Stanley Electric Co., Ltd.
Transcription
Stanley Electric Co., Ltd.
ANNUAL ANNUALREPORT REPORT2010 2010 Fiscal FiscalYear YearEnded EndedMarch March31, 31,2010 2010 STANLEY STANLEY FUTURE NOW NOW && FUTURE 2-9-13, 2-9-13,Nakameguro, Nakameguro,Meguro-ku, Meguro-ku,Tokyo Tokyo153-8636, 153-8636,Japan Japan Telephone: Telephone:81-3-3710-2222 81-3-3710-2222 Facsimile: Facsimile:81-3-3792-0007 81-3-3792-0007 URL URLhttp://www.stanley.co.jp/ http://www.stanley.co.jp/ This Thisreport reportis isprinted printedininJapan Japanonon100% 100%recycled recycledpaper. paper. Company Profile Stanley Electric Co., Ltd., was founded in 1920 by Takaharu Kitano. In those days, there were no more than 8,000 cars in Japan—all imported models. Under the circumstances, it certainly took courage, vision, and a challenging spirit to start a company devoted to the manufacturing of automotive light bulbs. The Company was named after the intrepid 19th-century explorer Sir Henry Morton Stanley, who was renowned for the vision and courage he had so abundantly demonstrated during his exploits on the continent of Africa. Stanley Electric has carried on that spirit of challenge, constantly responding to the demand of the times. Through our dedication in the pursuit of the potential of light, we have grown in influence, ability, and knowledge. We have, in fact, maintained a position as leader in the automotive-equipment industry, developing cutting-edge products in automotive lighting equipment, accessories, and electronic components through the application of innovative technologies. Accordingly, we have contributed to the safety and satisfaction of a modern automotive lifestyle. Regarding electronic components, Stanley Electric has been successful in the research and development of value-added products, such as semiconductors, parts for information and communication devices, automotive electronics products, and, of course, lighting devices. By offering a large variety of products for use in a wide range of industries, we, as a company, have become a part of the success our customers enjoy. Based on the Stanley Group Vision shared by the management and employees of the Stanley Group around the globe, we successfully completed the first three-year management plan in March 2004 and the second three-year management plan in March 2007, achieving steady results. With the three-year management plan, the Group Vision is translated into specific measures for action. In April 2007, we embarked on the third three-year management plan. In the third three-year management plan, we have “visualized” strategies from the perspectives of financing, provision of value to customers, operational processes, human resources, and corporate culture in deciding measures to be implemented. By steadily implementing these measures, Stanley Electric is making itself sufficiently strong and flexible to withstand the changing environment, and to continue to grow powerfully. As we continue our pursuit of the value of light, we will challenge the industry to “outshine light.” Through our exploration of light and its limitless possibilities, we will master the philosophy of manufacturing and open new avenues to the future. Financial Highlights Board of Directors Stanley Electric Co., Ltd. and its Subsidiaries For the years ended March 31, 2010 and 2009 (As of June 24, 2010) Millions of Yen, except for per share data Thousands of U.S. Dollars, except for per share data 2009 2010 2009 President ¥283,302 ¥238,888 $2,567,595 $3,044,955 2010 Results of operations: Net sales Gross profit 53,683 57,267 576,998 615,519 Operating income 24,336 23,392 261,573 251,424 Net income 17,128 12,128 184,094 130,359 7.2 % 4.3 % Takanori Kitano Senior Director 7.2% Managing 4.3% As a percentage of net sales Capital expenditures ¥20,447 ¥26,709 $219,773 $287,077 Net income ¥98.2 ¥68.5 $1.06 $0.74 Cash dividends 25.0 30.0 Managing Directors 0.27 0.32 $3,246,293 $2,935,323 108,770 1,222 2,120,622 1,964,874 Makio Natsusaka Per share data: STANLEY GROUP VISION STANLEY SPIRIT Outshining Light We shall blaze our own trail to a brilliant future by daring to‘‘outshine light.” BUSINESS PHILOSOPHY The boundless pursuit of the Value of Light We shall contribute broadly to society by exploring the infinite possibilities of light and bringing its value to humankind. Business innovation by maximizing our potential as a manufacturer Year-end financial position: Shinichi Katano ¥273,102 Hidenari yamazaki 10,119 Katsumi Kondo 113 Total assets ¥302,035 Long-term debt, including finance lease obligations, less current portion Total equity attributable to shareholders of the parent (Note 2) We shall continually reinvent our processes to draw out further value and quality from our business base in manufacturing. Ensuring the welfare of those who truly support our mission We shall value those who truly support Stanley and endeavor to ensure their welfare. 182,812 197,302 Director (Note 1) Yen amounts are translated into U.S. dollars, solely for convenience, at the prevailing exchange rate on March 31, 2010, of ¥93.04=U.S.$1.00 (Note 2) Total equity attributable to shareholders of the parent = Total net assets - Minority interests (as recorded on the consolidated balance sheets) Shigeki Muto Yutaka Hiratsuka THE FIVE WAYS OF CREATING VALUE WITH LIGHT We shall create new benefits to humankind by dedicating ourselves to the Five Ways of Creating Value with Light. CREATING RECOGNIZING INFORMING ENERGIZING EXPRESSING creating light sensing and recognizing with light processing information with light harnessing light's energy producing feeling with light Net Sales Net Income Statutory Corporate Auditors Net Income per Share Total Assets (Millions of Yen) (Millions of Yen) (Yen) GUIDELINES FOR ACTION Always challenge yourself with the highest standards and set out to reach them. INNOVATE Combine boundless creativity and user understanding to create new value. 29,732 354,469 338,680 CHALLENGE 26,283 311,785 COLLABORATE 283,302 Share and leverage our diverse total know-how to enhance our overall value. (Millions of Yen) Ryuta Yamaguchi 162.9 Shigeru Furuya Yoshiaki Yamauchi 142.1 Sakuma Yoichiro Mitsuhiro Amitani 340,816 325,798 304,238 302,035 273,102 HUMANIZE Be considerate of society in general and our environment to develop your humanity. GLOBALIZE 238,888 Respect and understand global diversity. 