Brother International 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 Brother International annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 67

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67

2014
for the year ended March 31, 2014
Annual Report

Table of contents

  • Page 1
    Annual Report for the year ended March 31, 2014 2014

  • Page 2
    ... original products and services, and helps global customers achieve new lifestyles and work styles. Contents Brother at a Glance Global Network Financial Highlights Message from the Management Special Feature: Mid-term Business Strategy "CS B2015" Enters Fourth Year Review of Operations Corporate...

  • Page 3
    ... Corporation. Backed by these five businesses, the Brother Group will seek out new opportunities in Japan and the global market. Net sales by business segment (FY2013) M&S 10.2% Machinery & Solution 69.8% P&S Printers All-in-Ones FAX machines Electronic stationeries Scanner Printing & Solutions...

  • Page 4
    ... INTERNATIONAL SALES INDONESIA BROTHER INTERNATIONAL TAIWAN LTD. BROTHER INTERNATIONAL (VIETNAM) CO., LTD. BROTHER INTERNATIONAL KOREA CO., LTD. BROTHER MACHINERY SHANGHAI LTD. BMB (SHANGHAI) INTERNATIONAL CORP. NISSEI TRADING (SHANGHAI) CO., LTD. Main group companies in Japan NISSEI CORPORATION...

  • Page 5
    ....5 73.0 17.8 66.7 19.2 72.2 80 60 8.7 7.2 5.3 6.9 4.3 300 60 15 40 10 32.9 231.4 278.8 200 40 20 0 5 4.5 6.9 10 0 2012 2013 5.8 7.0 5 0 2014 100 20 5 0 2012 2013 2014 Dividends per share (left) Payout ratio (right) 0 2012 2013 2014 Return on Assets* Return on Equity ** * Net income...

  • Page 6
    ... Brother Group saw net sales increase year on year to a new record high. This growth reflected several factors from operations in the Americas, China and the rest of Asia, most notably strong performance from communications and printing equipment, a recovery in demand for industrial sewing machines...

  • Page 7
    ...management infrastructure Strategic investment Development / Production / Sales & Marketing / Human resources / CSR & Branding strategy 1 To become a leading global company with high profitability Global Vision 21 2 outstanding proprietary technologies 3 corporate culture To become a world-class...

  • Page 8
    ... of black-and-white laser models tailored to these nations, we will support promotion activities and augment our sales force, among other measures, to reinforce sales channels. Business segment Existing field Low Home SOHO SMB Corporate Japan In order to increase our share of inkjet products, we...

  • Page 9
    ...home sewing machines, along with sales expansion in middle class and high class models, we will increase sales in emerging markets. Where commercial embroidery machines are concerned, our emphasis will be on winning new customers through sales force enhancement, proposing ways for using the products...

  • Page 10
    ... and JOYBEAT Priorities to achieve CS B2015 Industrial Part New Businesses Regarding scanners, in step with building up product competitiveness to grow our SOHO market share, we intend to have a full menu of software services on hand to enhance added value. In web conferencing systems, along with...

  • Page 11
    ..., fax machine, copier and scanner into one unit, user-friendly labeling systems, and scanners. With these communications and printing technologies, Brother meets a wide range of customer needs from SOHO (Small Office Home Office) to business offices. Main products and services • Laser Printer/All...

  • Page 12
    ... Net sales increased 41.6% year on year to ¥26,781 million, reflecting a recovery in capital investment demand in the garment manufacturing industry in China and the Asia region. Machine tools Net sales declined 14.6% year on year to ¥36,316 million, as the current round of large-scale orders for...

  • Page 13
    ... Board of Directors: 11 directors (including 5 outside directors) Auditing Internal Audit Department President Committee of Security Trade Control Product Liability Committee Information Management Committee Safety, Health and Disaster Prevention Committee Strategy Meeting Executive Officers...

  • Page 14
    ... 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 riskrelated conditions affecting the headquarters, internal and Group companies...

  • Page 15
    ... financial reports from the internal controls division via the Board of Directors, and can request other financial reports at any time necessary. As outside auditors operate from a position of independence, when necessary for the execution of their duties, systems exist in the Company and Board of...

