Innovative Technologies That Contribute to Society
Annual Report 2014 For the year ended March 31, 2014
Profile
The main activities of Hitachi Koki Co., Ltd. are manufacturing and selling power tools. The Company also manufactures and sells life-science instruments. As a result of continuous R&D and human resource development, we have acquired core technology leadership in ultra-high-speed motors, ultra-high precision machining and electronic control technology. Above all, Hitachi Koki seeks to reinforce the competitiveness of its present business fields and probe into new, but related fields to ensure its position as a major player of the industry.
CONTENTS To Our Shareholders and Customers ........................... 2 Review of Operations by Geographic Area .................. 4 New Products .................................................................. 5 Technologies of Hitachi Koki ......................................... 6 Corporate Governance ................................................... 8 Financial Section Management’s Discussion and Analysis of Operations ........................................... 10 Consolidated Balance Sheet ..................................... 14 Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ......................................... 16 Consolidated Statement of Changes in Net Assets ........................................... 17 Consolidated Statement of Cash Flows .................. 18 Notes to Consolidated Financial Statements ......... 19 Independent Auditor’s Report .................................. 33 Global Network ............................................................. 34 Corporate Data .............................................................. 36 Investor Information ..................................................... 37
Hitachi Koki ANNUAL REPORT 2014
An Abundant Product Lineup Untiring Pursuit of Energy Savings and Customer Convenience Power tools made by Hitachi Koki are popular in more than 50 countries worldwide. Amid growing demand for energy-efficient motors, Hitachi Koki is enhancing its lineup of tools equipped with next-generation brushless motors. Products with these high-efficiency, energysaving long-life motors help to reduce CO2 emissions. In addition to its commitment to the creation of higher-capacity lithium-ion batteries and battery safety and interchangeability, Hitachi Koki is actively working to improve customer convenience, including promoting expansion of its lineup of products that meet international standards for dust and water resistance.
Eco-Friendly Outdoor Power Equipment* Business Development The market for gardening and engine-operated tools is large and not very susceptible to changes in economic conditions. In this market, Hitachi Koki makes the most of its strengths as a comprehensive manufacturer of electrical, cordless and engine-operated outdoor power equipment. Efforts to augment Hitachi Koki’s lineup of eco-friendly products include the development of the New PureFire engine that meets stringent exhaust emission regulations in Japan, the United States and Europe in engine-operated tools and the introduction of a series of powerful 36V cordless gardening tools. * Outdoor equipment used for agriculture, gardening, etc.
Original Ideas and Reliable Technologies Hitachi Koki is consistently timely in providing products not available from other companies because of its highly original technologies and speedy development. Examples include a compact hammer drill with features that accurately address customer needs such as high durability, fast drilling speed and low vibration; a low-noise cordless grasstrimmer/brushcutter with extended runtime; and a lineup of interchangeable products* powered by high-capacity lithium-ion batteries that all use the same voltage. *Cordless products that use our 14.4V/18V slide lithium-ion batteries
Expand Sales in Key Regions Worldwide The Hitachi Koki Group sees the global market as the large markets of developed nations and the growing markets of emerging nations. While expanding our scale in Japan, the United States and Europe, we will introduce new products that match market needs and strengthen our lineup of products equipped with high-capacity batteries to establish Hitachi as a global brand in lithium-ion battery-operated products. In key regions worldwide, we will focus on developing new customer relationships and sales promotion activities.
Hitach Hit Hitachi achi Koki achi Ko oki ok ki ANNUAL ANNU NNUAL AL L REP REPORT PORT 20 201 2014 2014 1 14 1
To Our Shareholders and Customers
Kiyoshi Kato
Osami Maehara
Chairman of the Board & Director
President & Director
Under its new leadership structure,* the Hitachi Koki Group’s basic management policy will continue to be to contribute to society by offering innovative products that meet specific user needs and are easy to use, as well as delivering services that create a high level of customer satisfaction. As a global enterprise actively expanding worldwide, the Group is providing power tools and other products of superior performance and quality. In addition, as a member of society, the Group is working to strengthen compliance and steadfastly uphold corporate ethics throughout Group businesses, based on its corporate creed of “Basics and Ethics,” with the goal of being a socially trusted enterprise. * On June 25, 2014, Kiyoshi Kato was appointed Chairman of the Board & Director and Osami Maehara was appointed President & Director.
Business Results In the fiscal year ended March 31, 2014, a recovery in Europe became clear by the end of the period, despite the lingering effects of the debt crisis, mainly in Western Europe, and sales in Japan and North America were firm due to a gradual recovery in business conditions, including housing investment. In Asia and other regions, sales remained firm in India, and showed an underlying recovery in China and the Middle East. Moreover, with factors including the depreciation of the yen in foreign currency translation, net sales were ¥133,327 million, an increase of 15% compared with the previous fiscal year. As for income, despite efforts in areas such as expanding sales and reducing costs, as well as the boost from foreign currency translation, operating income decreased 30% compared with the previous fiscal year to ¥4,413 million as a result of factors including the end of special demand in the Life-Science Instruments business in Japan, which contributed substantially to results in the previous fiscal year, and the impact of cutbacks in production due to inventory adjustments. Net income decreased 64% compared with the previous fiscal year to ¥1,696 million due to factors including business restructuring expenses for factories in Japan and expenses attributable to measures taken for grasstrimmer/brushcutters. 2 Hitachi Koki ANNUAL REPORT 2014
We paid dividends of ¥6 per share for each quarter. As a result, dividends for the full fiscal year were ¥24 per share.
Initiatives Going Forward The Hitachi Koki Group will promote a variety of management initiatives, including measures to strengthen sales, product development and cost competitiveness, with the aim of improving performance in order to build a resilient corporate structure that will prevail amid intensifying global competition. In light of the severe market environment at present, the Group will focus on the following measures in particular to improve profitability. (1) While accurately determining region-specific economic trends and country risk, the Group will expand the scale of its business by conducting aggressive and timely measures, including opening and deepening new store sales channels, in both large-scale developed nations and growing emerging nations. (2) In areas in which the Group is strong, we will implement periodic model changes for the core products that are the base of the Hitachi Koki Group, and we will continuously launch profitable new products by developing strategic, highly competitive products that create user needs and innovative products not available from other companies. The Group will strengthen product development to improve the user’s work efficiency and work environment in ways such as reducing size, weight, vibration, noise and dust dispersion while enhancing durability, work volume and work speed to enhance its lineup of products that result in a high level of customer satisfaction. In addition, the Group will reinforce strategic initiatives to speed market penetration for new products. (3) In the growth field of lithium-ion battery-operated products, in addition to promoting higher-capacity and higher-voltage batteries, the Group will extend the wide range of its product series centered on products with highly energy-efficient brushless motors, and will
aggressively work to establish Hitachi as a global brand in lithium-ion battery-operated products.
Power Equipment and Accessories businesses, with M&A and alliances as an important strategy. * Outdoor equipment used for agriculture, gardening, etc.
(4) In the large market of the Outdoor Power Equipment* business, the Group will make the most of the strengths of its comprehensive lineup of electrical, cordless and engine-operated products to differentiate itself from other companies, and will develop unique, high-performance, highly reliable products to increase market share.
Management Policy The Hitachi Koki Group’s basic management policy will continue to be to contribute to society by offering innovative, high-performance and high-quality products and services that result in a high level of customer satisfaction. As a global enterprise, the Group will conduct its Power Tools and other businesses worldwide. In addition, as a member of society, the Group is working to strengthen compliance and steadfastly uphold corporate ethics throughout Group businesses, based on its corporate creed of “Basics and Ethics,” with the goal of being a socially trusted enterprise. In addition, while working to expand the scope of business to become a global major player, we will pursue profitability by targeting a consolidated operating margin of 10% or more and continue tirelessly striving to further raise corporate value in order to achieve continuous growth and development of our businesses. We thank you for your continued support and understanding.
(5) In the field of Accessories, which has a market size comparable to power tools, the Group will expand operations in ways such as strengthening its lineup. (6) In order to strengthen profitability in response to intensifying price competition, the Group will strive for design and development that is strongly aware of further cost reductions, and will work to thoroughly reduce costs in all areas, including production costs, direct material costs and indirect costs. (7) The Group will pursue an optimum global production system and reconfigure its global supply chain to establish a stable supply system and build a system in which quality is consistent worldwide to further increase reliability. (8) The Group will expand the scale of the Life-Science Instruments business by deploying high-value-added products that use its advanced technical capabilities in new fields such as the materials market, and work for further growth as a high-earning business.
Kiyoshi Kato Chairman of the Board & Director
(9) Financially, the Group will strengthen its system for generating cash even more efficiently in ways such as optimizing both inventory quality and quantity and improving global supply chain management from production to sales.
Osami Maehara President & Director
(10) The Group will continue to consider methods to rapidly expand the scale of its Power Tools, Outdoor
Net Sales
Operating Income/ Operating Margin
(Billions of yen) 150
133.3
100
Net Income
Annual Dividends per Share
(Billions of yen / %)
(Billions of yen)
(Yen)
12
15
45
8
10
30
24.0 4.4 4
50
3.3
5
15
1.6 0
0
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
0
0
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Operating Income Operating Margin (Years ended March 31)
Hitachi Koki ANNUAL REPORT 2014 3
Review of Operations by Geographic Area Japan
North America
Amid an ongoing recovery in housing investment, the Hitachi Koki Group’s initiatives included increasing sales of cordless tools equipped with high-capacity lithium-ion batteries that were launched ahead of competitors and expanding transactions in the home center channel. In the Life-Science Instruments segment, however, special demand ended for continuous flow ultracentrifuges for vaccine production related to a government project in Japan, which contributed substantially to results in the previous fiscal year. As a result of these and other factors, sales only increased 1% compared with the previous fiscal year. Sales in the Power Tools segment in Japan increased 5% compared with the previous fiscal year.
Backed by housing investment, which progressed on a recovery track, the Hitachi Koki Group worked to strengthen the general retailer sales channel and to expand the home center channel with a focus on pneumatic tools, an area of strength for Hitachi Koki. With additional factors including the depreciation of the yen in foreign currency translation, sales increased substantially by 29% compared with the previous fiscal year.
32%
21%
Net Sales by Geographic Area (Year ended March 31, 2014)
33%
14%
In Europe, sales in Russia slowed due to the impact of the rapid change in the situation in Ukraine at the end of the period. However, due to factors including recovery in Western Europe following Southern and Eastern Europe, and the depreciation of the yen in foreign currency translation, sales increased 23% compared with the previous fiscal year.
Sales remained strong in India, and showed an underlying recovery in China and the Middle East, as well as in Australia, which was in a slump in the previous fiscal year. As a result of these and other factors, sales increased 19% compared with the previous fiscal year.
Europe
Asia and Other Regions
4 Hitachi Koki ANNUAL REPORT 2014
New Products iF Product Design Award 2014 in Germany (Outdoor Power Equipment Business) 36V Lithium-Ion Battery-Operated Gardening Tools Series As in 2013, Hitachi Koki won awards at the 2014 iF Product Design Award competition. This year, the Group received a record number of six awards for seven models/product series, three of which also received recognition in Japan’s Good Design Award. The iF Product Design Award competition assesses comprehensive product strengths, including not only design but also factors such as performance and quality, and we have received awards at a total of seven iF Product Design Award competitions. Hitachi Koki will develop compelling product designs that enhance user satisfaction.
Top-Class Durability and Large Air Volume High-Pressure Air Compressor for Nailers (EC 1445H2) This compressor supplies compressed air to drive pneumatic tools. We achieved top-class durability by using computer analysis to optimize structure and improve key components. Features for user convenience include a large volume of air that raises work efficiency, a unique security function, a brushless motor that reduces weight, handles for easy carrying, and four selectable operating modes. With this product, Hitachi Koki will work to increase its share of Japan’s pneumatic tool market, in which demand is growing.
Smallest and Lightest in Class Compact Circular Saw Cordless Circular Saw (C 14DBL/C 18DBL) This saw gets 1.6 times more work done than conventional saws 1 and achieves an approximately 30% increase in cutting speed because of its 5.0Ah lithium-ion battery and brushless motor. A body that is smallest and lightest2 in its class and a superbly balanced center of gravity reduce operating fatigue. In addition, the unique silent mode both reduces noise and raises motor efficiency, while motor control that adapts to cutting load makes for comfortable work. A leader in lithium-ion products, Hitachi Koki will expand its lineup of cordless products. 1. Products configured with a brushed motor and a 4.0Ah lithium-ion battery 2. Hitachi Koki survey as of February 2014 (14.4V/18V cordless circular saws from Japanese electric power tool manufacturers)
Latest Model with Reduced Energy Consumption and Improved Operability and Visibility Ultracentrifuges for Separation (CP-NX Series) This series of ultracentrifuges still features the ability to simultaneously separate large sample volumes with high centrifugal force and fundamental performance of predecessor models, and also significantly improves operability and visibility with a full-color touch-screen operating panel on the front and a large LED indicator. Features such as a low-noise, low-power mode increase user convenience. This series will build on sales to conventional biotechnology customers by accelerating sales to nanotechnology-related research and manufacturing customers such as cosmetics, paint, i n k , a n d ch e m i c a l product manufacturers.
Hitachi Koki ANNUAL REPORT 2014 5
Technologies of Hitachi Koki Research and Development The Hitachi Koki Group’s research and development activities for fiscal 2013 were spearheaded by the Research and Development Division and the Design Department of the Life-Science Instruments Division. The Group obtained 480 patents and design registrations in Japan and overseas during the year, for a total of 3,863 patents and design registrations held worldwide as of March 31, 2014. The Group also maintains a
cooperative relationship in its research and development activities with its parent company, Hitachi, Ltd. Research and development costs for the Hitachi Koki Group during fiscal 2013 were 2.6% of net sales at ¥3,490 million, as it worked to develop new products and technologies.