20,619 110.2 98.2 17,128 68.5 12,128 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 1 To Our Shareholders Consolidated Business Forecasts for the fiscal year ending in March 2011 (From April 1, 2010 to March 31, 2011) Sales (Millions of Yen except per share data) orders, and steadily pushed for cost reductions including, “innovation-in-production” activities aimed at enhancing productivity. These efforts have been firmly put in place and have produced good results. The automobile and electronics markets, within which the Company operates, are still on the road to recovery. Sales decreased from the previous fiscal year while operating income increased due to an improvement in productivity through “innovation-in-production” activities. The Group’s net income increased due to extraordinary income generated from the extinction of projected benefit obligations related to the proxy portion of the employees’ pension fund (of the past). This was in spite of losses on the disposal of equipment caused by the withdrawal from the CCFL business. During the consolidated business year (April-March), net sales totaled ¥238,888 million, down 15.7% from the previous fiscal year. Operating income amounted to ¥24,336 million, up 4.0%. Net income stood at ¥17,128 million, up 41.2%. Consolidated financial standing We sincerely thank our shareholders for their loyal support of Stanley Electric. We are pleased to provide details of the company accounts for the fiscal year 2009 ended March 31, 2010. Overall review of business operations for the year under review During the consolidated business year in review, the Japanese economy was on a continued recovery trend due to global economic incentives and an increase in exports. However, the domestic economy is still in a state of mild deflation and the unstable employment/income environment is yet to see robust recovery. Looking overseas, the Americas have been continuing on a gradual recovery path due mainly to progress in inventory reduction, which has in turn led to a recovery in production. Personal consumption has remained steady and deterioration of the employment climate has slowed down. The Asia-Pacific region also saw continued recovery mainly due to the growth of exports. In China, both domestic and overseas demands have risen, as seen in the increased personal consumption and exports, which have been the drivers of economic expansion. In Europe, while exports continued to see a mild recovery, domestic demand has been generally weak due to the difficult employment and income climates. Under these economic circumstances, Stanley Electric and its group companies (“the Group”) worked to develop products that meet market needs exactly, strengthened its marketing activities in a bid to clinch a greater volume of 2 Gross assets at the end of the consolidated business year under review stood at ¥302,035 million, representing an increase of ¥28,933 million from a year earlier. Of the total assets, current assets increased by ¥28,525 million. Investment and other assets rose by ¥9,620 million while tangible fixed assets fell by ¥8,808 million. The major factors for the increase in current assets included the increase in cash and deposits and securities due to corporate bond issuance, the rise in notes and accounts receivable due to sales growth in the fourth quarter of the consolidated business year in review, and the increase in short-term deferred tax assets due to registering of accrued lump contribution to the defined contribution corporate pension. In investment and other assets, investment securities increased following the rise in stock prices, while long-term deferred tax assets decreased due to the decrease in provision for retirement benefits. On the other hand, as for tangible fixed assets, buildings and structures increased due to the completion of the new building No.1 of the Hatano Factory, while machinery, equipment and vehicles decreased due to the withdrawal from the CCFL business. Liabilities increased by ¥12,352 million from a year earlier to ¥90,762 million. This was mainly due to the increase of corporate bonds outstanding through the issue of ¥10,000 million worth of such bonds, and the rise in notes and accounts payable through larger purchases during the fourth quarter of the consolidated fiscal year in review. Longterm deferred tax liabilities and other current liabilities also increased following the decrease in provision for retirement benefits due to the return of the proxy portion of employees’ pension funds and the switch to a defined contribution corporate pension plan. Net assets stood at ¥211,272 million, an increase of ¥16,580 million from the previous fiscal year-end. Of the net assets, shareholders’ equity increased by ¥11,434 million while Operating income Current term net income Consolidated Total for the Second Quarter 123,000 13.0% 14,300 94.0% 8,200 105.6% Full Fiscal Year 260,000 8.8% 32,500 33.5% 20,000 16.8% * Numerical percentages show the year-on-year increase (decrease) for the full-fiscal-year and the increase (decrease) from the same quarter in the previous fiscal year for the consolidated total for the second quarter. * The foreign exchange rate for the next fiscal term is estimated to be ¥100 per US dollar. * Note that Stanley Electric made these projections based on currently available information and they do not take into account risks in foreign exchange, etc. and other uncertainties. Actual business performance may differ dramatically from these projections as a result of various important factors. valuation and translation adjustments increased by ¥3,057 million. The major factor for the increase in shareholders’ equity was the decrease in retained earnings due to treasury stock retirements and dividend payments, which resulted in a decrease (or an increase in terms of net assets) of treasury stocks, despite a rise due to the posting of current year net income. As for valuation and translation adjustments, the increase was brought about by the rise in net valuation difference on available-for-sale securities resulting from the rise in stock prices. Projected consolidated earnings for the current year and expected payments of dividends The world economy shifted from the global financial crisis of 2008 to an expansionary phase, mainly in Asia and China. The automotive and electronics markets have remained in a recovery phase. However, the situation is still unpredictable due to the possible impact of