  • Page 16
    ... for: Production Technology Dept., Parts Engineering Dept., Electronic Technology Dept., Prototype Engineering Dept. Hiroyuki Wakahara Responsible for: Personnel Dept. Mitsuyasu Kyuno President of Personal & Home Company â- Group Managing Executive Officers Shunsuke Katayama Representative Director...

  • Page 17
    ... : http://www.brother.com Foundation 67 Number of Group Employees 33,118 *Number of permanent employees in the Group Stock Exchange Listings 1908 Date of Incorporation Tokyo, Nagoya Transfer Agent January 15, 1934 Paid-in Capital Mitsubishi UFJ Trust and Banking Corporation 1-4-5, Marunouchi...

  • Page 18
    ...communications and printing equipment, a recovery in industrial sewing machine demand, and beneficial effects from the consolidation of Nissei Corporation. Operating income increased by 45.4% year on year to ¥43,301 million, as positive exchange rate effects overcame lower earnings from the Network...

  • Page 19
    ... adversely affecting Group's 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 is rising...

  • Page 20
    .... Our main manufacturing facilities are in China, Malaysia Vietnam and the Philippines, and the Group continues to establish sales facilities in countries throughout the world. To mitigate damage from natural disasters at these facilities, the Group has formulated response procedures in the event of...

  • Page 21
    ...(Note 1) Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Millions of Yen 2014 ASSETS CURRENT ASSETS: Cash and cash equivalents (Note 16) Time deposits Marketable securities (Notes 4 and 16) Receivables (Note 16): Trade notes and accounts Unconsolidated subsidiaries...

  • Page 22
    ... (Note 1) 2014 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 Total payables Income taxes payable (Note...

  • Page 23
    ...Current Deferred Total income taxes NET INCOME BEFORE MINORITY INTERESTS MINORITY INTERESTS IN NET INCOME NET INCOME PER SHARE OF COMMON STOCK (Note 19): Basic net income Diluted net income Cash dividends applicable to the year See notes to consolidated financial statements. 2014 ¥ 616,835 349,015...

  • Page 24
    ...(Note 1) Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Millions of Yen NET INCOME BEFORE MINORITY INTERESTS OTHER COMPREHENSIVE INCOME (Note 18): Unrealized gain on available-for-sale securities Deferred loss on derivatives under hedge accounting Foreign currency...

  • Page 25
    ... Stock Deferred Retirement Benefit Plans Total Minority Interests Total Equity BALANCE, MARCH 31, 2013 Adjustment of retained earnings due to change in scope of consolidation Net income Cash dividends, $0.23 per share Acquisition of treasury stock Sale of treasury stock Net change in the year...

  • Page 26
    ... benefits Increase in allowance for doubtful accounts Increase in liability for warranty reserve Other - net Total adjustments Net cash provided by operating activities INVESTING ACTIVITIES: Proceeds from sales of property, plant and equipment Proceeds from sales and redemption of marketable...

  • Page 27
    Consolidated Statement of Cash Flows Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Millions of Yen Thousands of U.S. Dollars (Note 1) FORWARD FINANCING ACTIVITIES: (Decrease) increase in short-term borrowings, net Proceeds from long-term debt Repayment of bonds ...

  • Page 28
    ... dollars at that or any other rate. Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 2. Summary of Significant Accounting Policies (1) Consolidation The Company has 83 (89 in 2013) subsidiaries at March 31, 2014. The accompanying consolidated financial statements as...

  • Page 29
    ...HK) 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 Technology (Shenzhen) Ltd...

  • Page 30
    ... of goodwill; (b) scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in the equity; (c) expensing capitalized development costs of R&D; (d) cancellation of the fair value model of accounting for property, plant, and equipment and investment properties and...

  • Page 31
    ... realizable value by a charge to income. (9) Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is mainly computed by the declining-balance method. The range of useful lives is principally from three to 60 years for buildings and structures, from four to 12...

  • Page 32
    Notes to Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 (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 asset ...

  • Page 33
    ...) and minority interests increased by ¥16 million ($155 thousand) for the year ended March 31, 2014. In addition, net asset per share for the year ended March 31, 2014, decreased by ¥22.53 ($0.22). (ii) Retirement Benefits for Directors and Audit & Supervisory Board members Certain domestic...