Power Tools-Related Strengthening our product lineup and developing unique new products to establish Hitachi as a global brand in lithium-ion battery-operated products Cordless Driver Drill
• Cordless circular saw with the smallest size in its class and a highly durable brushless motor in a lightweight body that achieves substantial increases in runtime and cutting speed and also has a unique silent mode that both reduces noise and improves motor efficiency • Simple cordless impact driver and cordless driver drill models equipped with brushless motors that hold down price through carefully selected functions • Hitachi Koki’s original multiple protection circuit technology, which won an Cordless Circular Saw Electrical Science and Engineering Promotion Award in fiscal 2013, is used in the high-capacity 5-amperehour batteries that feature excellent safety and service life, extended runtime and interchangeability with previous models
Development of highly competitive products • Easy-to-use, low-vibration compact rotary hammer that achieves the highest drilling speed and durability in its class and offers UVP* • High-pressure air compressor for nailers that achieves top-class durability and high capacity, and offers features for user convenience including a unique security function and handles that make it easy to carry *User vibration protection Rotary Hammer
Design • 2013 Good Design Award for the 24th time, with four awards for five models/product series • 2014 iF Product Design Award for the 7th time, with a record number of six awards for seven models/product series • Among the iF Product Design Award winners, four models/product series (engine chain saw, cordless chainsaw and backpack power supply, cordless grass trimmer and backpack power supply) also received three Good Design Awards
Life-Science Instruments-Related • Ultracentrifuge for separation with features that enhanced user convenience including significantly improved operability and visibility, quieter operation, and a power-saving mode
6 Hitachi Koki ANNUAL REPORT 2014
Quality Assurance Quality assurance entails ensuring customer satisfaction by manufacturing superior-quality products that are created in response to changes in the operating environment and fulfill a company’s responsibility to society. As a part of this process, product development involves continuous improvements in quality assurance through evaluations and assessments, as well as verification that all products and accessories, whether manufactured in Japan or overseas, have the quality that leads to customer satisfaction. Hitachi Koki strictly evaluates quality at each of the development, design and manufacturing stages and conducts a final check of products from the customer’s perspective. Quality evaluation tests a broad range of checklist items starting with a confirmation of basic product performance. Other tests include checking that each product functions properly as the environment changes over time, including high and low temperatures, and that it is durable enough to perform continuously over thousands of uses. In addition, the accurate measurement of component dimensions is crucial to the product development process. For this purpose, Hitachi Koki adopted the use of three-dimensional digitizers in 2001. Utilizing three-dimensional data prepared during the design phase, each component’s complicated external dimensions can be measured with a high degree of precision in a short time. This helps to maintain quality and reduce development time.
In the future, Hitachi Koki will continue to pursue further improvements in quality, which is the source of customer satisfaction, as it creates highly reliable and durable products.
Quality evaluation
Component dimensions are measured using a digitizer.
Production Technologies Hitachi Koki has high-level production technologies for faster commercialization of high-performance, high-quality products. These include technologies for sophisticated electronic motor control that supports high-speed rotation technology, high-precision processing and facility automation using intelligent robots. With in-house development facilities that use these technologies and a highly skilled workforce, we have achieved a highly efficient and flexible production system. We deploy these powerful production technologies at all our manufacturing bases around the world to support our highly efficient production activities. In addition, we tirelessly seek out new production technologies for next-generation products to continue to develop world-class products.
Robot with visual sensor for parts assembly
Humanoid robot for assembly
Hitachi Koki ANNUAL REPORT 2014 7
Corporate Governance
Management Committee The Management Committee is under the Board of Directors. It comprises directors and executive officers and meets twice a month in principle. The Committee makes substantive decisions on key management issues for the Company and the Group based on the basic guidelines decided on by the Board. Standing Audit & Supervisory Board Members also attend for auditing purposes.
Budget Budget items are deliberated by the Management Committee, the Budget Deliberation Committee and the Main Budget Committee. In addition, a Management Deliberation Committee composed of Management Committee members also meets when necessary. The Management Deliberation Committee listens to reports on key management issues in all business areas, deliberates on them and provides advice.
Regulatory Compliance Hitachi Koki has determined guidelines for conduct and other measures based on regulatory compliance in operational performance and a policy of specific penalties for violations of laws and regulations; established a department in charge of regulatory compliance; established operational performance rules and guidelines; conducted education and training; and created and distributed manuals. At the same time, the Company provides a framework for auditing operational performance with the Internal Auditing Division. The Company has also put in place and utilizes an effective compliance reporting system.
General Meeting of Shareholders
Audit & Supervisory Board • Audit & Supervisory Board Members • External Audit & Supervisory Board Members
po rti ng
tro
l
Management Supervision
Corporate Lawyer
Control
Auditing Office
po
rti
ng
Reporting
Re
Auditing
8 Hitachi Koki ANNUAL REPORT 2014
Reporting
The Audit & Supervisory Board meets once a month in principle to report on the status of audits. Audit & Supervisory Board Members also attend Board of Directors’ meetings and other key meetings to listen to directors about the status of their performance, in compliance with the corporate auditing standards set by the Audit & Supervisory Board and in line with auditing guidelines and schedules. Further, members exchange ideas in close cooperation with the accounting
Auditing
Audit & Supervisory Board
Accounting Auditors
The Board of Directors meets once a month in principle. It makes decisions regarding key Company and Group operational performance issues and supervises the performance of representative directors and directors.
Guidance Consultation
Co n
Board of Directors
Board of Directors • Directors • External Directors
Auditing
Re
Initiatives to Strengthen Corporate Governance
nt ro l
Aiming to establish a framework for rapid and accurate management decision making and for operational performance, as well as to enhance the management oversight function, Hitachi Koki is working to strengthen the important management area of corporate governance and upgrade its internal controls. In addition, the Company has established the Compliance Division for thoroughgoing observance of laws and regulations. Under the deep recognition that a company is a member of society, the Company has set the Hitachi Koki Standards for Corporate Conduct as a basis for all operations and has made clear the basic philosophy and operating guidelines of the Hitachi Koki Group. The Company has also established the Hitachi Koki Group Code of Conduct as a specific code of conduct applicable throughout the Group, and top management has been leading efforts for thorough adherence. In addition, the Company has set forth its Policy Regarding Improper Business Dealings and Practices, which elucidates its policy with regard to improper business dealings and practices and compliance violations, and has established and operates an effective compliance reporting system. Through these measures, the Company and the Hitachi Koki Group conduct business activities that are firmly rooted in corporate ethics and legal compliance. Based on a comprehensive consideration of factors including the scale of the Company’s operations and its officer system, Hitachi Koki has adopted the format of a company with an Audit & Supervisory Board as the system for governing the Company and has established a general meeting of shareholders, directors and Board of Directors’ meetings, Audit & Supervisory Board Members and Audit & Supervisory Board meetings, and accounting auditors in order to fully deploy its corporate governance functions and to maintain superior operating efficiency.
auditors and receive from them accounting schedules and reports on corporate and auditing results.
Co
Basic Policy on Corporate Governance
Compliance Division Export Management Office, etc.
Au
Management Committee Management Deliberation Committee Control Supervision
dit
ing
Guidance
Headquarters, divisions, offices, departments Control supervision
Affiliated companies, etc.
Guidance Consultation
Management Team
(As of June 25, 2014)
Chairman of the Board & Director
Board Director
Yasushi Fukui
Kiyoshi Kato
Board Director (External)
Yasunobu Kawaguchi
Osami Maehara
Audit & Supervisory Board Member
Takaharu Miyata
Vice-President & Director Akira Yoshida
Audit & Supervisory Board Member
Shoichi Sakuma
Vice-President & Director Yoichiro Tanaka
Audit & Supervisory Board Member (External) Takashi Miyoshi
Board Director
Chikai Yoshimizu
Audit & Supervisory Board Member (External) Nobuya Yamada
Board Director
Masato Yoshinari
President & Director
Environmental Protection and Social Contribution Environmental Protection Initiatives
Social Contribution
The Hitachi Koki Group has long recognized environmental conservation as a critical challenge all people share, and has been harmonizing corporate and environmental protection activities. In 2013, the Sawa Plant (Hitachinaka, Ibaraki) completed its Hitachi Koki Solar Power Generation System, which began full-scale operation in October 2013. This system has 2,088 solar panels installed in an area of 7,700m2, and all of the power it generates is sold to electric power companies. It generates approximately 465,000 kWh of power annually, which is equivalent to the electricity used by 100 ordinary homes, and is expected to reduce CO2 emissions by 146 tons. This system helps prevent global warming and is symbolic of Hitachi Koki’s environmental management.
Hitachi Koki’s social contribution activities include collaborative efforts with local communities linked to its environmental protection activities, such as promotion of greening at company premises and support for environmental education for schoolchildren. In Hitachinaka City, Ibaraki Prefecture, we introduce how products are made and provide support for practical training in manufacturing in ways such as welcoming elementary students for factory tours and offering hands-on learning programs for middle and high school students. The entire Hitachi Koki Group will continue to promote environmental protection and social contribution activities.
Hitachi Koki Solar Power Generation System
Welcoming elementary school students from Hitachinaka City on a factory tour
Hitachi Koki ANNUAL REPORT 2014 9
Management’s Discussion and Analysis of Operations (Years in graphs ended March 31)
Operating Results Net Sales/Overseas Sales Ratio (Billions of yen) 200
(%) 80
67.5 150
133.3
60
100
40
50
20
0
2010 2011 2012 2013 2014
0
Net Sales (left scale) Overseas Sales Ratio (right scale)
Annual Dividends per Share (Yen) 50
40
30
24.0 20
10
0
2010 2011 2012 2013 2014
10 Hitachi Koki ANNUAL REPORT 2014
In fiscal 2013 ended March 31, 2014, a recovery in Europe became clear by the end of the period, despite the lingering effects of the debt crisis, mainly in Western Europe, and sales in Japan and North America were firm due to a gradual recovery in business conditions, including housing investment. In Asia and other regions, sales remained firm in India, and showed an underlying recovery in China and the Middle East. Moreover, with factors including the depreciation of the yen in foreign currency translation, net sales were ¥133,327 million, an increase of 15% compared with the previous fiscal year. As for income, despite efforts in areas such as expanding sales and reducing costs, as well as the boost from foreign currency translation, operating income decreased 30% compared with the previous fiscal year to ¥4,413 million as a result of factors including the end of special demand in the Life-Science Instruments business in Japan, which contributed substantially to results in the previous fiscal year, and the impact of cutbacks in production due to inventory adjustments. Net income decreased 64% compared with the previous fiscal year to ¥1,696 million due to factors including business restructuring expenses for factories in Japan and expenses attributable to measures taken for grasstrimmer/brushcutters. In the Power Tools segment, sales were ¥129,112 million and segment profit was ¥3,880 million. In Japan, amid an ongoing recovery in housing investment, factors including promotion of sales of cordless tools equipped with high-capacity lithium-ion batteries, which the Hitachi Koki Group launched ahead of competitors, and expansion of transactions in the home center channel, as well as measures to securely capture last-minute demand ahead of the increase in the consumption tax rate, resulted in a 5% increase in sales compared with the previous fiscal year. In North America, backed by housing investment, which progressed on a recovery track, the Hitachi Koki Group worked to strengthen the general retailer sales channel centered on pneumatic tools, an area of strength for Hitachi Koki, and to expand the home center channel. With additional factors including the depreciation of the yen in foreign currency translation, sales in North America increased substantially by 30% compared with the previous fiscal year. In Europe, sales in Russia slowed due to the impact of the rapid change in the situation in Ukraine at the end of the period. However, due to factors including recovery in Western Europe following Southern and Eastern Europe, and the depreciation of the yen in foreign currency translation, sales in Europe increased 24% compared with the previous fiscal year. In Asia and other regions, sales remained strong in India, and showed an underlying recovery in China and the Middle East, as well as in Australia, which was in a slump in the previous fiscal year. As a result of these and other factors, sales in Asia increased 20% compared with the previous fiscal year. In the Life-Science Instruments segment, sales decreased 30% compared with the previous fiscal year to ¥4,215 million. Despite efforts including revision of sales channels and proactive product advertising, the substantial decreases were due to factors such as the end of special demand for continuous flow ultracentrifuges for vaccine production related to a government project in Japan, which contributed substantially to results in the previous fiscal year, and continued severe conditions in the European and North American markets resulting from intensifying competition.
Policy on Returns to Shareholders and Dividends Decisions to distribute profits to shareholders and retain earnings are made after taking full account of future business plans, performance, financial conditions, and other factors. In addition, Hitachi Koki strives for the efficient allocation of retained earnings, concentrating investments on core products and technologies and on rationalizing facilities as well as on M&A transactions expected to produce synergistic benefits and promote growth in the scale of business operations. Regarding cash dividends, Hitachi Koki pays quarterly dividends in an effort to be swift and proactive in returning profits to shareholders. Hitachi Koki takes a comprehensive view of factors including changes in the operating environment, future business plans, business results and financial condition in considering dividend payments as it works to continue paying annual dividends that are as stable as possible. Hitachi Koki has paid dividends of ¥6 per share for each of the first quarter, second quarter, third quarter and year end. As a result, dividends for the full fiscal year totaled ¥24 per share. For fiscal 2014, Hitachi Koki aims to continue proactively returning profits to shareholders and plans to implement more stable quarterly dividends, with dividends of ¥6 per share for each of the first quarter, second quarter, third quarter and year-end. Consequently, dividends for the full fiscal year are forecast to total ¥24 per share.
Financial Position Cash Flow • Net Cash Provided by Operating Activities Net cash provided by operating activities was ¥8,151 million, due to factors including a decrease in inventories.