any backlash caused by the termination of global economic incentives, political unrest in Thailand and the volatility of crude oil prices. In the automotive equipment industry to which the Group belongs, the swift shift of production to China and other emerging-country markets is a pressing task, along with efforts to enhance quality and cut costs. In the electronic equipment industry, the Group has been facing increasing pressure from new entrants, especially those from overseas. As a result, competition is intensifying over the development of new products and technologies. In order to expand orders and survive the competition, a more dynamic and expeditious response has become absolutely necessary for the Group. As mentioned above, the business climate for the Stanley Electric Group is expected to remain difficult throughout the current year. However, the Group is resolved to promote “innovation-in-production” activities aimed at enhancing productivity, which all of its member companies are united in implementing, so as to produce tangible results. By doing so, the Group aims to establish business fundamentals which can generate profits under any adverse business circumstances. The Group is resolved to be united in promoting such business activities while keeping a healthy sense of crisis. As a result, net sales for the current consolidated business year are projected to total ¥260 billion, up 8.8% from the preceding year. Operating income is forecast to amount to ¥32.5 billion, up 33.5%. Net income is projected to reach ¥20 billion, up 16.8%. The Group seeks to reinforce its financial strength and business infrastructure while maintaining stable dividends and returning a reasonable level of profit to our shareholders. The Group intends to use its retained earnings for investments targeted at enhancing enterprise value, such as developing new products and businesses as well as building a more efficient management structure. The Group aims, therefore, to further strengthen its business structure and competitiveness. Maintaining stable dividend payments and returning part of its profit to shareholders in an adequate manner is Stanley Electric’s basic dividend policy. As of January 29, 2010, the Company released a plan to pay a year-end dividend of ¥13 per share for the consolidated business year ended in March as part of its efforts to boost the dividend payout ratio to 20% on a consolidated basis. Combined with an interim dividend of ¥12 per share, the Company’s annual dividend will amount to ¥25. The Company plans to pay an annual dividend of ¥26 per share for the next fiscal year, an increase of ¥1 from the dividend paid for the year ended in March, despite the severity in the business climate that is expected to continue due to the negative impact of the termination of global economic incentives, political unrest in Thailand and the rise in raw material prices. The interim and year-end dividends are expected to be ¥13 per share respectively. During the year under review, Stanley Electric implemented the acquisition of treasury stocks worth ¥1,499 million. The acquisition was designed to allow the Company to return part of its profit to shareholders and implement a flexible capital policy in response to changes in the business climate. The Company also retired ¥11,689 million (6 million shares) worth of treasury stocks on December 7, 2009. We hope that our shareholders will provide continued patronage and loyal support to the Company. June 2010 Takanori Kitano President 3 Introduction of Our Business Review of Segment Operations Automotive Equipment Business Although global auto production dropped year on year, except in China, it has been on a continued recovery trend thanks to the economic incentives implemented in various countries. Under these circumstances, sales in the automotive equipment business decreased year on year but operating income increased due to improvements in productivity through the Company’s “innovation-in-production” activities. Stanley Electric has been focusing on eco-friendly LED headlamps and rear combination lamps and intends to actively promote the products in order to gain larger orders for hybrid and electric vehicles. As a result, sales in the automotive equipment business were ¥178,840 million in the consolidated business year under review, down 14.2% from the preceding year. Operating income for the year amounted to ¥21,178 million, up 15.5%. Breakdown of Sales in Automotive Equipment Business Changes in Sales in Automotive Equipment Business (Millions of Yen) Stanley Electric’s headlamps and rear combination lamps do more than ensure safety for the driver and passengers. They answer the demand for beautiful styling. In particular, our MR headlamps and flexible curved-surface headlamps, which mirror the full spectrum of our optical technologies, have generated considerable acclaim for their innovative contributions to automotive design. Stanley Electric was early in commercializing outstanding, value-added products, including high-intensity discharge (HID) products widely used as an automobile headlamp light source, adaptive front-lighting system (AFS), Night Vision, etc. Automotive Lighting Business—These example show our products in car models. 246,184 231,138 213,811 208,497 178,840 74.9 Honda Odyssey Honda Stepwgn Honda CR-Z Toyota Prius MMC RVR Mazda Premacy Nissan Fuga Suzuki Alto Air conditioner operation panels for automobiles (Honda CR-V) % ¥178,840 million 2006 2007 2008 2009 2010 Motorcycle Lighting Business—These example show our products in car models. Winofdow Technology 1 Range measurement camera system Stanley Electric is developing vision chips for cameras with range measurement features. Vision chips feature range measurement based on the time it takes LED light to reflect on an object and return. In addition to providing images, they will enable the measurement of the distance to an object as well as the direction and speed of movement of the object. The system is expected to be used for automobile perimeter monitoring and security equipment. 