  • Page 34
    ... swap and currency option contracts are utilized by the Group to reduce foreign currency exchange and interest rate risks. The Group does not enter into derivatives for trading or speculative purposes. Derivative financial instruments are classified and accounted for as follows: a) all derivatives...

  • Page 35
    ... The Group files a tax return under the consolidated corporate-tax system, which allows companies to base tax payments on the combined profits or losses of the parent company and its wholly owned domestic subsidiaries. (27) New Accounting Pronouncements Accounting Standard for Retirement Benefits-On...

  • Page 36
    ... Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 3. Changes in Presentation Method (Consolidated statement of cash flows) Prior to April 1, 2013, "Proceeds from sales and redemption of marketable securities" was included in "Other - net" among "INVESTING...

  • Page 37
    Notes to Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Millions of Yen March 31, 2013 Securities classified as: Available-for-sale: Equity securities Government and corporate bonds Other Held-to-maturity ¥ Cost Unrealized Gains...

  • Page 38
    ... The Group reviewed its long-lived assets for impairment. For the years ended March 31, 2014 and 2013, the Company and consolidated subsidiaries recorded impairment loss of ¥2,122 million ($20,602 thousand) and ¥269 million, respectively, as other expense, for business assets. The carrying amounts...

  • Page 39
    Notes to Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 7. Investment Property In November 2008, the ASBJ issued ASBJ Statement No. 20, "Accounting Standard for Investment Property and Related Disclosures" and issued ASBJ Guidance ...

  • Page 40
    ... Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 8. Short-term Borrowings and Long-term Debt Short-term borrowings at March 31, 2014 and 2013 consisted of the following: Millions of Yen Thousands of U.S. Dollars 2014 Loans principally from banks with...

  • Page 41
    ... shareholders in accordance with the Companies Act of Japan (the "Companies Act"). Certain domestic consolidated subsidiaries recorded liabilities for their unfunded retirement allowance plan covering all of their directors and Audit & Supervisory Board members. Employees' Retirement Benefits Under...

  • Page 42
    ... Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 (2) The changes in plan assets for the year ended March 31, 2014, were as follows: Millions of Yen Thousands of U.S. Dollars Balance at beginning of year Expected return on plan assets...

  • Page 43
    ... Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 (5) Accumulated other comprehensive income on defined retirement benefit plans as of March 31, 2014 Millions of Yen Thousands of U.S. Dollars Unrecognized prior service cost Unrecognized...

  • Page 44
    ... to Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 The components of net periodic benefit costs for the year ended March 31, 2013, were as follows: Millions of Yen 2013 Service cost Interest cost Expected return on plan assets...

  • Page 45
    ... term by its articles of incorporation, 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...

  • Page 46
    ... Number of Options Granted Date of Grant Exercise Price Exercise Period 2007 Stock Option 2008 Stock Option 2009 Stock Option 2010 Stock Option 2011 Stock Option 2012 Stock Option 2013 Stock Option 2014 Stock Option Six directors Six directors Five directors Four directors 14 executive officers...

  • Page 47
    ... Vested March 31, 2014 - Outstanding Vested April 1, 2013 - Outstanding Vested Exercised Canceled March 31, 2014 - Outstanding Exercise price Average stock price at exercise Fair value price at grant date (directors) Fair value price at grant date (executive officers) - 80,400 - - 80,400 ¥1 ($ 0.01...

  • Page 48
    ... fair value of 2014 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 40.98% 9 years 1.89% 0.55% Black-Scholes option pricing model 39.76% 10...

  • Page 49
    ... 2013, were as follows: Millions of Yen Thousands of U.S. Dollars 2014 Deferred Tax Assets: Inventories Liability for retirement benefits Employees' retirement benefits Depreciation Write-down of investment securities Accrued bonuses Accrued expenses Warranty reserve Allowance for doubtful accounts...

  • Page 50
    ... the normal effective statutory tax rate and the actual effective tax rate was not significant, a reconciliation was not presented for the year ended March 31, 2013. New tax reform laws enacted in 2014 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after...