• Net Cash Used in Investing Activities Net cash used in investing activities was ¥1,212 million, due to factors including purchase of property, plant and equipment.
• Net Cash Used in Financing Activities Net cash used in financing activities was ¥5,418 million, due to factors including a decrease in short-term loans payable and cash dividends paid. As a result of the above, free cash flow improved by ¥9,462 million compared with the previous fiscal year and cash and cash equivalents as of March 31, 2014 totaled ¥31,920 million, an increase of ¥2,894 million from the end of the previous fiscal year.
Cash Flow Summary (Millions of yen)
2012
2013
2014
Net cash provided by operating activities
10,333
Net cash used in investing activities
(2,170) (2,687) (1,212)
Net cash used in financing activities
(1,804) (4,317) (5,418)
Cash and cash equivalents at end of year
33,809 29,026 31,920
164
Hitachi Koki ANNUAL REPORT 2014 11
8,151
Assets, Liabilities and Net Assets • Assets
Total Assets/ROA (Billions of yen) 150
149.7
(%) 6
Total assets as of March 31, 2014 were ¥149,732 million, an increase of ¥4,799 million compared with the end of the previous fiscal year. Current assets were ¥122,738 million of the total, an increase of ¥7,486 million from a year earlier. This was mainly due to an increase in trade notes and accounts receivable.
4
100
• Liabilities 2
50
1.1 0
2010 2011 2012 2013 2014
0
• Net Assets
Total Assets (left scale) ROA (right scale)
Total net assets were ¥111,299 million, an increase of ¥779 million from a year earlier. This was mainly due to an increase in foreign currency translation adjustments.
Capital Expenditures
Net Assets/ROE (Billions of yen) 120
111.2
80
(%) 6
4
40
During fiscal 2013, the Hitachi Koki Group made total capital expenditures of ¥2,945 million to carry out projects, which were carefully selected based on their necessity. Major investments included streamlining of production facilities in Japan and overseas, outfitting of information technology systems to reform supply chain management and introduction of solar power generation equipment at production facilities in Japan.
2
Risk Information
1.5
0
Total liabilities were ¥38,433 million, an increase of ¥4,020 million from a year earlier. This was mainly due to an increase in liabilities associated with retirement benefits due to a change in accounting standards.
2010 2011 2012 2013 2014
0
Net Assets (left scale) ROE (right scale)
Factors that could affect the operating results, share price and financial condition of the Hitachi Koki Group are listed below. Forward-looking statements below reflect the judgment of management as of March 31, 2014. (1) Economic Conditions The Hitachi Koki Group sells products in Japan, North America, Europe, Asia and other regions. To counter regional economic fluctuations, the Group plans measures including increasing manufacturing efficiency through cost-reduction activities and establishing production bases in multiple regions. However, a reduction in demand in each region stemming from a worse-than-expected economic slowdown could negatively affect the Group’s businesses.
Capital Expenditures (Billions of yen) 5
4
3
2.9
(2) Exchange Rate Fluctuations 2
1
0
2010 2011 2012 2013 2014
12 Hitachi Koki ANNUAL REPORT 2014
Although the Hitachi Koki Group is working to establish a business model that is not susceptible to exchange rate fluctuations, greater-than-expected exchange rate fluctuations could affect the Group’s businesses because overseas sales make up a high proportion of the Group’s total consolidated net sales. Usually, a strong yen exerts a negative effect on the Group’s businesses and a weak yen has a positive effect.
Management’s Discussion and Analysis of Operations
(3) Price Competition and Raw Material Price Increases The Hitachi Koki Group’s products experience market price competition. Although the Group is taking measures to be successful in this competition such as continually introducing strategic products based on its accurate perception of user needs and cost-reduction activities, situations including a dramatic increase in price competition and higher-than-expected raw material price increases could negatively affect the Group’s businesses. (4) Potential Risk from International Activities The Hitachi Koki Group conducts manufacturing and sales activities in North America, Europe, Asia and other regions. As a result, factors in such regions including regulatory, taxation and economic changes, political changes including the occurrence of terrorism and conflicts, and social changes including labor shortages and disputes, power supply shortages, and the spread of infectious diseases could negatively affect the Group’s businesses. (5) Limits on Intellectual Property Rights Protection In order to differentiate its products from those of its competitors, the Hitachi Koki Group has accumulated various technologies and know-how and created several measures to protect its intellectual property rights. However, it may not be possible to prevent other companies from using Group technologies to produce similar products, and claims may surface that the Group unknowingly infringed on another company’s intellectual property rights. These and other factors could negatively affect the Group’s businesses. (6) Product Defects The Hitachi Koki Group has taken sufficient measures in this area, including product designs that consider safety, thorough quality management and product liability insurance subscription. However, situations such as being responsible for an unexpectedly high amount of compensation and large-scale product liability litigation could exert a substantial negative effect on public perception of the Group’s products and require substantial costs to remedy, and thus could negatively affect the Group’s businesses. (7) Changes in Shareholder Composition, Business Alliances, Etc. Factors including changes in the Hitachi Koki Group’s shareholder composition, and changes in or dissolution of business alliances, could negatively affect the Group’s businesses. (8) Earthquakes and Other Natural Disasters A large-scale earthquake or other natural disaster that causes serious damage to the Hitachi Group’s business sites, as well as cuts off transportation infrastructure and creates problems with the supply of electricity, fuel or materials, may interfere with the business activities of the Group. This interference may include the Group’s production and sales activities as well as require substantial costs to recover from. As a result, such an event could negatively affect the Group’s businesses.
Hitachi Koki ANNUAL REPORT 2014 13
Consolidated Balance Sheet
Hitachi Koki Co., Ltd. and consolidated subsidiaries March 31, 2014 and 2013 Thousands of U.S. dollars (Note 1)
Millions of yen
ASSETS
2014
2013
2014
Cash on hand and in banks (Notes 10 and 12) .............................
¥ 18,318
¥ 15,861
Deposits (Notes 10, 12 and 19) ....................................................
13,602
13,165
132,161
Trade notes and accounts receivable (Notes 3 and 12) ................
39,589
34,860
384,658
Inventories (Note 4) ......................................................................
46,366
47,837
450,505
Deferred tax assets (Note 16) ......................................................
2,766
1,920
26,875
Other ............................................................................................
3,213
2,508
31,218
Allowance for doubtful accounts ..................................................
(1,116)
Current assets:
Total current assets .................................................................
(899)
$
177,983
(10,843)
122,738
115,252
1,192,557
Buildings and structures ...........................................................
29,320
31,756
284,881
Machinery, equipment and vehicles .........................................
34,991
36,626
339,983
Land ...........................................................................................
2,083
2,633
20,239
Other .........................................................................................
11,775
10,966
114,409
Less accumulated depreciation ................................................
(60,822)
(62,852)
(590,964)
17,347
19,129
168,548
Goodwill (Note 18) ....................................................................
4,175
4,459
40,565
Other .........................................................................................
1,698
1,442
16,498
Total intangible assets ...........................................................
5,873
5,901
57,064
Investment securities (Notes 12 and 13) ..................................
880
1,116
8,550
Prepaid pension costs (Note 15) ...............................................
—
1,573
—
Deferred tax assets (Note 16) ...................................................
2,216
1,085
21,531
Other .........................................................................................
678
877
6,588
Total investments and other assets ......................................
3,774
4,651
36,669
Total non-current assets ............................................................
26,994
29,681
262,281
Total assets .....................................................................................
¥149,732
¥144,933
$1,454,839
Non-current assets: Property, plant and equipment:
Net property, plant and equipment (Note 18) ........................
Intangible assets:
Investments and other assets:
See notes to consolidated financial statements
14 Hitachi Koki ANNUAL REPORT 2014
Thousands of U.S. dollars (Note 1)
Millions of yen
LIABILITIES AND NET ASSETS
2014
2013
2014
LIABILITIES Current liabilities: Trade notes and accounts payable (Notes 12 and 19) .................
¥
9,743
¥
7,590
$
94,666
Short-term loans payable (Notes 12, 19 and 20) ..........................
10,753
12,328
104,479
Accrued expenses ........................................................................
8,187
6,973
79,547
Income taxes payable (Note 16) ...................................................
836
521
8,123
Provision for directors’ bonuses ...................................................
33
51
321
Asset retirement obligations (Note 17) .........................................
27
58
262
Other (Notes 12, 14 and 20) .........................................................
3,158
3,181
30,684
Total current liabilities ...............................................................
32,737
30,702
318,082
Liability for retirement benefits (Notes 2 and 15) ........................
5,016
2,976
48,737
Directors’ retirement benefits ........................................................
230
397
2,235
Asset retirement obligations (Note 17) .........................................
243
231
2,361
Other (Note 20) .............................................................................
207
107
2,011
Total long-term liabilities ...........................................................
5,696
3,711
55,344
Total liabilities ........................................................................
38,433
34,413
373,426
—123,072,776 shares ............................................
17,813
17,813
173,076
Capital surplus ..............................................................................
21,558
21,558
209,464
Retained earnings ........................................................................
88,746
90,222
862,281
Treasury stock, at cost .................................................................
(13,638)
(13,635)
(132,511)
Long-term liabilities:
NET ASSETS Shareholders’ equity (Note 8): Common stock Authorized —270,000,000 shares Issued
Accumulated other comprehensive income: Valuation difference on available-for-sale securities .....................
25
26
243
Foreign currency translation adjustments ....................................
(2,498)
(6,278)
(24,271)
Remeasurement of defined benefit plans ....................................
(1,670)
—
(16,226)
Minority interests ............................................................................
963
814
9,357
Total net assets .....................................................................
111,299
110,520
1,081,413
Total liabilities and net assets ..........................................................
¥149,732
¥144,933
$1,454,839
Hitachi Koki ANNUAL REPORT 2014 15
Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Hitachi Koki Co., Ltd. and consolidated subsidiaries Years ended March 31, 2014 and 2013
Consolidated Statement of Income
Net sales (Note 18) .......................................................................... Cost of sales .................................................................................... Gross profit ...................................................................................... Selling, general and administrative expenses (Note 6) .................... Operating income (Note 18) ............................................................. Other income (expenses): Interest income ............................................................................ Dividend income .......................................................................... Real estate rent ............................................................................. Interest expenses ........................................................................ Foreign exchange losses .............................................................. Loss on retirement of non-current assets .................................... Rent expenses on real estate ...................................................... Gain on sales of non-current assets (Note 7) ............................... Compensation income ................................................................. Gain on sales of investment securities ......................................... Loss on liquidation of subsidiaries ................................................ Special retirement payment ......................................................... Litigation settlement .................................................................... Business restructuring cost (Note 7) ............................................ Cost related to voluntary recovery of product .............................. Loss on sales of non-current assets (Note 7) ............................... Other, net ...................................................................................... Income before income taxes and minority interests ....................... Income taxes: (Note 16) — Current ..................................................................................... — Deferred ................................................................................... Income before minority interests .................................................... Minority interests ............................................................................ Net income ......................................................................................
2014
2013
¥133,327 88,231 45,096 40,683 4,413
¥115,645 71,240 44,405 38,074 6,331
¥
2014
$1,295,443 857,277 438,166 395,288 42,878
246 20 371 (181) (290) (87) (178) — — 45 (74) — — (756) (663) (244) 137 2,759
204 18 413 (170) (203) (67) (250) 19 142 — (29) (80) (55) — — — 11 6,284
2,390 194 3,605 (1,759) (2,818) (845) (1,729) — — 437 (719) — — (7,346) (6,442) (2,371) 1,331 26,807
1,572 (585) 1,772 76 1,696
918 657 4,709 18 4,691
15,274 (5,684) 17,217 738 $ 16,479
Net income per share: — Basic ........................................................................................ — Diluted ..................................................................................... Cash dividends applicable to the year .............................................
Thousands of U.S. dollars (Note 1)
Millions of yen
¥ Yen
U.S. dollars (Note 1)
¥16.73 — 24.00
¥46.26 — 24.00
$0.16 — 0.23
See notes to consolidated financial statements
Hitachi Koki Co., Ltd. and consolidated subsidiaries Years ended March 31, 2014 and 2013
Consolidated Statement of Comprehensive Income
Thousands of U.S. dollars (Note 1)
Millions of yen
2014
2013
2014
Income before minority interests .................................................... Valuation difference on available-for-sale securities ........................ Foreign currency translation adjustments ........................................ Remeasurement of defined benefit plans ....................................... Total other comprehensive income (Note 9) ................................... Comprehensive income ...................................................................
¥1,772 (1) 3,857 1,327 5,183 ¥6,955
¥ 4,709 164 5,682 — 5,846 ¥10,555
$17,217 (10) 37,476 12,894 50,360 $67,577
Attributable to: Owners of the parent .................................................................... Minority interests ..........................................................................
¥6,802 153
¥10,448 107
$66,090 1,487
See notes to consolidated financial statements
16 Hitachi Koki ANNUAL REPORT 2014
Consolidated Statement of Changes in Net Assets
Hitachi Koki Co., Ltd. and consolidated subsidiaries Year ended March 31, 2014 Millions of yen Accumulated other comprehensive income Valuation Total difference Foreign accumulated on available- currency Remeasurement other for-sale translation of defined comprehensive Minority interests securities adjustments benefit plans income
Shareholders’ equity
Common stock
Balance at beginning of the year ... ¥17,813 Cumulative effect of change in accounting policy ............... Restated balance .....................
17,813
Capital surplus
Treasury stock, at cost
Retained earnings
¥21,558
¥90,222 ¥(13,635)
Total shareholders’ equity
¥115,958
(739) 21,558
¥26
¥(6,278)
26
(6,278)
¥
(739)
89,483
(13,635)
115,219
—
¥(6,252)
(2,997)
(2,997)
(2,997)
(9,249)
Total net assets
¥814
¥110,520
814
106,784
(3,736)
Changes during the year.......... Dividends of surplus ................