4 using vision chips Honda VFR1200F Honda DN-01 Yamaha Majesty Suzuki Bandit 650S Hyper halogen bulb LED room lamp Accessory & Parts Business Vision chips Hyper HID Burner Lightning RAYBRIG LED color bulb 5 Introduction of Our Business Review of Segment Operations Stanley Electric, thanks to its cutting-edge research and development, has created an extensive lineup of lighting devices and applications for use in mobile devices and office equipment and industry and urban infrastructures, contributing to the creation of a better way of life. The Company’s value-added products include Light Emitting Diodes, LCD elements, and Subminiature lamps. Electronic Equipment Business Breakdown of Sales in Electronic Equipment Business Changes in Sales in Electronic Equipment Business (Millions of Yen) Component Business 107,069 107,995 The global electronics market benefited from an improvement in consumer spending due to global economic incentives. This led to the continuation of the recovery trend in digital still cameras (DSC), flat panel display (FPD) TVs and laptop computers. Under these market conditions, the Group’s electronic equipment business continued its efforts to attempt to win larger orders by launching new products that meet market needs exactly. Sales in the business generally declined from the preceding year, but operating income showed only a small decrease, thanks to improvement in productivity due to the Company’s “innovation-in-production” activities. Stanley Electric has also launched new eco-friendly “LED lighting” products. The Company intends to aggressively enhance product lineups with a focus on customer needs. As a result, sales in the Group’s electronic equipment business totaled ¥59,618 million in the year under review, down 20.0% from the previous fiscal year. Operating income was ¥4,693 million, down 4.7%. 96,378 74,511 25.0 % 59,618 Surface mount LEDs Through-hole LEDs Optical sensors Subminiature lamps Automotive light bulbs Liquid crystal displays (LCDs) ¥59,618 million 2006 2007 2008 2009 2010 Lighting Business Other Business Total sales in other businesses were ¥429 million (up 46.3% year-on-year). Compact LED lamps Winofdow Technology 2 LED lighting modules LED street light LEDs for indoor lighting applications Operation panels LED signal lights Electric Application Business LED floodlights Stanley Electric has developed lightweight and compact high-power LED floodlights that provide intense brightness. Through temperature control using a newly-developed cooling system, Stanley Electric has realized intense brightness and stable lighting performance, in spite of the floodlight’s compact size. Since they can also be used outdoors, they are anticipated to serve as an alternative to metal halide lamps. LED backlight units for LCDs Flash units for cameras LED floodlights 6 7 Review of Regional Operations Business Highlights for the Term under Review Japan various countries, personal consumption saw further recovery and exports have shown signs of picking up. The Group’s sales of components used for motorcycles, electronic devices and applied electronic products were mostly unchanged from the previous fiscal year. Operating income increased due to the contribution from improvements in productivity generated under the Company’s “innovationin-production” activities. As a result, the Group’s net sales in the Asia-Pacific region totaled ¥32,317 million in the consolidated year under review, down 0.1% from the previous fiscal year. Operating income reached ¥5,473 million, up 26.6%. The automotive and electronics markets in Japan contracted from the previous fiscal year due to the effects of the global economic slowdown since autumn 2008. However, the markets are on a continued recovery trend thanks to the positive effects of economic incentives implemented by the government. Since the markets are yet to see full recovery, the Group’s sales in Japan dropped from the previous fiscal year. However, operating income remained mostly unchanged due to improvements in productivity through the Company’s “innovation-in-production” activities. As a result, the Group’s net sales in Japan came to ¥122,160 million in the consolidated business year under review, down 23.0% year on year. Operating income totaled ¥6,907 million, down 0.2%. China The Americas Bouncing back from the large drops in U.S. automobile sales that have occurred since autumn 2008, some companies have been on a recovery track due to positive effects brought about by economic incentives. However, a full-scale recovery is expected to take some time since earning gaps can still be seen between companies. The Stanley Electric Group was not an exception, with sales and operating income in the Americas dropping from the previous fiscal year. Consequently, the Group’s net sales in the Americas stood at ¥32,768 million, down 17.0%. Operating income was ¥623 million, down 45.2%. Although both net sales and operating income decreased year on year, they have been on a continued upward trend since the global economic crisis that arose in the autumn of 2008. Asia-Pacific The recovery trend in the economy of the region has become apparent. Thanks to economic incentives implemented in Regional sales component ratio (%) 17.8 Other Regions While the economy in Europe, which is a part of the “Other Regions” category, was on a gradual recovery trend driven mainly by exports, internal demand measured by consumer spending and capital expenditure was weak. Sales and operating income of the Group’s automotive equipment, electronic devices and applied electronic products in Europe generally dropped from the previous fiscal year. Consequently, sales in the “Other Regions” category totaled ¥9,199 million, down 36.5% from the preceding year. Operating loss came to ¥82 million yen, down 106.7%. Although sales of this category saw a year-on-year decrease, they have been continuing on an improving trend since the global economic crisis of autumn 2008. In October 2009, Stanley Electric established a new company, brought positive results within the Group from the beginning. The expansion into South America will further enhance Stanley Electric do Brasil Ltda. in the Federative Republic of the Group’s international competitiveness in the global Brazil. business arena. Through the establishment of a company in Brazil, a country experiencing rapid growth in Outline of Stanley Electric do Brasil Ltda. the electronics and automobile markets Location: Near Sao Paulo, Federative Republic of Brazil in recent years, Stanley Electric will commence manufacturing and sales of Establishment: October 1, 2009 electronic and automotive equipment. Common shares: 70 million reais In order to quickly establish advanced Sales: Approx. 