  • Page 51
    ..., the Group manages its exposure to credit risk by limiting investment to high credit rated bonds in accordance with its internal guidelines. The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31, 2014. Market risk management (foreign exchange risk...

  • Page 52
    ... financial instruments Millions of Yen Carrying Amount Unrealized Gain/(Loss) March 31, 2014 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 Fair Value...

  • Page 53
    ...Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Thousands of U.S. Dollars March 31, 2014 Cash and cash equivalents Marketable securities Receivables Investment securities Total Short-term borrowings Current portion of long-term debt...

  • Page 54
    ... of U.S. Dollars 2014 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 in an active market Investments in and advances to unconsolidated subsidiaries and associated companies Total...

  • Page 55
    ... Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Thousands of U.S. Dollars March 31, 2014 Cash and cash equivalents Marketable securities Receivables Investment securities: Available-for-securities with contractual maturities Total Please see Note 8 for annual...

  • Page 56
    ... Amount Due after One Year Unrealized Gain/(Loss) At March 31, 2014 Foreign currency forward contracts: Selling: U.S. Dollar Euro Pound Sterling Yen Mexican Peso Korean Won Indonesia Rupiah Taiwan Dollar India Rupee Philippine Peso Buying: U.S. Dollar Euro Yen Swiss Franc Currency option contracts...

  • Page 57
    ... Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Millions of Yen At March 31, 2013 Foreign currency forward contracts: Selling: U.S. Dollar Euro Pound Sterling Thailand Baht Yen Mexican Peso Korean Won Indonesia Rupiah Taiwan Dollar India Rupee Philippine...

  • Page 58
    ...Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Thousands of U.S. Dollars At March 31, 2014 Foreign currency forward contracts: Selling: U.S. Dollar Euro Pound Sterling Yen Mexican Peso Korean Won Indonesia Rupiah Taiwan Dollar India Rupee Philippine Peso...

  • Page 59
    ... to which hedge accounting is applied at March 31, 2014 and 2013 Millions of Yen Contract Amount Due after One Year At March 31, 2014 Foreign currency forward contracts: Selling: U.S. Dollar Euro Pound Sterling Korean Won Indonesia Rupiah Taiwan Dollar India Rupee Philippine Peso Hedged Item...

  • Page 60
    Notes to Consolidated Financial Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 18. Comprehensive Income The components of other comprehensive income for the years ended March 31, 2014 and 2013 were as follows: Millions of Yen Millions of Yen Thousands of...

  • Page 61
    ... Year-end cash dividends of ¥12 ($0.12) per share ¥ 3,189 $ 30,961 (2) Sale of Property At the Board of Directors' meeting held on May 8, 2014, the Company resolved to sell partly investment property to pursue asset efficiency due to the tenant leaving and executed the sale on May 29, 2014...

  • Page 62
    .... "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. "Network & Contents" consists of sales and production of online karaoke systems, and of content distribution services...

  • Page 63
    ... Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 3. Information about Sales, Profit (Loss), Assets and Other Items Millions of Yen 2014 Reportable segment Printing & Solutions Personal & Home Machinery & Solution Network & Contents Industrial Part Others...

  • Page 64
    ... Statements Brother Industries, Ltd. and Consolidated Subsidiaries Year ended March 31, 2014 Reportable segment Printing & Solutions Personal & Home Machinery & Solution Network & Contents Industrial Part Others Total Reconciliations Consolidated Thousands of U.S. Dollars 2014 Sales Sales to...

  • Page 65
    ... Japan China Asia and others Vietnam Americas Europe Total $ 535,874 $ 119,718 $ 111,679 $ 97,981 $ 62,447 $ 47,272 $ 974,971 5. Information about Impairment Losses of Assets by Reportable Segment Millions of Yen 2014 Printing & Solutions Personal & Home Machinery & Solution Network...

  • Page 66
    ..., 2014 6. Information about Amount of Goodwill by Reportable Segment Millions of Yen 2014 Printing & Solutions Personal & Home Machinery & Solution Network & Contents Industrial Part Others Total Goodwill at March 31, 2014 - - ¥ 189 ¥ 4,133 - - ¥ 4,322 Millions of Yen 2013 Printing...

  • Page 67
    66