(2,433)
(2,433)
(2,433)
Net income ..............................
1,696
1,696
1,696
(3)
(3)
(3) (1)
3,780
1,327
5,106
149
(3)
(740)
(1)
3,780
1,327
5,106
149
4,515
¥88,746 ¥(13,638)
¥114,479
¥25
¥(2,498)
¥(1,670)
¥(4,143)
¥963
¥111,299
Purchase of treasury stock ...... Net changes in items other than shareholders’ equity ...... Net changes during the year ...
—
—
Balance at end of the year ....... ¥17,813
¥21,558
(737)
5,255
Year ended March 31, 2013 Millions of yen Accumulated other comprehensive income Valuation Total difference Foreign accumulated Total on availablecurrency other Treasury shareholders’ for-sale translation comprehensive stock, at cost equity securities adjustments income
Shareholders’ equity
Common stock
Balance at beginning of the year ... ¥17,813 Effect of subsidiaries’ fiscal terms change ...............................
Capital surplus
Retained earnings
¥21,558
¥88,022
¥(13,634)
¥113,759
¥(138)
¥(11,871)
¥(12,009)
Minority interests
Total net assets
¥963
¥102,713
(57)
(57)
(57)
Dividends of surplus ......................
(2,434)
(2,434)
(2,434)
Net income ....................................
4,691
4,691
4,691
(1)
(1)
(1)
Changes during the year................
Purchase of treasury stock ............ Net changes in items other than shareholders’ equity ....................
164
5,593
5,757
(149)
—
—
2,257
(1)
2,256
164
5,593
5,757
(149)
7,864
Balance at end of the year ............. ¥17,813
¥21,558
¥90,222
¥(13,635)
¥115,958
¥ 26
¥ (6,278)
¥ (6,252)
¥814
¥110,520
Net changes during the year..........
5,608
Year ended March 31, 2014 Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock, at cost
Thousands of U.S. dollars (Note 1) Accumulated other comprehensive income Valuation Total difference Foreign accumulated Total on available- currency Remeasurement other shareholders’ for-sale translation of defined comprehensive Minority interests equity securities adjustments benefit plans income
Balance at beginning of the year ... $173,076 $209,464 $876,623 $(132,482) $1,126,681 Cumulative effect of change in accounting policy ............... (7,180) (7,180) Restated balance ..................... 173,076 209,464 869,442 (132,482) 1,119,501 Changes during the year..........
$253
$(60,999)
253
(60,999)
$
—
$(60,746)
(29,120)
(29,120)
(29,120)
(89,866)
Total net assets
$7,909
$1,073,844
7,909
1,037,544
(36,300)
Dividends of surplus ................
(23,640)
(23,640)
(23,640)
Net income ..............................
16,479
16,479
16,479
(29)
(29)
(29) (10)
36,728
12,894
49,611
1,448
(29)
(7,190)
(10)
36,728
12,894
49,611
1,448
43,869
Balance at end of the year ....... $173,076 $209,464 $862,281 $(132,511) $1,112,311
$243
$(24,271)
$(16,226)
$(40,255)
$9,357
$1,081,413
Purchase of treasury stock ...... Net changes in items other than shareholders’ equity ...... Net changes during the year ...
—
—
(7,161)
51,059
Hitachi Koki ANNUAL REPORT 2014 17
Consolidated Statement of Cash Flows
Hitachi Koki Co., Ltd. and consolidated subsidiaries Years ended March 31, 2014 and 2013 Thousands of U.S. dollars (Note 1)
Millions of yen
2014
Cash flows from operating activities: Income before income taxes and minority interests..................... Depreciation and amortization....................................................... Decrease in liability for retirement benefits .................................. Interest and dividend income ........................................................ Interest expense ........................................................................... Loss (Gain) on sales of non-current assets ................................... Increase in trade notes and account receivable ............................ Decrease (Increase) in inventories ................................................ Increase (Decrease) in trade notes and accounts payable ............ Increase (Decrease) in accounts payable other............................. Increase (Decrease) in accrued expenses..................................... Other, net ......................................................................................
2013
2014
¥ 2,759 3,174 (189) (266) 181 244 (1,913) 5,401 1,651 158 840 (2,684) 9,356
¥ 6,284 2,919 (159) (222) 170 (22) (802) (2,948) (2,371) (17) (271) (677) 1,884
$ 26,807 30,839 (1,836) (2,585) 1,759 2,371 (18,587) 52,478 16,042 1,535 8,162 (26,079) 90,906
Interest and dividend income received ........................................ Interest expenses paid ................................................................ Income taxes refund ..................................................................... Income taxes paid ......................................................................... Net cash provided by operating activities ..................................
265 (182) 449 (1,737) 8,151
225 (171) 218 (1,992) 164
2,575 (1,768) 4,363 (16,877) 79,197
Cash flows from investing activities: Proceeds from sale of investment securities ............................... Purchase of property, plant and equipment .................................. Proceeds from sales of property, plant and equipment ................ Purchase of intangible assets ....................................................... Purchase of shares of subsidiaries ................................................ Payments for transfer of business ................................................ Other, net ...................................................................................... Net cash used in investing activities ..........................................
280 (2,043) 967 (623) — — 207 (1,212)
73 (2,321) 316 (335) (411) (130) 121 (2,687)
2,721 (19,850) 9,396 (6,053) — — 2,011 (11,776)
Cash flows from financing activities: Net decrease in short-term loans payable ..................................... Cash dividends paid ..................................................................... Other, net ...................................................................................... Net cash used in financing activities..........................................
(2,940) (2,426) (52) (5,418)
(1,824) (2,428) (65) (4,317)
(28,566) (23,572) (505) (52,643)
1,373 2,894 29,026
2,120 (4,720) 33,809
13,340 28,119 282,025
— ¥31,920
(63) ¥29,026
— $310,144
Effect of exchange rate change on cash and cash equivalents ........ Net increase (decrease) in cash and cash equivalents ..................... Cash and cash equivalents at beginning of the year ........................ Decrease in cash and cash equivalents resulting from change of fiscal terms of subsidiaries ................................... Cash and cash equivalents at end of the year (Note 10)................... See notes to consolidated financial statements
18 Hitachi Koki ANNUAL REPORT 2014
Notes to Consolidated Financial Statements
Hitachi Koki Co., Ltd. and consolidated subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2014 and 2013
(d) Marketable securities and investment securities Under the Japanese accounting standards, companies are required to examine the intent of holding each security and classify those securities as (a) securities held for trading purposes (hereafter, “trading securities”), (b)
1. Basis of presentation and summary of significant accounting policies
debt securities intended to be held to maturity (hereafter, “held-to-maturity
(a) Basis of presenting consolidated financial statements
and affiliated companies, and (d) for all other securities that are not
The accompanying consolidated financial statements have been restructured and translated into English (with some expanded descriptions) from the consolidated financial statements of Hitachi Koki Co., Ltd. (the
debt securities”), (c) equity securities issued by nonconsolidated subsidiaries classified in any of the above categories (hereafter, “available-for-sale securities”). Equity securities issued by subsidiaries and affiliated companies which
“Company”) prepared in accordance with accounting principles generally
are neither consolidated nor accounted for by the equity method are stated
accepted in Japan and filed with the appropriate Local Finance Bureau of
at moving-average cost. Available-for-sale securities with fair market value
the Ministry of Finance as required by the Financial Instruments and
are stated at fair market value. Unrealized gains and unrealized losses on
Exchange Law. Certain supplementary information included in the statutory
these securities are reported, net of applicable income taxes, as a separate
Japanese language consolidated financial statements is not presented in
component of the net assets. Realized gain on sale of such securities is
the accompanying consolidated financial statements. Accounting principles
computed using the moving-average cost. Securities with no fair market
generally accepted in Japan are different in certain respects as to
values are stated principally at the moving-average cost.
application and disclosure requirements from International Financial Reporting Standards. (b) U.S. dollar amounts The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2014, which was ¥102.92 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange. (c) Principles of consolidation The consolidated financial statements include the accounts of the Company and its significant subsidiaries (46 subsidiaries in 2014 and 48 subsidiaries in 2013) (together, “the Group”). All significant inter-company accounts, transactions and unrealized profits are eliminated in consolidation. Goodwill is amortized using the straight-line method over a reasonable period not exceeding 20 years. Investments in unconsolidated subsidiaries (1 subsidiary in both 2014 and
The Company and its consolidated subsidiaries had no trading securities or held-to-maturity debt securities. If the market value of equity securities issued by subsidiaries and affiliated companies neither consolidated nor accounted for using the equity method, and available-for-sale securities, declines significantly, such securities are stated at fair market value and the difference between fair market value and the carrying amount is recognized as a loss in the period of the decline. (e) Inventories Merchandise, finished goods and raw materials of the Company and its consolidated subsidiaries are mainly stated at cost determined using primarily the moving-average method. Work in process is mainly determined by the specific identification method. Balance sheet amounts are written down to net selling value if profitability of inventories decreased. (f) Property, plant and equipment Property, plant and equipment are stated at cost. Depreciation is
2013) and affiliated companies (not applicable in 2014 and 2013) over which
computed primarily using the straight-line method at rates based on the
the Group has the ability to exercise significant influence (mainly 20% to 50%
estimated useful lives.
ownership) are accounted for using the equity method.
The significant useful lives are summarized as follows:
Guang Dong Hitachi Koki Co., Ltd., Fujian Hitachi Koki Co., Ltd., Guangzhou
Buildings and structures ........................... 3-50 years
Hitachi Koki Co., Ltd., Hitachi Koki (China) Co., Ltd., Hitachi Koki do Brasil Ltda.,
Machinery, equipment and vehicles ......... 4-17 years
Hitachi Power Tools de Mexico S.A. de C.V., Hitachi Power Tools Panama S.A., L.L.C. and Hitachi Power Tools RUS are consolidated subsidiaries with fiscal years ending December 31. The consolidated financial statements incorporate the accounts of these companies based on the provisional settlement of accounts conducted as of March 31. Note: Hitachi Koki Haramachi Co., Ltd. was merged with consolidated subsidiary Nikko Solutions Co., Ltd. by absorption and was removed from the scope of consolidation. In addition, Nikko Solutions Co., Ltd. changed its name to Hitachi Koki Manufacturing & Services Co., Ltd.
(g) Intangible assets Intangible assets are amortized by the straight-line method. (h) Lease assets Finance leases are capitalized and depreciated over the useful lives of the assets or lease terms.
Sankyo Diamond Industrial Europe B.V. was liquidated and removed from the scope of consolidation.
Hitachi Koki ANNUAL REPORT 2014 19
(i) Allowance for doubtful accounts Allowance for doubtful accounts is provided in an amount sufficient to cover possible losses on the collection of receivables. The amount of the
derivative transactions, in order to hedge foreign currency risks and interest rate risks arising from normal business transactions. Derivative instruments are stated at fair value. Changes in the fair
allowance is mainly determined on the basis of past experience of bad debts
values are recognized as gains or losses unless derivative transactions are
and an estimate of the collectibility of individual receivables based on the
used for hedging purposes.
financial position of the debtors. and an estimate of the collectibility of individual receivables based on the financial position of the debtors. (j) Provision for directors’ bonuses Provision for directors’ bonuses are provided for the expected payments at the amount attributable to the fiscal year. (k) Retirement benefits (1) Method for attributing estimated retirement benefits to individual periods of service In calculating benefit obligation, a benefit formula was used to attribute estimated retirement benefits to periods up to March 31, 2014. (2) Calculation of actuarial difference and prior service cost Prior service cost is amortized on a straight-line basis over a 15-year period, which is shorter than the average remaining years of service of the eligible employees. Unrecognized actuarial difference is primarily amortized from the following year on a straight-line basis over a 15-year period, which is shorter than the average remaining years of service of the eligible employees. In addition, directors’ retirement benefits are provided at the amounts which would be required if all directors and Audit & Supervisory Board Members retired at the balance sheet date. Payment of such benefits is subject to the approval at the shareholders’ meeting. (l) Foreign currency translation All monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. Resulting exchange gains or losses are credited or charged to income as incurred. The assets and liabilities of overseas subsidiaries and affiliates are translated into Japanese yen at current rates of exchange at the balance sheet date. Common stock, capital surplus and retained earnings are translated at the historical exchange rates. Income and expenses are translated at average rates of exchange in effect during the year.
If foreign currency derivative transactions are used as hedges and meet certain hedging criteria, the Company and its consolidated subsidiaries defer recognition of gains or losses resulting from changes in fair value of derivative transactions until the related losses or gains on the hedged items are recognized. Evaluation of hedge effectiveness is not considered necessary as the terms and notional amounts of these hedging instruments are the same as those of the related hedged transactions, assets and liabilities, and therefore they are assumed to be highly effective in offsetting movements in the exchange rates at their inception as well as during their term. (n) Cash and cash equivalents For the purpose of the consolidated statement of cash flows, the Company and its consolidated subsidiaries classify cash on hand, readily available bank deposits and short-term highly liquid investments with low risk of value fluctuation with maturities not exceeding three months at the time of purchase as cash and cash equivalents. (o) Consumption taxes Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. (p) Income taxes Provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. (q) Appropriation of retained earnings Payments of dividends are accounted for as appropriation of retained earnings or other capital surplus, as applicable, in the period when approved at the shareholders’ meeting or at the Board of Directors meeting. (r) Earnings per share Net income per share of common stock is computed based upon the weighted-average number of shares outstanding during each year.