800 million yen (Fiscal 2011 plan) and efficient management control and No. of employees: Approx. 50 (Fiscal 2011 plan) production methods, the new company Business: Manufacturing and sales of electronic and automotive equipment will aggressively adopt “innovationMain customers: Electronics and automobile manufacturers, etc. in-production” activities, which have Asian Stanley International and Guangzhou Stanley Electric to expand plants 31,243 Japan The Americas Asia-Pacific China Other Regions 23,506 16,663 24,684 30,262 35,195 36,265 42,541 66,417 57,284 14,485 38,370 9,199 32,357 42,443 39,491 32,317 51.1 32,768 195,940 194,649 184,675 158,597 122,160 13.7 2006 8 (Left) Rendering of new company facility (Above) Asian Stanley International’s new plant (in red box) (Millions of Yen) 65,603 13.5 (Above) Groundbreaking ceremony in March 2010 Regional changes in sales Japan The Americas Asia-Pacific China Other Regions 3.9 The Chinese economy saw a continued expansion trend. The Group’s sales in China increased mainly due to the recovery in orders for automotive equipment. Operating income also increased due to improvements in productivity through “innovation-in-production” activities. As a result, the Group’s sales in China amounted to ¥42,443 million in the consolidated year under review, up 10.6%. Operating income totaled ¥8,842 million, up 22.1%. Stanley Electric established Stanley Electric do Brasil Ltda. in Brazil 2007 2008 2009 2010 (Left) Rendering of Guangzhou Stanley Electric’s plant no. 3 As a result of customers seeking “global optimum procurement,” the Group is in the process of building a global network in order to provide the best products with high quality and cost performance on a global scale. In January 2010, a new plant was completed at Asian Stanley International (Pathumthanee, Thailand). Unlike existing plants, the new two-storied plant consists only of clean rooms and will commence production of LCDs and car electronics products. In December 2009, Guangzhou Stanley Electric conducted a groundbreaking ceremony of its plant no. 3. Scheduled for completion in October 2010, this plant aims to enhance production of automotive lighting equipment for the Chinese automobile market which is seeing continued growth. 9 Stanley’s International Presence Stanley Electric (U.K.) Co., Ltd. Tianjin Stanley Electric Co., Ltd. Stanley Electric GmbH 9 11 10 Suzhou Stanley LED Lighting Technology Co., Ltd. Stanley Electric Hungary Kft. 8 7 Stanley Electric Korea Co., Ltd. STANLEY - IDESS S.A.S. Chongqing Hua-yu Stanley Lighting Co., Ltd. Lumax Industries Ltd. 22 23 24 28 Ltd. 13 14 Stanley Electric Engineering India Pvt. Guangzhou Stanley Electric Co., Ltd. 29 27 25 12 19 15 16 18 Asian Stanley International Co., Ltd. 20 Stanley Electric Holding Asia-Pacific Pte. Ltd. Stanley Electric Holding of America, Inc. I I Stanley Co., Inc. 26 17 PT. 1 Stanley Electric Co., LTD. Shanghai Stanley Electric Co., Ltd. Taiwan Stanley Electric Co., Ltd. 4 3 5 2 Stanley Electric U.S. Co., Inc. Stanley Electric Sales of America, Inc. Shenzhen Stanley Electric Co., Ltd. Stanley Electric (Asia Pacific) Ltd. Vietnam Stanley Electric Co., Ltd. 2 Stanley Electric U.S. Co., Inc. Ohio, U.S.A. Manufacture and sales of automotive lighting equipment 17 PT. Indonesia Stanley Electric. 4 Stanley Electric Sales of America, Inc. California, U.S.A. Sales and procurement of semiconductors, subminiature lamps, and electronic components 5 Stanley Electric Holding of America, Inc. Michigan, U.S.A. Administration of three locations in the Americas 6 Stanley Electric do Brasil Ltda. (completed in November, 2010) Sao Paulo ,Brazil Electronics and automobile manufacturers, etc. Thai Stanley Electric Public Co., Ltd. 7 Stanley Electric Hungary Kft. Gyongyos, Hungary Manufacture and sales of automotive lighting equipment and electronic components Indonesia Stanley Electric. Stanley Electric do Brasil Ltda. (completed in November, 2010) 21 Hella-Stanley 16 Thai Stanley Electric Public Co., Ltd. 3 I I Stanley Co., Inc. Michigan, U.S.A. Manufacture and sales of automotive lighting equipment, semiconductors, and electronic equipment Suzhou Stanley Electric Co., Ltd. Stanley Electric Holding Europe Co., Ltd. 1 Stanley Electric Co., LTD. Tokyo, Japan Manufacture and sales of automotive equipment, Semiconductors, and electronic equipment Holding Pty Ltd Stanley all around the world Stanley—in exploration of light and mastery of manufacturing, contributes to the creation of brighter future for the world. From the perspective of global operations, the Stanley Group divides the world into five area—Japan, America, Europe, the Asian Pacific and China— thereby implementing a thorough operational matrix. 6 Pathumthanee, Thailand Manufacture and sales of automotive lighting equipment, automotive light bulbs, and dies and molds Banten, Indonesia Manufacture and sales of automotive lighting equipment, dies and molds, electronic equipment 18 Vietnam Stanley Electric Co., Ltd. Hanoi, Vietnam Manufacture and sales of automotive light bulbs, automotive lighting equipment, and electronic equipment 19 Stanley Electric (Asia Pacific) Ltd. Hong Kong, People’s Republic of China Sales of semiconductors and subminiature lamps, and procurement of electronic component 20 Stanley Electric Holding Asia-Pacific Pte. Ltd. Singapore Administration of seven locations in the Asia Pacific 21 Hella-Stanley Holding Pty Ltd Victoria, Australia Investment in automotive lighting business of Stanley / Hella 22 Stanley Electric Korea Co., Ltd. Seoul, Korea Sales and procurement of electronic equipment 8 Stanley Electric GmbH Moerfelden-Walldorf, Germany Sales and procurement of semiconductors, electronic equipment, and automotive lighting equipment 23 Suzhou Stanley Electric Co., Ltd. 9 Stanley Electric (U.K.) Co., Ltd. Suzhou, People’s Republic of China Manufacture and sales of semiconductor lighting equipment Berkshire , U. K. Sales and procurement of semiconductors, electronic equipment, and automotive lighting equipment 10 STANLEY - IDESS S.A.S. Nanterre, France Sales and procurement of semiconductors, electronic equipment, and automotive lighting equipment 11 Stanley Electric Holding Europe Co., Ltd. Berkshire, U.K. Administration of four locations in the Europe 12 Taiwan Stanley Electric Co., Ltd. Tainan, Taiwan R&D, manufacture and sales of cold cathode fluorescent lamps (CCFLs), CCFL applications and backlight units for LCDs 13 