f1 Online karaoke system JOYBEAT...

  • Page 16
    ... President Committee of Security Trade Control Product Liability Committee Information Management Committee Safety, Health and Disaster Prevention Committee Strategy Meeting Executive Officers Environmental Committee Headquarters Departments / Personal & Home Company / Machinery & Solution...

  • Page 17
    ... by the managing director. Having established the Internal Audit Department, the internal auditing staff (seven members) under the direction of the representative director and president, inspect riskrelated conditions affecting the headquarters, internal and Group companies and report directly to...

  • Page 18
    ... 31, 2012) 277,535,866 shares Number of Shareholders 16,325 B oard of Directors, Auditors and Executive Officers Board of Directors Representative Director & President Statutory Auditors Standing Corporate Auditor Executive Officers Managing Executive Officers Group Managing Executive Officers...

  • Page 19
    ... and future operating activities. In accordance with these policies, we have created and operated a cash management system to optimize the group-wide use of cash held by individual companies. We also maintain open commitment lines of credit with several banking institutions to complement existing...

  • Page 20
    ...market share, adversely affecting Group performance. (2) Acquisition of Human Resources The Brother Group works to secure needed human resources for each function related to global expansion in projects, development, design, manufacturing, sales and services. However, competition for human resources...

  • Page 21
    ... 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 22
    ... Thousands of U.S. Dollars (Note 1) Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 2012 ASSETS CURRENT ASSETS: Cash and cash equivalents (Note 15) Time deposits Marketable securities (Notes 3 and 15) Receivables (Note 15): Trade notes and accounts Unconsolidated...

  • Page 23
    ... Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 Millions of Yen Thousands of U.S. Dollars (Note 1) 2012 LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term borrowings (Notes 7 and 15) Current portion of long-term debt (Notes 7 and 15) Payables (Note 15): Trade...

  • Page 24
    ...EXPENSES): Interest and dividend income Interest expense Sales discount Loss on sales and disposals of property, plant and equipment, net Foreign exchange gain Loss on impairment of long-lived assets (Notes 2(10) and 5) Other, net Other expenses, net INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS...

  • Page 25
    ... 1) Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 NET INCOME BEFORE MINORITY INTERESTS OTHER COMPREHENSIVE (LOSS) INCOME (Note 18): Unrealized loss on available-for-sale securities Deferred loss on derivatives under hedge accounting Foreign currency translation...

  • Page 26
    ...11,789) BALANCE, MARCH 31, 2011 Adjustment of retained earnings due to change in scope of consolidation Net income Cash dividends, ¥ 24 per share Acquisition of treasury stock Sale of treasury stock Net change in the year BALANCE, MARCH 31, 2012 267,648 - - - (14) 35 - 19,210 - - - - - - 16,157...

  • Page 27
    ... Other - net Net cash used in investing activities FINANCING ACTIVITIES: (Decrease) increase 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...

  • Page 28
    ... 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 ¥82 to $1, the approximate rate of exchange at March 31, 2012...

  • Page 29
    .... Brother Corporation (Asia) Ltd. Brother Industries Technology (Malaysia) Sdn. Bhd. Brother International (Aust.) Pty. Ltd. Brother International Singapore Pte. Ltd. Brother Machinery Xian Co., Ltd. Brother Industries (Shenzhen), Ltd. Brother (China) Ltd. Brother Industries (Vietnam) Ltd. Brother...

  • Page 30
    ... property, plant, and equipment and investment properties and incorporation of the cost model accounting; and 5) exclusion of minority interests from net income, if included. (4) Unification of Accounting Policies Applied to Associated Companies for the Equity Method In March 2008, the ASBJ issued...

  • Page 31
    ... and fixtures. Depreciation of leased assets under finance leases is computed by the straight-line method over the lease period. (10) Long-lived Assets The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or...

  • Page 32
    ... over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the...

  • Page 33
    ... currently enacted tax laws to the temporary differences. (21) Foreign Currency Transactions All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the consolidated balance sheet date. The foreign...

  • Page 34
    ... are scheduled to adopt the system from the year ended March 31, 2013. As a result, the Company has been adopting accounting treatments as a prerequisite to the adoption of a consolidated corporate tax system in accordance with PITF No.5 "Practical Solution on Tentative Treatment of Tax Effect...

  • Page 35
    ... Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 3. Marketable and Investment Securities Marketable and investment securities as of March 31, 2012 and 2011 consisted of the following: Millions of Yen Thousands of U.S. Dollars 2012 Current: Government and corporate...

  • Page 36
    ...The Group reviewed its long-lived assets for impairment. For the years ended March 31, 2012 and 2011, the Company and consolidated subsidiaries recorded impairment loss of ¥609 million ($7,427 thousand) and ¥1,473 million, respectively, as other expense, for business assets, idle assets and rental...

  • Page 37
    ... of properties is mainly measured by the Group in accordance with its Real-estate Appraisal Standard. 7. Short-term Borrowings and Long-term Debt Short-term borrowings at March 31, 2012 and 2011 consisted of the following: Millions of Yen Thousands of U.S. Dollars Loans principally from banks with...

  • Page 38
    ... at March 31, 2012 and 2011, respectively. Retirement Allowances for Directors and Corporate Auditors Retirement allowances for directors and corporate auditors are paid subject to approval of the shareholders in accordance with the Companies Act of Japan (the "Companies Act"). Certain domestic...

  • Page 39
    ... Assumptions used for the years ended March 31, 2012 and 2011 were as follows: 2012 Periodic recognition of projected benefit obligation Discount rate Expected rate of return on plan assets Recognition period of actuarial gain / loss Amortization period of prior service benefit / cost Straight-line...