Translation adjustments are debited or credited to the foreign currency translation adjustments account and minority interests, which are reported in net assets in the accompanying consolidated balance sheet. (m) Derivative transactions and hedge accounting The Company and its consolidated subsidiaries utilize forward foreign exchange contracts and interest rate and currency swap agreements as
2. Accounting changes Effective April 1, 2013, the Company applied the Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012; the “Retirement Benefits Accounting Standard”) and the Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012; the “Guidance on Retirement Benefits”) because they were
20 Hitachi Koki ANNUAL REPORT 2014
Notes to Consolidated Financial Statements
applicable from fiscal years beginning on or after April 1, 2013. Under the new standard, plan assets are deducted from retirement benefit obligation and stated as liability for retirement benefits, and unrecognized actuarial
5. Commitments and contingencies Guarantees of employees’ loans were ¥34 million ($330 thousand) and ¥40 million at March 31, 2014 and 2013, respectively.
difference and unrecognized prior service cost are recognized within this liability. In addition, the method for calculating retirement benefit obligation and service cost has been revised. The Company has changed from using the straight-line attribution method for projected benefit obligation to using a
6. Selling, general and administrative expenses Major items and the amounts under “Selling, general and administrative expenses” are as follows:
benefit formula, and has changed from using a discount rate based on using a discount rate that is a single weighted average reflecting the projected benefit payment period and the projected payment per period. The Retirement Benefits Accounting Standard is being applied transitionally as determined in Paragraph 37 of the standard. At March 31, 2014, the effect of deducting plan assets from retirement benefit obligation and stating them as liability for retirement benefits are recognized as an increase or decrease within remeasurements of defined benefit plans under accumulated other comprehensive income. In addition, the effect of changing the method for calculating retirement benefit obligation and service cost is stated as an increase or a decrease in retained earnings. As of March 31, 2014, these changes caused accumulated other
Thousands of U.S. dollars
Millions of yen
estimated average remaining years of service of the eligible employees to Direct selling expenses: Packing and distribution expenses............. Advertising expenses ................................. Sales promotion expenses ......................... Indirect selling expenses and general expenses: Provision for doubtful accounts.................. Salaries and wages .................................... Retirement benefit expenses ..................... Depreciation and amortization ................... Research and development costs .............. Other ........................................................... Total ..............................................................
2014
2013
2014
¥ 4,782 1,387 3,063
¥ 4,405 1,275 3,137
$ 46,463 13,476 29,761
179 14,531 730 715 801 14,495 ¥40,683
193 13,457 789 662 752 13,404 ¥38,074
1,739 141,187 7,093 6,947 7,783 140,838 $395,288
comprehensive income to decrease by ¥2,997 million ($29,119 thousand) and retained earnings to decrease by ¥739 million ($7,180 thousand). The
Research and development costs included in cost of sales, and “selling,
effect on profit and loss was not material. Net assets per share decreased
general and administrative expenses” were ¥3,490 million ($33,910 thousand)
by ¥22.91 ($0.22).
and ¥3,386 million for the years ended March 31, 2014 and 2013, respectively.
3. Procedure of matured bills
7. Supplementary information to the consolidated statement of income
Regarding the procedure of matured bills for the year ended March 31, 2013, the Company accounted for these notes receivable and notes payable as if they had been settled on the maturity date though financial institutions were closed
Major items and the amounts under “Other income (expenses)” are as follows:
on holiday at the end of the fiscal year.
2014 Millions of yen
2014
Notes receivable-trade...................................
¥−
2013
¥280
Thousands of U.S. dollars
2014
$−
4. Inventories Inventories at March 31, 2014 and 2013 are as follows: Millions of yen
Merchandise and finished goods...................... Work in process ................................................ Raw materials ................................................... Total................................................................
Thousands of U.S. dollars
Millions of yen
Thousands of U.S. dollars
2014
2013
2014
¥37,276 1,931 7,159 ¥46,366
¥39,049 2,226 6,562 ¥47,837
$362,184 18,762 69,559 $450,505
Gain (Loss) on sales of non-current assets: Gain on sales of land and buildings ........... Loss on sales of land and buildings ........... Business restructuring cost: Extra retirement payments and other ........ Loss on retirement of non-current assets and other .....................................
2013
2014
— ¥244
¥19 —
— $2,371
443
—
4,304
313
—
3,041
Note: Amounts above are net of write-downs. The amounts of write-downs recognized as cost of sales for the years ended March 31, 2014 and 2013 were ¥(433) million (($(4,207)) thousand) and ¥290 million, respectively.
Hitachi Koki ANNUAL REPORT 2014 21
8. Shareholders’ equity Certain Provisions of the Japanese Corporate Law (the “Corporate Law”)
The Corporate Law also provides that common stock, legal earnings reserve, additional paid-in capital, other capital surplus and retained
that may significantly affect financial and accounting matters are
earnings can be transferred among the accounts under certain conditions
summarized below.
upon resolution of the shareholders.
Under Japanese laws and regulations, the entire amount paid for new
The Corporate Law also provides for companies to purchase treasury
shares is required to be designated as common stock. However, a company
stock and dispose of such treasury stock by resolution of the Board of
may, by a resolution of the Board of Directors, designate an amount not
Directors. The amount of treasury stock purchased cannot exceed the
exceeding one-half of the price of the new shares as additional paid-in
amount available for distribution to the shareholders, which is determined
capital, which is included in capital surplus.
by specific formula.
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria such as;
9. Other comprehensive income The following table presents reclassification adjustment and tax effects
(1) having a Board of Directors, (2) having independent auditors, (3) having
allocated to each component of other comprehensive income for the years
Audit & Supervisory Board Members, and (4) the term of service of the
ended March 31, 2014 and 2013:
directors is prescribed as one year rather than two years by its articles of
Millions of yen
incorporation, the Board of Directors may declare dividends (except for dividends in kind) if the company has prescribed so in its articles of incorporation. The Corporate Law also provides certain limitations on the amounts available for dividends or purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million ($29 thousand). The maximum amount that companies can distribute as dividends is calculated based on their non-consolidated financial statements in accordance with Japanese laws and regulations. Appropriations are not accrued in the financial statements for the period to which they relate, but are recorded in the subsequent accounting period when the Board of Directors’ approval has been obtained. Retained earnings at March 31, 2014 include the amounts representing the year-end cash dividends of ¥6 ($0.06) per share, aggregating ¥608
2014
Valuation difference on available-for-sale securities: Amount arising during the year.................. Reclassification adjustments........................ Amount before tax effect ........................... Tax effect.................................................... Valuation difference on available-for-sale securities..................... Foreign currency translation adjustments: Amount arising during the year ................. Remeasurement of defined benefit plans: Amount arising during the year.................. Reclassification adjustments .................... Amount before tax effect ............................ Tax effect .................................................... Remeasurement of defined benefit plans.. Total other comprehensive income ............
¥
Thousands of U.S. dollars
2013
2014
42 (45) (2) 1
¥ 261 (7) 253 (89)
$
408 (437) (19) 10
(1)
164
(10)
¥3,857
¥5,682
$37,476
¥1,213 919 2,132 (805) ¥1,327 ¥5,183
— — — — — ¥5,846
$11,786 8,929 20,715 (7,822) $12,894 $50,360
million ($5,907 thousand) which was approved at the Board of Directors’ meeting held on April 28, 2014. Cash dividends charged to retained earnings during the years ended March 31, 2014 and 2013 represent dividends paid out during these periods. The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal earnings reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal earnings reserve and additional paid-in capital equals 25% of the common stock. Under the Corporate Law, the aggregate amount of additional paid-in capital and legal earnings reserve that exceeds 25% of the common stock may be made available for dividends by resolution of the shareholders. Under the Corporate Law, all additional paid-in-capital and all legal earnings reserve may be transferred to other capital surplus and other retained earnings, respectively, which are potentially available for dividends.
22 Hitachi Koki ANNUAL REPORT 2014
10. Cash and cash equivalents Cash and cash equivalents at March 31, 2014 and 2013 for the consolidated statement of cash flows are as follows: Millions of yen
2014
Cash on hand and in banks .......................... ¥18,318 Deposits ....................................................... 13,602 Cash and cash equivalents .......................... ¥31,920
2013
Thousands of U.S. dollars
2014
¥15,861 $177,983 13,165 132,161 ¥29,026 $310,144
Notes to Consolidated Financial Statements
11. Lease transaction
Division of the Company executes and controls derivative transac-
Future minimum lease payments subsequent to March 31, 2014 and
and the maximum limit of transactions. The results of transactions
2013 for noncancelable operating leases are summarized as follows: Millions of yen
2014
Due within one year ..................................... Due after one year ....................................... Total .............................................................
¥192 190 ¥382
Thousands of U.S. dollars
2013
¥181 206 ¥388
tions in conformity with the internal rules specifying authorization
2014
$1,866 1,846 $3,712
12. Financial instruments (a) Outline of financial instruments (1) Management policies The Company and its consolidated subsidiaries invest mainly in shortterm instruments such as deposits in banks and raise funds by borrowing from outside financial institutions. The Company and certain consolidated subsidiaries enter into derivatives transactions only for the purpose of mitigating risk as described below and do not engage in such transactions for speculative purposes.
are reported monthly to the director in charge. Trade payables and short-term loans are exposed to liquidity risk. The Company and its consolidated subsidiaries develop and update their cash flow forecasts on a monthly basis to manage their liquidity risk. (b) Fair value of financial instruments The carrying amounts on the consolidated balance sheet, fair values and differences between them as of March 31, 2014 and 2013 of financial instruments are set out as follows: Financial instruments of which fair values are not generally available and are deemed to be extremely difficult to measure are excluded from the following table. For the year ended March 31, 2014 Millions of yen
(2) Nature of financial instruments, related risk and risk management system Deposits are deposits held in the Hitachi Group Pooling System (a system among Hitachi, Ltd. and its Group companies for lending and borrowing surplus funds on a daily basis). Trade notes and accounts receivable are exposed to credit risk of customers and counterparties. The Company and its consolidated subsidiaries’ credit risk monitoring activities include review of overdue and balance amounts of each customer as well as review of cred-
Carrying amount (*1)
Fair value (*1)
Cash on hand and in banks ........................... Deposits ........................................................ Trade notes and accounts receivable (*2) ....
¥ 18,318 13,602 38,473
¥ 18,318 13,602 38,473
— — —
Investment securities: Other investment securities .......................... Trade notes and accounts payable ................... Short-term loans payable................................. Derivatives liabilities (*3).................................
811 (9,743) (10,753) (143)
811 (9,743) (10,753) (143)
— — — —
itworthiness of major customers on a regular basis. Trade receivables
Thousands of U.S. dollars
in foreign currencies generated by worldwide operations are exposed
Carrying amount (*1)
to foreign exchange fluctuation risk. This risk is hedged by using forward exchange contracts for, in principle, the net positions after offsetting trade receivables denominated in foreign currency with trade payables denominated in foreign currencies. Investment securities mainly consist of marketable securities of the companies with which the Company has business relationships. As such marketable securities are exposed to market volatility risk, the Company keeps track of their fair value on a quarterly basis. Trade payables are mostly due within one year. Trade payables denominated in foreign currencies are exposed to foreign exchange fluctuation risk, which are principally hedged by using forward exchange contracts.
Difference
Fair value (*1)
Difference
Cash on hand and in banks ........................... $ 177,983 $ 177,983 Deposits ........................................................ 132,161 132,161 Trade notes and accounts receivable (*2) .... 373,815 373,815
— — —
Investment securities: Other investment securities .......................... Trade notes and accounts payable ................... Short-term loans payable................................. Derivatives liabilities (*3).................................
— — — —
7,880 7,880 (94,666) (94,666) (104,479) (104,479) (1,389) (1,389)
Notes: 1. The amounts of liabilities are represented in parentheses. 2. The amounts of trade notes and accounts receivable are presented after allowance for doubtful accounts amounting to ¥1,116 million ($10,843 thousand) are deducted. 3. Net debts and credits arising from derivative transactions are presented in net value.
Short-term loans are mainly for operating capital. Forward exchange contracts and interest currency swaps are used to minimize foreign exchange fluctuation risk associated with receivables and payables in foreign currencies, and to minimize interest rate risk from the possibility of changes in interest rates associated with financing debts. Foreign exchange fluctuation risk and interest rate risk are inherent in forward exchange contracts and interest currency swaps, respectively. To mitigate such risks, the Accounting
Hitachi Koki ANNUAL REPORT 2014 23
For the year ended March 31, 2013
For the year ended March 31, 2013 Carrying amount (*1)
Millions of yen
Millions of yen
Fair value (*1)
Within one year
Difference
Cash on hand and in banks ........................... ¥ 15,861 ¥ 15,861 Deposits ........................................................ 13,165 13,165 Trade notes and accounts receivable (*2) .... 33,961 33,961
— — —
Investment securities: Other investment securities .......................... Trade notes and accounts payable ................... Short-term loans payable ................................ Derivatives liabilities (*3) ................................
— — — —
1,047 (7,590) (12,328) (208)
1,047 (7,590) (12,328) (208)
Notes: 1. The amounts of liabilities are represented in parentheses. 2. The amounts of trade notes and accounts receivable are presented after allowance for doubtful accounts amounting to ¥899 million are deducted. 3. Net debts and credits arising from derivative transactions are presented in net value.
Cash on hand and in banks ......................... Deposits ...................................................... Trade notes and accounts receivable ......... Investment securities Other investment securities with maturity ... Total..........................................................
¥15,861 13,165 33,961 — ¥62,987
13. Securities At March 31, 2014, acquisition cost and fair value of available-for-sale securities with fair value are as follows: Available-for-sale securities Millions of yen
i. Fair value measurement of financial instruments and information for investment securities and derivative transactions Cash on hand and in banks, deposits and trade notes and accounts receivable: Book values of these accounts are deemed fair values as they are settled in a short-term period. Investment securities:
Securities with fair value exceeding acquisition costs: Equity securities ............................................ Total................................................................ Other securities: Equity securities ............................................. Total................................................................