Stanley Electric Engineering India Pvt. Ltd. Haryana , India Design and development of automotive lighting equipment, and manufacture and sales of dies and molds 14 Lumax Industries Ltd. New Delhi , India Manufacture and sales of automotive lighting equipment Suzhou, People’s Republic of China Manufacture and sales of semiconductors and electronic equipment 24 Suzhou Stanley LED Lighting Technology Co., Ltd. 25 Shenzhen Stanley Electric Co., Ltd. Shenzhen, People’s Republic of China Manufacture and sales of electronic equipment 26 Tianjin Stanley Electric Co., Ltd. Tianjin, People’s Republic of China Manufacture and sales of automotive lighting equipment, semiconductors, subminiature lamps 27 Guangzhou Stanley Electric Co., Ltd. Guangzhou, People’s Republic of China Manufacture and sales of automotive lighting equipment and electronic equipment 28 Chongqing Hua-yu Stanley Lighting Co., Ltd. Chongqing, People’s Republic of China Manufacture and sales of automotive lighting equipment 29 Shanghai Stanley Electric Co., Ltd. Shanghai, People’s Republic of China Sales and procurement of semiconductors, subminiature lamps, and photoelectric devices 15 Asian Stanley International Co., Ltd. 10 Pathumthanee, Thailand Manufacture and sales of semiconductors, subminiature lamps, and photoelectric devices 11 Financial Review Stanley’s Environmental Philosophy Stanley Electric Co., Ltd. and its Subsidiaries We of the Stanley Group are working to preserve the environment through a compassionate and understanding view of people and the natural world. Brimming with desire to fulfill our responsibilities as a citizen of the world, we are continually reexamining every aspect of corporate activity through the lens of environmental preservation. That view has engendered within us a wholehearted approach to the conservation of natural resources. Thus, in the spirit of Stanley’s “Basic Philosophy on the Environment and Environmental Policy,” we have pledged “not to produce, use or dispose of substances that negatively impact the environment.” ISO 14001 Accreditation Basic Philosophy on the Environment Environmental Conservation The Stanley Group is fully committed to the effective use of resources and the maintenance and improvement of our environment in every aspect of corporate activity. We know this is the only way to ensure that succeeding generations inherit a healthy and beautiful planet free from the ravages of uncaring consumption. Environmental Policy We at Stanley shall engage in all areas of corporate activity in the spirit of our Basic Philosophy on the Environment; that is, with an awareness of the roles and responsibilities each individual has in the effort to preserve the earth and its precious resources. Stanley’s head office, all domestic facilities and the Stanley group’s nineteen domestic and overseas subsidiaries and affiliates have obtained ISO 14001 certification, the international standard for environmental management. *The certification of domestic facilities was unified in 2007. A Human/Organizational Approach to Stanley is actively promoting a range of programs designed to educate employees on the environment and provide information regarding environmental issues. These programs go forward under the auspices of the Environmental Conservation Activity Committee, as established in 1998.The Committee works to build environmental awareness among individual employees, encouraging them to adopt “green” practices in their daily lives and activities. Our Approach to Environmental Conservation in Product Development We are also striving to save energy and resources, reduce waste, and eliminate the generation/use of greenhouse gases and toxic chemical substances from all processes during the product cycle - from design and development to production, distribution, collection, and, ultimately, disposal. Stanley’s Logo for environmental preservation 12 Operating Results During the fiscal year ended March 31, 2010, consolidated net sales decreased by 15.7% to ¥238,888 million ($2,567,595 thousand). Cost of sales (COS) decreased by 18.1% to ¥185,205 million ($1,990,597 thousand). Gross profit on sales decreased by 6.3% to ¥53,683 million ($576,998 thousand). Selling, general and administrative expenses decreased by 13.4% to ¥29,347 million ($315,425 thousand). As a result, operating income increased by 4.0% to ¥24,336 million ($261,573 thousand). Income before income taxes and minority interests amounted to ¥32,555 million ($349,910 thousand). After deducting income taxes of ¥12,371 million ($132,970 thousand) and minority interests of ¥3,056 million ($32,846 thousand), Stanley Electric Co., Ltd. (the “Company”) and its subsidiaries posted a net income of ¥17,128 million ($184,094 thousand). Cash dividends declared for the fiscal year ended March 31, 2010 were ¥25.0 per share, a decrease of ¥5.0 compared to the previous fiscal year. Financial Position and Cash Flows The Company and its subsidiaries’ financial position remained stable during the fiscal year ended March 31, 2010. The shareholders’ equity ratio declined by 1.6%, from 66.9% to 65.3%. Net cash provided by operating activities increased by 3.7% to ¥47,326 million ($508,663 thousand). Expenditures on property, plant, and equipment (mainly for molds and dies, semiconductor manufacturing facilities, and automotive lighting equipment manufacturing facilities) decreased by 23.4% to ¥20,447 million ($219,773 thousand). Five-Year Summary Stanley Electric Co., Ltd. and its Subsidiaries For the years ended March 31 2010 Results of operations: Net sales Gross profit Operating income Net income As a percentage of net sales Capital expenditures Per share data: Net income Cash dividends Year-end financial position: Total assets Long-term debt, including lease obligations, less current portion Total equity attributable to shareholders of the parent (Note 2) Results of operations: Net sales Gross profit Operating income Net income As a percentage of net sales Capital expenditures Per share data: Net income Cash dividends Year-end financial position: Total assets Long-term debt, including lease obligations, less current portion Total equity attributable to shareholders of the parent (Note 2) 2009 Millions of Yen, except for per share data 2008 2007 2006 ¥238,888 53,683 24,336 17,128 7.2% ¥20,447 ¥283,302 57,267 23,392 12,128 4.3% ¥26,709 ¥354,469 82,635 46,563 29,732 8.4% ¥30,606 ¥338,680 76,800 40,649 26,283 7.8% ¥35,990 ¥311,785 66,028 32,039 20,619 6.6% ¥25,945 ¥98.2 25.0 ¥68.5 30.0 ¥162.9 30.0 ¥142.1 25.0 ¥110.2 20.0 ¥302,035 ¥273,102 ¥325,798 ¥340,816 ¥304,238 10,119 113 — 10,000 10,004 197,302 182,812 192,385 195,601 173,977 2010 2009 2008 2007 2006 $2,567,595 576,998 261,573 184,094 7.2% $219,773 $3,044,955 615,519 251,424 130,359 4.3% $287,077 $3,809,858 888,176 500,470 319,563 8.4% $328,961 $3,640,164 825,454 436,903 282,502 7.8% $386,832 $3,351,086 709,682 344,367 221,615 6.6% $278,869 $1.06 0.27 $0.74 0.32 $1.75 0.32 $1.53 0.27 $1.18 0.21 $3,246,293 $2,935,323 $3,501,702 $3,663,114 $3,269,972 108,770 1,222 — 107,481 107,524 2,120,622 1,964,874 2,067,777 2,102,337 1,869,926 Thousands of U.S. Dollars, except for per share data (Note 1) Yen amounts are translated into U.S. dollars, solely for convenience, at the prevailing exchange rate on March 31, 2010, of ¥93.04=U.S.