  • Page 40
    ..., the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria. The Companies Act permits companies to distribute dividends-in-kind (non-cash...

  • Page 41
    ... Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 (c) Treasury Stock and Treasury Stock Acquisition Rights The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors...

  • Page 42
    ... Vested April 1, 2011 - Outstanding Vested Exercised Canceled March 31, 2012 - Outstanding Exercise price Average stock price at exercise Fair value price at grant date (directors) Fair value price at grant date (executive officers) - 106,400 - - 106,400 ¥1 ($ 0.01) - (-) ¥ 929 ($11.33) ¥ 957...

  • Page 43
    ...Risk free interest rate: The assumptions used to measure fair value of 2012 Stock Option (executive officers) Estimate method: Volatility of stock price: Estimated remaining outstanding period: Estimated dividend rate: Risk free interest rate: Black-Scholes option pricing model 40.48% 11 years 1.57...

  • Page 44
    ...) and ¥36,253 million for the years ended March 31, 2012 and 2011, respectively. 14. Leases (As lessee) The Group leases certain buildings and structures, furniture and fixtures, machinery and vehicles. Total rental expense of finance leases, except for those cases in which the ownership of the...

  • Page 45
    ... 16 14 - 2 ¥ ¥ 2,839 1,396 600 843 Thousands of U.S. Dollars 2012 Buildings and Structures Furniture and Fixtures Total Acquisition cost Accumulated depreciation Accumulated impairment loss Net leased property Obligations under finance leases: $ $ 988 634 293 61 $ $ 11,622 8,439 1,841...

  • Page 46
    ...3,998 $ $ 2012 14,768 30,610 45,378 (As lessor) As discussed in Note 2(18), the Group accounts for leases which existed at the transition date and do not transfer ownership of the leased property to the lessee as operating lease transactions. Expected revenues from such finance leases that existed...

  • Page 47
    ...2012 15. Financial Instruments and Related Disclosures (1) Group policy for financial instruments The Group uses financial instruments, mainly long-term debt including bank loans and bonds, based on its capital financing plan. Cash surpluses, if any, are invested in low risk financial assets. Short...

  • Page 48
    ... instruments Millions of Yen March 31, 2012 Cash and cash equivalents Marketable securities Receivables Investment securities Total Short-term borrowings Current portion of long-term debt Payables Income taxes payable Long-term debt Total ¥ ¥ Carrying Amount Fair Value Unrealized Gain/(Loss...

  • Page 49
    ... short maturities. Short-term borrowings and long- term debt The carrying values of short-term borrowings approximate fair value because of their short maturities. The fair values of Company's bonds are measured at the quoted market price of the bond market. The fair values of long-term bank loans...

  • Page 50
    ... - 475 14 ¥ 123,882 March 31, 2012 Cash and cash equivalents Marketable securities Receivables Investment securities Held-to-maturity securities Available-for-sale securities with contractual maturities Total Please see Note 7 for annual maturities of long-term debt. Due in One Year or Less Due...

  • Page 51
    ...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 or notional...

  • Page 52
    ... Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 Millions of Yen At March 31, 2011 Foreign currency forward contracts: Selling: U.S. Dollars Euro Pound Sterling Thailand Baht Yen Mexican Peso Korean Won Indonesia Rupiah Taiwan Dollars India Rupee Philippine...

  • Page 53
    ... Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 Thousands of U.S. Dollars At March 31, 2012 Foreign currency forward contracts: Selling: U.S. Dollars Euro Pound Sterling Thailand Baht Yen Mexican Peso Korean Won Indonesia Rupiah Taiwan Dollars India Rupee Philippine...

  • Page 54
    ...99 44 Thousands of U.S. Dollars ¥ (147) 3 1 2 1 At March 31, 2012 Foreign currency forward contracts: Selling: Euro Pound Sterling Yen Korean Won Indonesia Rupiah Taiwan Dollars India Rupee Philippine Peso Hedged Item Contract Amount Contract Amount Due after One Year Fair Value Receivables...

  • Page 55
    ... Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 17. Contingent Liabilities At March 31, 2012, the Group had the following contingent liabilities: Millions of Yen Thousands of U.S. Dollars Guarantees for debt of customers ¥ 213 $ 2,598...

  • Page 56
    ... $ 0.89 20. Subsequent Events Appropriation of Retained Earnings The following appropriation of retained earnings at March 31, 2012 was approved at the Company's board of directors' meeting held on May 17, 2012: Millions of Yen Thousands of U.S. Dollars Year-end cash dividends of ¥12 ($0.15) per...

  • Page 57
    ... of sales and production of online karaoke system, and of contents distribution services. 2. Information about sales, profit (loss), assets and other items is as follows: Millions of Yen 2012 Reportable segment Printing and Solutions Personal and Home Machinery and Solution Network and Contents...

  • Page 58
    ... for increase in property, plant and equipment and intangible assets for the years ended March 31, 2012 and 2011, respectively, are corporate assets, which are not allocated to reportable segments. 3. Information about geographical areas (a) Sales Millions of Yen 2012 Europe Japan U.S.A China Asia...

  • Page 59
    ... of U.S. Dollars 2012 Japan China Asia and others Americas Europe Total $ 555,037 $ 119,720 $ 79,768 $ 57,378 $ 41,097 $ 853,000 4. Information about impairment losses of assets Millions of Yen 2012 Printing and Solutions Personal and Home Machinery and Solution Network and Contents...

  • Page 60
    Notes to Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2012 5. Information about amount of goodwill Millions of Yen 2012 Printing and Solutions Personal and Home Machinery and Solution Network and Contents Others Total Goodwill at ...

  • Page 61
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