Fair values of investment securities are measured at quoted market
securities. Trade notes and accounts payable and short-term loans payable: Book values of these accounts are deemed fair values as they are settled in a short-term period. Derivatives: See “Note 14. Derivative transactions” for the relevant information. ii. Unlisted equity shares, amounting to ¥69 million ($670 thousand) and
able and their future cash flows cannot be estimated. Redemption schedule for monetary claims and securities with maturity after the year-end at March 31, 2014 and 2013 are as follows: For the year ended March 31, 2014
Cash on hand and in banks ......................... Deposits ...................................................... Trade notes and accounts receivable ......... Investment securities Other investment securities with maturity ... Total..........................................................
Millions of yen
Thousands of U.S. dollars
Within one year
Within one year
¥18,318 13,602 38,473
$177,983 132,161 373,815
— ¥70,393
— $683,958
24 Hitachi Koki ANNUAL REPORT 2014
¥155 ¥155
¥210 ¥210
¥54 ¥54
¥607 ¥607
¥601 ¥601
¥ (6) ¥ (6)
Acquisition cost
Securities with fair value exceeding acquisition costs: Equity securities ............................................ Total................................................................ Other securities: Equity securities ............................................. Total................................................................
Difference
Fair value
Difference
$1,506 $1,506
$2,040 $2,040
$525 $525
$5,898 $5,898
$5,839 $5,839
$ (58) $ (58)
At March 31, 2013, acquisition cost and fair value of available-for-sale securities with fair value are as follows: Available-for-sale securities Millions of yen
¥69 million at March 31, 2014 and 2013, respectively, are excluded from other investment securities above as quoted market prices are not avail-
Fair value
Thousands of U.S. dollars
prices of stock exchanges. See “Note 13. Securities” for additional information on investment
Acquisition cost
Securities with fair value exceeding acquisition costs: Equity securities ............................................ Total................................................................ Other securities: Equity securities ............................................. Total................................................................
Acquisition cost
Fair value
Difference
¥385 ¥385
¥451 ¥451
¥ 66 ¥ 66
¥613 ¥613
¥596 ¥596
¥(16) ¥(16)
Notes to Consolidated Financial Statements
Thousands of U.S. dollars
14. Derivative transactions
2014
(a) Derivative transactions not accounted for
Contract amount
by hedge accounting The aggregate amounts contracted to be paid or received and the fair value of derivative transactions at March 31, 2014 and 2013 are as follows: Currency-related derivatives: Millions of yen
2014 Contract amount Total
Forward contracts: To sell: U.S. dollars ............................ Euro........................................ U.K. pound sterling ................ Australian dollars .................. Singapore dollars .................. Hong Kong dollars ................. Czech koruna ......................... Romanian ron ........................ Polish zloty............................. Hungarian forint .................... Norwegian krone .................. Thai baht................................ Indian rupee........................... Brazilian real.......................... To buy: U.S. dollars ............................ Total....................................
Due after one year
Fair value
Unrealized gains (losses)
¥ 5,233 9,883 692 692 25 7 47 26 108 20 352 242 145 158
— — — — — — — — — — — — — —
¥ (33) (37) (6) (21) 0 0 0 0 (1) 0 1 (5) (7) (12)
¥ (33) (37) (6) (21) 0 0 0 0 (1) 0 1 (5) (7) (12)
2,560 ¥20,196
— —
10 ¥(115)
10 ¥(115)
Total
Forward contracts: To sell: U.S. dollars ............................ Euro........................................ U.K. pound sterling ................ Australian dollars .................. Singapore dollars .................. Hong Kong dollars ................. Czech koruna ......................... Romanian ron ........................ Polish zloty ............................ Hungarian forint .................... Norwegian krone .................. Thai baht ............................... Indian rupee .......................... Brazilian real ......................... To buy: U.S. dollars ............................ Total....................................
Fair value
Unrealized gains (losses)
$ (321) (360) (58) (204) 0 0 0 0 (10) 0 10 (49) (68) (117)
$ 50,845 96,026 6,724 6,724 243 68 457 253 1,049 194 3,420 2,351 1,409 1,535
— — — — — — — — — — — — — —
$ (321) (360) (58) (204) 0 0 0 0 (10) 0 10 (49) (68) (117)
24,874 $196,230
— —
97 97 $(1,117) $(1,117)
Note: The method for estimating the fair value is principally based on obtaining quotes provided by financial institutions.
Interest related derivatives: Millions of yen
2014 Contract amount Total
Millions of yen
2013 Contract amount Total
Forward contracts: To sell: U.S. dollars ............................ Euro........................................ U.K. pound sterling ................ Australian dollars .................. Singapore dollars .................. Czech koruna ......................... Romanian ron ........................ Polish zloty............................. Thai baht................................ Mexican pesos ...................... Indian rupee........................... Brazilian real.......................... To buy: U.S. dollars ............................ Total....................................
Due after one year
Due after one year
Fair value
Unrealized gains (losses)
¥ 8,967 5,644 341 724 28 15 11 43 257 34 92 250
— — — — — — — — — — — —
¥(108) (54) 0 (18) 0 0 0 0 (18) (3) (1) (27)
¥(108) (54) 0 (18) 0 0 0 0 (18) (3) (1) (27)
3,402 ¥19,813
— —
11 ¥(221)
11 ¥(221)
Interest rate and currency swap agreements: Pay Euro, receive yen Receive variable, pay variable... ¥10,552 Pay Polish zloty, receive yen Receive variable, pay variable... 675 Pay Mexican pesos, receive yen Receive variable, pay variable... 606 Pay Czech koruna, receive yen 103 Receive variable, pay variable... Total ........................................... ¥11,937
Due after one year
Fair value
Unrealized gains (losses)
—
¥(17)
¥(17)
—
(4)
(4)
—
(6)
(6)
— —
0 ¥(28)
0 ¥(28)
Hitachi Koki ANNUAL REPORT 2014 25
15. Retirement benefit plans
Millions of yen
2013
The Company and its consolidated subsidiaries in Japan have
Contract amount Total
Due after one year
Interest rate and currency swap agreements: Pay Euro, receive yen Receive variable, pay variable... ¥ 9,280 Pay Polish zloty, receive yen Receive variable, pay variable... 666 Pay Mexican pesos, receive yen Receive variable, pay variable... 597 Pay Czech koruna, receive yen 94 Receive variable, pay variable... Total ........................................... ¥10,639
Fair value
Unrealized gains (losses)
retirement allowance system. Retiring employees may also be paid premium retirement benefits that are not included in the retirement benefit obligations determined actuarially in accordance with the
—
¥ 4
¥ 4
—
9
9
—
(1)
(1)
— —
1 ¥13
1 ¥13
accounting standard for retirement benefits. Certain overseas subsidiaries have also established a defined-benefit corporate pension system. (a) The changes in the retirement benefit obligation during the year ended March 31, 2014 are as follows:
Thousands of U.S. dollars
2014 Contract amount Total
established a defined-benefit corporate pension system and a lump-sum
Due after one year
Interest rate and currency swap agreements: Pay Euro, receive yen Receive variable, pay variable... $102,526 Pay Polish zloty, receive yen Receive variable, pay variable... 6,558 Pay Mexican pesos, receive yen Receive variable, pay variable... 5,888 Pay Czech koruna, receive yen 1,001 Receive variable, pay variable... Total ........................................... $115,983
Fair value
Unrealized gains (losses)
—
$(165)
$(165)
—
(39)
(39)
—
(58)
(58)
— —
0 $(272)
0 $(272)
Note: The method for estimating the fair value is principally based on obtaining quotes provided by financial institutions.
(b) Derivative transactions accounted for by hedge accounting Currency transactions: Not applicable. Interest-related transactions: Not applicable.
Thousands of U.S. dollars
Millions of yen
2014
Retirement benefit obligation at beginning of the year ................................................ ¥ 29,886 Service cost ................................................................... 913 Interest cost .................................................................. 333 Actuarial difference ...................................................... 316 Retirement benefit paid ................................................ (2,390) Effect of change in standard ......................................... 1,216 Other.............................................................................. 155 Retirement benefit obligation at end of the year ......... ¥ 30,429
2014
$290,381 8,871 3,236 3,070 (23,222) 11,815 1,506 $295,657
(b) The changes in plan assets during the year ended March 31, 2014 are as follows: Thousands of U.S. dollars
Millions of yen
Plan assets at beginning of the year ............................ Expected return on plan assets..................................... Actuarial difference ...................................................... Contributions by the company ...................................... Retirement benefit paid ................................................ Other.............................................................................. Plan assets at end of the year ......................................
2014
2014
¥24,509 619 1,529 1,436 (2,098) 142 ¥26,137
$238,136 6,014 14,856 13,953 (20,385) 1,380 $253,955
(c) The changes in liability for retirement benefits between the beginning and end of the year under plans that apply the simplified method as follows: Millions of yen
Balance of liability for retirement benefits at the beginning of the year ....................................... Retirement benefit expenses ........................................ Retirement benefit paid ................................................ Other.............................................................................. Balance of liability for retirement benefits at the end of the year ...................................
26 Hitachi Koki ANNUAL REPORT 2014
Thousands of U.S. dollars
2014
2014
¥686 53 (36) 21
$6,665 515 (350) 204
¥724
$7,035
Notes to Consolidated Financial Statements
(d) The following table sets the funded status of the plans and the
(h) The fair value of plan assets, by major category, as a percentage of
amounts recognized in the consolidated balance sheet as of March 31,
total plan assets as of March 31, 2014 are as follows:
2014 for the Company’s and the consolidated subsidiaries’ defined benefit plans: Millions of yen
2014
Thousands of U.S. dollars
2014
Funded retirement benefit obligations ........................ ¥ 28,097 $ 272,998 Plan assets at fair value ............................................... (26,137) (253,955) 1,960 19,044 Unfunded retirement benefit obligations ..................... 3,056 29,693 Net liabilities for retirement benefits in the balance sheet .............................................................. 5,016 48,737 Liability for retirement benefits .................................... Net liabilities for retirement benefits in the balance sheet........................................................ ¥
5,016
48,737
5,016 $ 48,737
Note: Includes plans that apply the simplified method.
2014
Bonds ................................................................................................ Stocks ............................................................................................... Cash on hand and in banks .............................................................. Other ................................................................................................. Total ..............................................................................................
59% 28% 1% 12% 100%
The expected return on assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns on assets held in each category. (i) Actuarial assumptions Principal actuarial assumptions used in calculations for the fiscal year ended March 31, 2014 Discount rate: 0.9% to 1.0%
(e) The components of retirement benefit expense for the year ended
Long-term expected return on plan assets: 2.5%
March 31, 2014 are as follows: Millions of yen
2014
Service cost .................................................................. Interest expense ........................................................... Expected return on plan assets .................................... Amortization of actuarial differences .......................... Amortization of prior service cost ................................ Retirement benefit expenses under plans that apply the simplified method ..................... Extra retirement payments ........................................... Other ............................................................................. Retirement benefit expense .....................................
Thousands of U.S. dollars
For the year ended March 31, 2013 Millions of yen
2014
¥ 913 333 (619) 1,030 (111)
$ 8,871 3,236 (6,014) 10,008 (1,079)
43 342 24 ¥1,955
418 3,323 233 $18,995
Funded retirement benefit obligation ........ Plan assets at fair value ............................. Unfunded retirement benefit obligations ... Unrecognized actuarial difference ............. Unrecognized prior service cost ................. Net retirement benefit obligation ............... Prepaid pension costs ................................ Liability for retirement benefits ...............
¥(30,572) 24,509 (6,063) 5,114 (454) (1,403) (1,573) ¥ (2,976)
For the year ended March 31, 2013 Millions of yen
(f) Prior service cost and actuarial difference included in other comprehensive income (before tax effect) for the year ended March 31, 2014 are as follows: Millions of yen
2014
Prior service cost .......................................................... Actuarial difference ...................................................... Total...........................................................................
¥ (111) 2,243 ¥2,132
Thousands of U.S. dollars
2014
$ (1,079) 21,794 $20,715
(g) Unrecognized prior service cost and unrecognized actuarial difference included in accumulated other comprehensive income (before tax effect) as of March 31, 2014 are as follows: Millions of yen
2014
Unrecognized prior service cost ................................... Unrecognized actuarial difference ............................... Total...........................................................................
¥ (342) 2,871 ¥2,529
Thousands of U.S. dollars
2014
$ (3,323) 27,895 $ 24,572
Service costs .............................................. Interest expense ......................................... Expected return on plan assets .................. Amortization of actuarial differences ........ Amortization of prior service costs ............ Retirement benefit expense ....................
¥ 839 619 (594) 911 (70) ¥1,705
The discount rate used by the Company and certain consolidated subsidiaries was 1.7% for the year ended March 31, 2013. The rate of expected return on plan assets used by the Company and certain consolidated subsidiaries was 2.5% for the year ended March 31, 2013. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the estimated number of total service years. Actuarial difference is recognized as income or expense in equal amounts over 15 years commencing from the succeeding period. Prior service costs are recognized as income or expense in equal amounts over 15 years.
Hitachi Koki ANNUAL REPORT 2014 27
16. Income taxes
Significant components of deferred tax assets and liabilities as of March 31, 2014 and 2013 are as follows:
Taxes on income consist of corporation tax, inhabitant taxes and enterprise tax. The aggregate statutory tax rate on income before income taxes and minority interests was approximately 37.8% for 2014 and 2013. The significant differences between the statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended March 31, 2014 and 2013 are as follows: 2014
Statutory tax rate ......................................................... Non-deductible expenses.......................................... Change in valuation allowance ................................. Difference in statutory tax rate of foreign subsidiaries............................................. Experimental research expenses .............................. Deductions for special reconstruction district ......... Deduction for foreign taxes paid............................... Decrease in deferred tax assets at fiscal year-end due to change in tax rate ......................... Per capita inhabitants tax ......................................... Foreign withholding taxes paid ................................. Increase/decrease in tax effects of undistributed earnings of overseas subsidiaries........................... Loss on valuation of affiliates’ stock ........................ Unrecognized tax effects........................................... Other .......................................................................... Effective tax rate ..........................................................