$1.00 (Note 2) Total equity attributable to shareholders of the parent = Total net assets - Minority interests (as recorded on the consolidated balance sheets) 13 Consolidated Balance Sheets Stanley Electric Co., Ltd. and its Subsidiaries As of March 31, 2010 and 2009 Millions of Yen ASSETS 2010 Thousands of U.S. Dollars (Note 3) 2009 2010 2009 Current assets: Cash and cash equivalents ¥46,627 $718,400 $501,154 4,336 605 46,612 6,511 48,548 43,480 521,799 467,330 Affiliates 494 520 5,319 5,595 Less, allowance for doubtful accounts (86) (111) Notes and accounts receivable: Trade (928) (1,193) 48,956 43,889 526,190 471,732 14,017 14,535 150,659 156,223 Deferred tax assets (Note 8) 4,786 2,266 51,442 24,363 Other 7,650 10,137 82,199 108,933 146,584 118,059 1,575,502 1,268,916 Inventories (Note 4) Total current assets Investments and advances: Investment securities (Note 5) 33,368 23,824 358,645 256,063 Investments in affiliates (Note 5) 8,037 7,463 86,383 80,217 Other 5,920 3,107 63,627 33,393 47,325 34,394 508,655 369,673 Land 13,237 11,278 142,280 121,217 Buildings and structures 77,751 74,056 835,681 795,960 Machinery, equipment and vehicles 90,846 98,160 976,427 1,055,035 123,895 118,757 1,331,641 1,276,410 229 175 2,466 1,884 9,893 14,691 106,301 157,897 315,851 317,117 3,394,796 3,408,403 (211,217) (203,675) (2,270,174) (2,189,116) 104,634 113,442 1,124,622 1,219,287 Lease assets (Note 10) Construction in progress Less, accumulated depreciation Other Total assets 2010 2009 Short-term loans, including current portion of lease obligations (Notes 6 and 10) ¥6,568 ¥9,714 $70,596 $104,410 33,444 26,687 359,464 286,835 590 332 6,346 3,574 11,138 4,629 119,711 49,754 45,172 31,648 485,521 340,163 Accrued expenses 7,607 6,866 81,761 73,804 Income taxes payable (Note 8) 2,092 1,228 22,485 13,205 13 9 147 107 3,160 3,324 33,952 35,692 64,612 52,789 694,462 567,381 10,119 113 108,770 1,222 Deferred tax liabilities (Note 8) 8,365 437 89,914 4,703 Provision for retirement benefits (Note 9) 4,653 22,291 50,015 239,594 Other 3,013 2,780 32,359 29,859 90,762 78,410 975,520 842,759 30,514 30,514 327,977 327,977 29,825 29,825 320,561 320,561 Retained earnings (Note 11) 153,036 151,784 1,644,843 1,631,388 Treasury stock: 8,190,235 shares in 2010 and 13,394,106 shares in 2009 (15,955) (26,137) 197,420 185,986 2,121,890 1,998,998 13,721 8,829 147,479 94,892 (13,838) (12,003) (148,747) (129,016) (117) (3,174) (1,268) (34,124) Notes and accounts payable: Trade Affiliates Other Deferred tax liabilities (Note 8) Other Total current liabilities Long-term debt, including lease obligations, less current portion (Notes 6 and 10) Total liabilities Net assets Shareholders’ equity: Capital stock: Authorized 750,000,000 shares in 2010 and 2009 Issued 182,240,000 shares in 2010 and 188,240,256 shares in 2009 Capital surplus Total shareholders’ equity (171,491) (280,928) Valuation and translation adjustments Other assets: Deferred tax assets (Note 8) 2009 2010 Commitments and contingent liabilities (Note 12) Property, plant and equipment: Tools, furniture and fixtures LIABILITIES AND NET ASSETS Thousands of U.S. Dollars (Note 3) Current liabilities: ¥66,839 Time deposits Millions of Yen 858 4,169 9,225 44,811 2,634 3,038 28,289 32,636 ¥302,035 ¥273,102 $3,246,293 $2,935,323 Valuation difference on available-for-sale securities Foreign currency translation adjustment Total valuation and translation adjustments Minority interests Total net assets Total liabilities and net assets 13,970 11,880 150,151 127,690 211,273 194,692 2,270,773 2,092,564 ¥302,035 ¥273,102 $3,246,293 $2,935,323 The accompanying notes are an integral part of these balance sheets. 14 15 Consolidated Statements of Income Consolidated Statements of Changes in Net Assets Stanley Electric Co., Ltd. and its Subsidiaries For the years ended March 31, 2010 and 2009 Stanley Electric Co., Ltd. and its Subsidiaries For the years ended March 31, 2010 and 2009 Millions of Yen 2009 2010 Net sales Cost of sales Gross profit Selling, general and administrative expenses (Notes 13 and 14) Operating income 2010 2009 ¥238,888 ¥283,302 $2,567,595 $3,044,955 185,205 226,035 1,990,597 2,429,436 53,683 57,267 576,998 615,519 29,347 33,875 315,425 364,095 24,336 23,392 261,573 251,424 Non-operating income (expenses): Interest and dividends income 833 1,608 8,956 17,284 Equity in earnings of affiliates 768 333 8,263 3,584 Royalty income 806 939 8,665 10,100 Interest expenses (358) (337) (3,857) (3,625) Gain on sales of noncurrent assets 232 1,874 2,498 20,144 22 — 245 — 14,539 — 156,272 — Gain on sales of subsidiaries and affiliates’ stocks Gain on transfer of benefit obligation relating to employees’ pension fund Impairment loss Loss on retirement of noncurrent assets — (178) — (1,919) (1,864) (1,527) (20,038) (16,420) (78) (3,291) (846) (35,374) Loss on valuation of investment securities Loss on liquidation of business (3,925) — (42,194) — Loss on abolishment of retirement benefit plan (2,238) — (24,051) — (916) (3,657) (9,852) Other, net (340) 8,219 (1,317) 88,337 (14,159) 32,555 22,075 349,910 237,265 Current 6,764 6,678 72,705 71,775 Deferred 5,607 603 60,265 6,476 12,371 7,281 132,970 78,251 20,184 14,794 216,940 159,014 (3,056) (2,666) (32,846) (28,655) Income before income taxes and minority interests Millions of Yen Thousands of U.S. Dollars (Note 3) Shareholders’ equity Number of shares of capital stock (Thousands) Balance at March 31, 2008 Effect of changes in accounting policies applied to foreign subsidiaries Changes of items during the