2013
37.8% 2.9 (4.7)
37.8% 1.7 (6.2)
(14.9) (0.8) (2.9) (2.5)
(1.9) 1.8 — 4.3
3.3 3.3 9.6
— 1.3 3.5
(0.2) (0.8) 2.4 3.2 35.8%
(0.4) (14.8) (5.4) 3.4 25.1%
Note: The “Act for Partial Revision of the Income Tax Law” (Act No. 10 of 2014) was enacted on March 31, 2014. Accordingly, the Special Corporation Tax for Reconstruction has been abolished for fiscal years beginning on or after April 1, 2014. As a result, the applicable income tax rate used to calculate deferred tax assets and deferred tax liabilities will be changed from 37.8% to 35.4% for temporary differences expected to be reversed effective the fiscal year beginning April 1, 2014. Consequently, for the fiscal year ended March 31, 2014 net deferred assets after deduction of deferred liabilities decreased by ¥92 million ($894 thousand) and income taxes increased by the same amount.
Thousands of U.S. dollars
Millions of yen
2014
Deferred tax assets: Retirement benefits.................................... ¥ 1,675 Accrued bonuses ........................................ 558 Accrued expenses ...................................... 718 Devaluation of inventories ......................... 789 Foreign tax credit carry-forward................. 383 Unrealized intercompany profit of inventories .......................................... 1,102 Tax loss carry-forward................................ 1,040 Other ........................................................... 1,250 Subtotal ......................................................... 7,515 Valuation allowance ..................................... (2,372) Total deferred tax assets .............................. 5,143 Deferred tax liabilities: Undistributed earnings of overseas subsidiaries............................................. (121) Other ........................................................... (46) Total deferred tax liabilities.......................... (167) Net deferred tax assets ................................ ¥ 4,976
2013
2014
¥ 474 599 492 845 468
$16,275 5,422 6,976 7,666 3,721
192 1,526 1,108 5,704 (2,527) 3,177
10,707 10,105 12,145 73,018 (23,047) 49,971
(127) (47) (174) ¥ 3,003
(1,176) (447) (1,623) $48,348
17. Asset retirement obligations The Company and certain consolidated subsidiaries recognize asset retirement obligations associated with real estate rental contracts for business-use facilities requiring restoration to their original condition, and asset retirement obligations for disposal of machinery and equipment containing PCBs based on the Law Concerning Special Measures Against PCB Waste effective as of July 2001. The liability is calculated using expected useful lives ranging from 15 to 24 years and discount rates ranging from 1.583% to 2.125%. The following table summarizes changes in the aggregate carrying amount of asset retirement obligations for the years ended March 31, 2014 and 2013: Thousands of U.S. dollars
Millions of yen
28 Hitachi Koki ANNUAL REPORT 2014
2014
2013
Balance at beginning of the year .................. Increase due to acquisition of property, plant and equipment ................................... Changes in asset retirement obligation over time ..................................................... Liabilities settled ..........................................
¥288
¥279
$2,798
2014
12
—
117
1 (31)
8 —
10 (301)
Balance at end of the year ............................
¥270
¥288
$2,623
Notes to Consolidated Financial Statements
18. Segment information (a) Information by reportable segment The Company has classified its reportable segments as the discrete units from which it obtains financial information, and for which the Board of Directors periodically allocates resources and evaluates performance. The Company’s overall relevance strategy involves providing products and services in Japan and overseas. The Company classifies its products and services into two reportable segments: Power Tools and Life-Science Instruments. The Power Tools segment manufactures and markets power tools. The Life-Science Instruments segment manufactures and markets life-science instruments including ultracentrifuges and cooled centrifuges. Sales, income, expenses, assets, liabilities and other items are presented for reportable segments as discussed in “Note 1. Basis of presentation and summary of significant accounting policies.” The operations of the Company and its consolidated subsidiaries for the years ended March 31, 2014 and 2013 are summarized by reportable segment as follows: Millions of yen
2014 Power tools
Life-science instruments
Elimination or corporation
Consolidated
Net sales: Sales to third party ........................................................................................ Intersegment sales and transfers .................................................................. Total sales ..................................................................................................
¥129,112 — 129,112
¥ 4,215 — 4,215
— — —
¥133,327 — 133,327
Segment profit or loss ................................................................................... Segment assets .............................................................................................
3,880 132,905
533 16,827
— —
4,413 149,732
Depreciation and amortization ...................................................................... Capital expenditures ......................................................................................
2,991 2,528
183 138
— —
3,174 2,666
Millions of yen
2013 Power tools
Life-science instruments
Elimination or corporation
Consolidated
Net sales: Sales to third party ........................................................................................ Intersegment sales and transfers .................................................................. Total sales ..................................................................................................
¥109,650 — 109,650
¥ 5,995 — 5,995
— — —
¥115,645 — 115,645
Segment profit or loss ................................................................................... Segment assets .............................................................................................
4,423 126,349
1,908 18,584
— —
6,331 144,933
Depreciation and amortization ...................................................................... Capital expenditures ......................................................................................
2,724 2,411
195 245
— —
2,919 2,656
Thousands of U.S. dollars
2014 Power tools
Life-science instruments
Elimination or corporation
Net sales: Sales to third party ........................................................................................ Intersegment sales and transfers .................................................................. Total sales ..................................................................................................
$1,254,489 — 1,254,489
$ 40,954 — 40,954
— — —
$1,295,443 — 1,295,443
Segment profit or loss ................................................................................... Segment assets .............................................................................................
37,699 1,291,343
5,179 163,496
— —
42,878 1,454,839
Depreciation and amortization ...................................................................... Capital expenditures ......................................................................................
29,061 24,563
1,778 1,341
— —
30,839 25,904
Consolidated
Hitachi Koki ANNUAL REPORT 2014 29
(b) Relevance information A summary of sales and property, plant and equipment by geographic area for the years ended March 31, 2014 and 2013 is as follows: For the year ended March 31, 2014 (1) Sales
(Millions of yen) Consolidated
Japan
Asia
Europe
North America
Others
¥43,381
¥11,365
¥43,526
¥27,483
¥7,572
¥133,327
Japan
Asia
Europe
North America
Others
(Thousands of U.S. dollars) Consolidated
$421,502
$110,426
$422,911
$267,033
$73,572
$1,295,443
Notes: 1. Geographic areas are decided based on geographic proximity. 2. The principal nations or regions included in each area other than Japan are as follows: Asia ................... Singapore, China and India Europe .............. Germany, France, United Kingdom, Norway and Russia North America .. U.S.A. and Canada Others ............... Australia
(2) Property, plant and equipment
(Millions of yen) Consolidated
Japan
Asia
Europe
North America
Others
¥12,604
¥3,396
¥1,229
¥50
¥68
¥17,347
Japan
Asia
Europe
North America
Others
(Thousands of U.S. dollars) Consolidated
$122,464
$32,997
$11,941
$486
$661
$168,548
Japan
Asia
Europe
North America
Others
(Millions of yen) Consolidated
¥43,084
¥9,608
¥35,262
¥21,336
¥6,355
For the year ended March 31, 2013 (1) Sales
¥115,645
Notes: 1. Geographic areas are decided based on geographic proximity. 2. The principal nations or regions included in each area other than Japan are as follows: Asia ................... Singapore, China and India Europe .............. Germany, France, United Kingdom, Norway and Russia North America .. U.S.A. and Canada Others ............... Australia
(2) Property, plant and equipment Japan
Asia
Europe
North America
Others
¥14,577
¥3,352
¥1,074
¥61
¥65
(Millions of yen) Consolidated
¥19,129
(c) Information of goodwill by reportable segment For the year ended March 31, 2014 Current year amortization............................................................................... Balance at end of the year .............................................................................
(Millions of yen) Power tools
Life-science instruments
¥ 346 4,138
¥ 2 36
Power tools
Life-science instruments
$ 3,362 40,206
$ 19 350
Power tools
Life-science instruments
¥ 333 4,421
¥ 3 38
Consolidated
¥ 348 4,175 (Thousands of U.S. dollars)
Current year amortization............................................................................... Balance at end of the year .............................................................................
For the year ended March 31, 2013 Current year amortization............................................................................... Balance at end of the year .............................................................................
30 Hitachi Koki ANNUAL REPORT 2014
Consolidated
$ 3,381 40,565
(Millions of yen) Consolidated
¥ 336 4,459
Notes to Consolidated Financial Statements
19. Related party transactions (a) Related party transactions between the Company and its related companies Hitachi, Ltd. directly and indirectly owned 51.2% of the voting rights of the Company as of March 31, 2014. Balances between the Company and its related company, Hitachi, Ltd., and its subsidiaries as of March 31, 2014 and 2013, and related transactions for the years ended March 31, 2014 and 2013 are summarized as follows: Millions of yen
2014
Thousands of U.S. dollars
2013
2014
Balances: Hitachi, Ltd.: Deposits .....................................................................................................
¥6,333
¥8,823
$61,533
Hitachi Capital Corporation: Trade notes and accounts payable ...........................................................
761
805
7,394
Millions of yen
Thousands of U.S. dollars
2014
2013
Principal transactions: Hitachi, Ltd.: Deposits ..................................................................................................... Interest received ........................................................................................
2014
¥26,650 9
¥47,200 21
$258,939 87
Hitachi Capital Corporation: Factoring ....................................................................................................
2,825
3,040
27,449
Note: Business transactions with related parties are carried out on an arm’s-length basis similar to third party transactions.
(b) Related party transactions between the Company’s consolidated subsidiaries and its related companies Balances between the Company’s consolidated subsidiaries and its related companies, subsidiaries of Hitachi, Ltd. as of March 31, 2014 and 2013, and related transactions for the years ended March 31, 2014 and 2013 are summarized as follows: Millions of yen
2014
Thousands of U.S. dollars
2013
2014
Balances: HITACHI (CHINA) LTD. Deposits .....................................................................................................
¥4,232
¥2,988
$41,119
Hitachi International Treasury, Ltd. Deposits .....................................................................................................
2,316
1,353
22,503
Hitachi International (Holland) B.V. Short-term loans payable ..........................................................................
5,423
4,941
52,691
Hitachi America Capital, Ltd. Short-term loans payable .......................................................................... Deposits ....................................................................................................
884 720
879 —
8,589 6,996
Hitachi Koki ANNUAL REPORT 2014 31
Notes to Consolidated Financial Statements
Millions of yen
2014
Thousands of U.S. dollars
2013
2014
Principal transactions: HITACHI (CHINA) LTD. Deposits ..................................................................................................... Interest received ........................................................................................
¥1,444 142
¥ 875 99
$14,030 1,380
Hitachi International Treasury, Ltd. Deposits ..................................................................................................... Interest received ........................................................................................
8,371 3
1,110 1
81,335 29
Hitachi International (Holland) B.V. Short-term borrowings .............................................................................. Interest expenses paid ..............................................................................
6,262 26
964 21
60,843 253
Hitachi America Capital, Ltd. Short-term borrowings .............................................................................. Interest expenses paid .............................................................................. Deposits ..................................................................................................... Interest received .......................................................................................
861 15 720 0
776 9 — —
8,366 146 6,996 0
Note: Business transactions with related parties are carried out on an arm’s-length basis similar to third party transactions.
20. Short-term and long-term debt Short-term and long-term debt at March 31, 2014 and 2013 are as follows: Millions of yen
Short-term loans payable (weighted average interest rate 1.04%) ........................................................ Lease obligations due within one year (weighted average interest rate 2.20%) ........................................................ Lease obligations due after one year ............................................................... Total...............................................................................................................
Thousands of U.S. dollars
2014
2013
¥10,753
¥12,328
$104,479
41 20 ¥10,816
43 51 ¥12,422
398 194 $105,091
Notes: 1. Weighted average interest rate on balance at end of the year 2. The maturities of lease obligations at March 31, 2014, excluding amount due within one year, are as follows: Years ending March 31
2016 2017 2018 2019
Millions of yen
¥11 4 2 1
32 Hitachi Koki ANNUAL REPORT 2014
Thousands of U.S. dollars
$107 39 19 10
2014
Independent Auditor’s Report
Hitachi Koki ANNUAL REPORT 2014 33
Global Network (As of June 30, 2014)
21 33
28 30
16
15
19
31 17
14 18
26
24
22 29
27
23
20
25
10
32
5
4 3 8
2
6 9
12 7
11 1
Manufacturing Company
13
Company and Sales Office Names and Addresses
Hitachi Koki Co., Ltd. Headquarters Shinagawa Intercity Tower A, 20th Floor, 15-1, Konan 2-chome, Minato-ku, Tokyo 108-6020, Japan Tel: 81-3-5783-0601 Katsuta Plant 1060 Takeda, Hitachinaka, Ibaraki 312-8502, Japan Tel: 81-29-273-8111 Sawa Plant 1450 Tarazaki, Hitachinaka, Ibaraki 312-0003, Japan Tel: 81-29-285-1112 Shirako Plant 2373 Minamihinata, Shirakomachi, Choseigun, Chiba 299-4205, Japan Tel: 81-475-33-2523
8 ●
9 ●
10 ●
11 ●
ASIA/OCEANIA 1 Hitachi Koki (Malaysia) Sdn. Bhd. ●
2 ● 3 ●
4 ●
PLO53, Kawasan Perindustrian Senai (II), K.B. No. 114, 81400 Senai, Johor, Malaysia Tel: 60-7-5992345 Fax: 60-7-5992355
Hitachi Koki India Ltd. Plot No. 9A, 1st Phase, Peenya Industrial Area, Bangalore, 560058, India Tel: 91-80-41170777 Fax: 91-80-41171222 Guang Dong Hitachi Koki Co., Ltd. Industry Country Wealthy Zone, Industry Road, Hua Long Town, Pan Yu District, Guangzhou City, Guang Dong, China Tel: 86-20-84754622 Fax: 86-20-84754623
Guangzhou Hitachi Koki Co., Ltd. Processing Zone of Guanzhou Nansha Free Trade Port Zone, Nansha District, Guangzhou City, Guang Dong, China Tel: 86-20-84951238 Fax: 86-20-84951228
5 ● 6 ● 7 ●
12 ●
13 ●
Hitachi Koki Asia Co., Ltd. Workshop 01-05, on 10th Floor, King Palace Plaza, No.52A, Sha Tsui Road, Tsuen Wan, New Territories, Hong Kong, China Tel: 852-2437-9291 Fax: 852-2417-9432 Hitachi Koki (China) Co., Ltd. Room 19B-C, Shartex Plaza, No. 88 Zun Yi Nan Rd., Shanghai, China Tel: 86-21-6295-1736 Fax: 86-21-6278-6086 Hitachi Power Tools (Malaysia) Sdn. Bhd. Wisma Sumber, Lot 558, Jalan Subang 3, Off Persiaran Subang, Sungai Penaga Industrial Park, 47610 Subang Jaya, Selangor, Malaysia Tel: 60-3-56241833 Fax: 60-3-80816683 Hitachi Power Tools (Thailand) Co., Ltd. 84, 88 Krungthepkreetha Road, Huamark, Bangkapi, Bangkok 10240, Thailand Tel: 66-2-379-4460 Fax: 66-2-379-4712 Hitachi Power Tools Australia Pty. Ltd. Unit 1, 10 Boden Road, Seven Hills, NSW 2147, Australia Tel: 61-2-8887-8100 Fax: 61-2-8887-8180
EUROPE 14 ● 15 ●
Fujian Hitachi Koki Co., Ltd. Hutang, Fuxing Investment Zone, Fuzhou, Fujian, China Tel: 86-591-83620201 Fax: 86-591-83620518
16 ●
Hitachi Koki Taiwan Co., Ltd. No. 140, Gongye 11th Rd., Dali Dist., Taichung City 412, Taiwan Tel: 886-4-2491-0707 Fax: 886-4-2491-8787
17 ●
Hitachi Koki (Singapore) Pte. Ltd. 31, Jurong Port Road, #01-11M, Jurong Logistic Hub, Singapore 619115 Tel: 65-6861-0211 Fax: 65-6861-4066
18 ●
34 Hitachi Koki ANNUAL REPORT 2014
Hitachi Koki (Singapore) Gulf Branch P.O. Box 261502, Jafza Lob 19, Flat No. Lb192207 South Zone, Jebel Ali, Dubai, U.A.E. Tel: 971-4-8-865-865 Fax: 971-4-8-865-867
Hitachi Koki Europe Ltd. Clonshaugh Business + Technology Park, Dublin 17, Ireland Tel: 353-1-803-6222 Fax: 353-1-803-6272 Hitachi Power Tools Belgium N.V./S.A. Koningin Astridlaan 51, B-1780 Wemmel, Belgium Tel: 32-2-460-1720 Fax: 32-2-460-2542 Hitachi Power Tools Denmark A/S Lillebaeltsvej 90, 6715 Esbjerg N, Denmark Tel: 45-75-143200 Fax: 45-75-143666 Hitachi Power Tools Europe GmbH Siemensring 34, 47877 Willich, Germany Tel: 49-2154-49930 Fax: 49-2154-499350 Hitachi Power Tools France S.A.S. Parc de l’Eglantier - 22 rue des Cerisiers, Lisses C.E. 1541, 91015 EVRY CEDEX, France Tel: 33-1-69474949 Fax: 33-1-60861416
35 38 34 42
41
37
39 40
36
Manufacturing Company Sales Branch in Japan Plant of Subsidiary
19 ● 20 ● 21 ● 22 ● 23 ● 24 ● 25 ● 26 ●
●
Hitachi Power Tools Finland Oy Tupalankatu 9, 15680 Lahti, Finland Tel: 358-20-7431-530 Fax: 358-20-7431-531 Hitachi Power Tools Iberica, S.A. C/.Puigbarral, 26-28 Pol. Ind. Can Petit, 08227 Terrassa (Barcelona), Spain Tel: 34-93-735-6722 Fax: 34-93-735-7442 Hitachi Power Tools Netherlands B.V. Brabanthaven 11, 3433 PJ Nieuwegein, The Netherlands Tel: 31-30-6084040 Fax: 31-30-6067266 Hitachi Power Tools Netherlands B.V. Moscow Branch Kashirskoye shosse 65, 4F, 115583 Moscow, Russia Tel: 7-495-727-4460 Fax: 7-495-727-4461 Hitachi Power Tools Oesterreich GmbH Str. 7, Objekt 58/A6, Industriezentrum NO-Sud, 2355, Wiener Neudorf, Austria Tel: 43-2236-64673/5 Fax: 43-2236-63373 Hitachi Power Tools Polska Sp.z.o.o. ul. Gierdziejewskiego 1 (Gates 12-15) 02-495, Warszawa, Poland Tel: 48-22-863-3378 Fax: 48-22-863-3382 Hitachi Power Tools Hungary Kft. 1106 Bogancsvirag U.5-7, Budapest, Hungary Tel: 36-1-2643433 Fax: 36-1-2643429 Hitachi Power Tools Czech s.r.o. Modricka 205, 664 48 Moravany, Czech Republic Tel: 420-547-422-660 Fax: 420-547-213-588
27 Hitachi Power Tools Romania S.R.L.
28 ● 29 ● 30 ● 31 ● 32 ●
Bld. Biruintei, Nr. 101, Oras Pantelimon, 077145, Judetul Ilfov, Romania Tel: 40-31-805-2719 Fax: 40-31-805-2577
33 ●
NORTH AMERICA 34 ● 35 ●
36 ●
37 ●
Hitachi Koki Canada Corp. 450 Export Blvd., Unit B, Mississauga, Ontario L5S 2A4, Canada Tel: 1-905-564-9477 Fax: 1-905-564-0902
Hitachi Koki do Brasil Ltda. Alameda Venus, 219 Distrito Industrial American Park Cep: 13347-659-Indaiatuba-SP Brasil Tel: 55-19-3936-9730 Fax: 55-19-3936-9731 Hitachi Power Tools de Mexico S.A. de C.V. Avenida Isaac Newton No.286, Piso 2, Colonia Polanco Sección V, Delegacion Miguel Hidalgo, Codigo Postal 11560 Mexico, Distrito Federal Tel: 52-55-5254-6673 Fax: 52-55-5254-5201
DOMESTIC 38 ●
39 ●
Hitachi Power Tools RUS L.L.C. Kashirskoye shosse 65, 4F, 115583 Moscow, Russia Tel: 7-495-727-4460 Fax: 7-495-727-4461
40 ●
Hitachi Power Tools Sweden AB Rotebergsvagen 2B SE-192 78 Sollentuna, Sweden Tel: 46-8-598-999-00 Fax: 46-8-598-999-40
41 ●
Hitachi Fercad Power Tools Italia S.p.A. Via Retrone 49, 36077 Altavilla Vicentina (VI), Italy Tel: 39-0444-548111 Fax: 39-0444-548110
Hitachi Koki U.S.A., Ltd. 3950 Steve Reynolds Blvd., Norcross, Georgia 30093, U.S.A. Tel: 1-770-925-1774 Fax: 1-770-279-4293
LATIN AMERICA
Hitachi Power Tools Norway AS Kjeller Vest 7, N-2007 Kjeller, Norway Tel: 47-66-92-66-00 Fax: 47-66-92-66-50
Hitachi Power Tools (U.K.) Ltd. Precedent Drive, Rooksley, Milton Keynes, MK 13, 8PJ, U.K. Tel: 44-1908-660663 Fax: 44-1908-606642
Carat International B.V. Nikkelstraat 18 4823 AB Breda, The Netherlands Tel: 31-765-422-422 Fax: 31-765-422-422
42 ●
Haramachi Manufacturing Center 70 Minami-Harada, Kita-Nagano, Haramachi-ku, Minami-Soma, Fukushima 975-0072 Tel: 81-244-26-1821 Fax: 81-244-24-5818 Nikko Tanaka Engineering Co., Ltd. 3-4-29 Tsudanuma, Narashino, Chiba 275-0016 Tel: 81-47-472-1111 Fax: 81-47-479-0558 Sankyo Diamond Industrial Co., Ltd. 1770 Hongo, Ebina, Kanagawa 243-0417 Tel: 81-46-238-6161 Fax: 81-46-238-6165 Hitachi Koki Sales Co., Ltd. 5th Floor, Heiwajima Distribution Center, 5-5-36, Heiwajima, Ota-ku, Tokyo 143-0006 Tel: 81-3-5753-7700 Fax: 81-3-5753-7669 Hitachi Koki Manufacturing & Service Co., Ltd. 1060 Takeda, Hitachinaka, Ibaraki 312-8502 Tel: 81-29-276-7444 Fax: 81-29-276-7495 Hitachi Koki ANNUAL REPORT 2014 35
Corporate Data (As of March 31, 2014)
Hitachi Koki Co., Ltd. Founded December 18, 1948
Representative President & Director Osami Maehara
Headquarters Shinagawa Intercity Tower A, 20th Floor, 15-1, Konan 2-chome, Minato-ku, Tokyo 108-6020, Japan Tel: 81-3-5783-0601
Capital ¥17,813 million
Katsuta Plant 1060 Takeda, Hitachinaka, Ibaraki 312-8502, Japan Tel: 81-29-273-8111
Employees (Consolidated) 4,923
History December 1948 Founded (product lineup: power tools)
May 1949 Listed on the Tokyo Stock Exchange and Osaka Securities Exchange
November 1954 Production begun for Chemical Instruments products (currently Life-Science Instruments)
June 1963
Katsuta Plant
Production begun for printers (line printers for large-frame computers)
November 1978 Hitachi Power Tools Europe GmbH established
November 1980 Hitachi Power Tools U.S.A., Ltd. established (currently Hitachi Koki U.S.A., Ltd.)
March 1985
Hitachi Koki’s first cordless screwdriver
Joint company Mindong Hitachi Power Tools Co., Ltd. established (currently Fujian Hitachi Koki Co., Ltd.)
October 2002 Printer business transferred to Hitachi, Ltd.
January 2005 Markt & Co AS* of Norway (currently Hitachi Power Tools Norway AS) added as a subsidiary through share acquisition
March 2005 Sankyo Diamond Industrial Co., Ltd.* added as a subsidiary through share acquisition
January 2007
Hitachi Power Tools Europe GmbH
Carat International B.V. added as a subsidiary through share acquisition
April 2007 Nikko Tanaka Engineering Co., Ltd.* established (engine tools business of Tanaka Kogyo Co., Ltd. transferred in May 2007)
March 2009 Hitachi, Ltd. becomes the parent company of Hitachi Koki Co., Ltd. as a result of a tender offer that increased its ownership of the voting rights of Hitachi Koki from 38.97% to 51.07%. Hitachi intends to maintain the listing of Hitachi Koki’s stock and to preserve its independent management as a listed company. Hitachi therefore has no plans to make any substantial changes to the management policies or areas of operation of the Hitachi Koki Group.
Fujian Hitachi Koki Co., Ltd.
January 2010 Hitachi Koki do Brasil Ltda. established
November 2011 Operation started at Guangzhou Hitachi Koki Co., Ltd.
October 2012 Operation started at Hitachi Power Tools (Malaysia) Sdn. Bhd. * Accounted for as a consolidated subsidiary as of the end of the fiscal year under review
36 Hitachi Koki ANNUAL REPORT 2014
Outdoor power equipment
Investor Information (As of March 31, 2014)
Stock Code 6581
Number of Shares Authorized 270,000,000 Outstanding 123,072,776
Listed Exchange Tokyo (First section)
Number of Shareholders 15,757
Closing of Accounts March
Shareholder Composition
Treasury stock
17.61%
General Meeting of Shareholders Every June
Financial institutions
11.23% Securities companies
0.31% Individuals and others
18.00% Other domestic corporations, etc. Overseas corporations
42.56%
10.29%
Major Shareholders
Percentage of Total Shares Issued
1. Hitachi, Ltd.
33.17%
2. Hitachi Urban Investment, Ltd.
8.99
3. Japan Trustee Services Bank, Ltd.
2.10
4. BNP Paribas Sec Services Luxembourg/ Jasdec/Aberdeen Global Client Assets
1.64
5. Trust & Custody Services Bank, Ltd.
1.15
6. The Bank of New York, Inc.
1.11
7. The Master Trust Bank of Japan, Ltd.
1.01
8. Hitachi Koki Employees’ Shareholding Association
0.90
9. Bank of Tokyo-Mitsubishi UFJ
0.73
10. Nippon Life Insurance Company
0.71
Note: In addition to the above, the Company holds 21,675,344 shares (17.61%) in treasury stock.
Stock Price Range (Tokyo Stock Exchange) (Yen) 1,000
800
600
400
200
0
April 2011
March 2012
March 2013
March 2014
For further information, please contact: Public Relations Strategy Office, Strategic Management Division, Hitachi Koki Co., Ltd. Fax: 81-3-5783-0709 E-mail:
[email protected] Web site: http://www.hitachi-koki.com
Hitachi Koki ANNUAL REPORT 2014 37
www.hitachi-koki.com
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