year Dividends from surplus Net income for the year Purchase of treasury stock Disposal of treasury stock Net changes of items other than shareholders’ equity Total changes during the year Balance at March 31, 2009 Changes of items during the year Dividends from surplus Net income for the year Purchase of treasury stock Disposal of treasury stock Retirement of treasury stock Net changes of items other than shareholders' equity Total changes during the year Balance at March 31, 2010 Income before minority interests Net income ¥17,128 ¥12,128 $184,094 Yen 2010 $130,359 U.S. Dollars 2009 2010 2009 Per share (Note 2 (p)): Net income Cash dividends in respect of the year The accompanying notes are an integral part of these statements. ¥98.2 ¥68.5 $1.06 $0.74 25.0 30.0 0.27 0.32 ¥30,514 Capital surplus Retained earnings ¥29,826 ¥145,168 (1) 188,240 30,514 (1) 29,825 Treasury stock ¥(18,669) (6,000) 182,240 ¥(7,892) ¥11,131 ¥203,516 369 (5,873) 12,128 (5,873) 12,128 (7,489) 12 (5,873) 12,128 (7,489) 12 (8) 6,247 151,784 1,252 ¥153,036 ¥29,825 ¥13,438 Total net assets 369 (0) (11,690) ¥30,514 ¥186,839 Minority interests 369 (7,489) 21 (7,468) (26,137) (1,222) 185,986 (1,508) 0 11,690 (4,186) 17,128 (1,508) 0 — (4,186) 17,128 (6,000) Valuation Foreign Total on currency shareholders’ difference available-for- translation equity sale securities adjustment (4,609) (4,111) 749 (7,971) (4,609) 8,829 (4,111) (12,003) 749 11,880 (9,193) 194,692 (4,186) 17,128 (1,508) 0 — 10,182 11,434 ¥(15,955) ¥197,420 4,892 (1,835) 2,090 5,147 4,892 ¥13,721 (1,835) ¥(13,838) 2,090 ¥13,970 16,581 ¥211,273 Minority interests Total net assets Thousands of U.S. Dollars (Note 3) Shareholders’ equity Number of shares of capital stock (Thousands) Income taxes (Note 8): Minority interests in income 188,240 Capital stock Valuation and translation adjustments Balance at March 31, 2008 Effect of changes in accounting policies applied to foreign subsidiaries Changes of items during the year Dividends from surplus Net income for the year Purchase of treasury stock Disposal of treasury stock Net changes of items other than shareholders' equity Total changes during the year Balance at March 31, 2009 Changes of items during the year Dividends from surplus Net income for the year Purchase of treasury stock Disposal of treasury stock Retirement of treasury stock Net changes of items other than shareholders' equity Total changes during the year Balance at March 31, 2010 188,240 Capital surplus $327,977 $320,575 $1,560,277 3,966 $(200,662) $2,008,167 3,966 (63,129) 130,359 (63,129) 130,359 (80,498) 133 (85) Treasury stock Valuation Foreign Total on currency shareholders’ difference available-for- translation equity sale securities adjustment Capital stock (14) Retained earnings Valuation and translation adjustments (80,498) 232 $144,428 327,977 (6,000) (14) 67,145 320,561 1,631,388 (80,266) (13,135) (280,928) 1,998,998 (44,999) 184,094 (44,999) 184,094 (16,208) 5 — (2) (125,638) (16,208) 7 125,638 (44,198) 8,060 (49,536) (44,198) 94,892 (129,016) 8,060 127,690 (98,809) 2,092,564 22,461 (44,999) 184,094 (16,208) 5 — 55,317 52,587 (6,000) 182,240 $327,977 13,455 $320,561 $1,644,843 109,437 122,892 $(171,491) $2,121,890 $119,630 $2,187,407 3,966 (63,129) 130,359 (80,498) 133 (85,674) (49,536) 188,240 $(84,818) 52,587 $147,479 (19,731) (19,731) 22,461 178,209 $(148,747) $150,151 $2,270,773 The accompanying notes are an integral part of these statements. 16 17 Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Stanley Electric Co., Ltd. and its Subsidiaries For the years ended March 31, 2010 and 2009 Stanley Electric Co., Ltd. and its Subsidiaries Millions of Yen 2010 Net cash provided by (used in) operating activities Income before income taxes and minority interests Adjustments to reconcile income before income taxes and minority interest to net cash provided by operating activities: Depreciation and amortization Impairment loss Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in provision for retirement benefits Interest and dividends income Interest expenses Equity in (earnings) losses of affiliates Loss (gain) on sales and retirement of noncurrent assets Loss (gain) on sales of stocks of subsidiaries and affiliates Loss (gain) on valuation of investment securities Loss on liquidation of investment securities Loss on liquidation of business Decrease (increase) in notes and accounts receivable-trade Decrease (increase) in inventories Increase (decrease) in notes and accounts payable-trade Other, net Subtotal Interest and dividends income received Interest expenses paid Income taxes (paid) refund Net cash provided by (used in) operating activities 2010 2009 ¥32,555 ¥22,075 $349,910 $237,265 20,403 178 2 (118) (17,640) (833) 358 (768) 1,631 (22) 78 — 3,925 (5,538) 254 7,217 8,048 49,730 1,261 (252) (3,413) 47,326 25,218 — 103 (496) (71) (1,608) 337 (333) (346) — 3,291 122 — 30,625 3,264 (21,840) (2,402) 57,939 1,802 (375) (13,730) 45,636 219,295 1,919 24 (1,273) (189,600) (8,956) 3,857 (8,263) 17,540 (245) 846 — 42,194 (59,526) 2,731 77,570 86,485 534,508 13,562 (2,715) (36,692) 508,663 271,051 — 1,108 (5,336) (766) (17,284) 3,625 (3,584) (3,724) — 35,374 1,316 — 329,163 35,087 (234,739) (25,820) 622,736 19,370 (4,036) (147,571) 490,499 (6,361) 572 (19,752) 829 (918) (1,376) (620) 50 (26,980) 2,395 (742) (2,518) (68,370) 6,154 (212,303) 8,919 (9,871) (14,795) (6,672) 537 (289,986) 25,749 (7,986) (27,069) Net cash provided by (used in) investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sales and redemption of short-term and long term investment securities Other, net Net cash provided by (used in) investing activities (276) (27,094) 681 (25,234) (2,974) (291,210) 7,333 (271,224) Net cash provided by (used in) financing activities Net increase (decrease) in short-term loans payable Proceeds from issuance of bonds Redemption of bonds Purchase of treasury stock Cash dividends paid Cash dividends paid to minority shareholders Other, net Net cash provided by (used in) financing activities 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 year Cash and cash equivalents at end of year (2,902) 10,000 — (1,508) (4,186) (749) (57) 598 (618) 20,212 46,627 ¥66,839 1,736 — (10,000) (7,489) (5,873) (1,338) 12 (22,952) (2,348) (4,898) 51,525 ¥46,627 (31,192) 107,481 — (16,208) (44,999) (8,052) (600) 6,430 (6,637) 217,246 501,154 $718,400 18,668 — (107,481) (80,498) (63,131) (14,391) 133 (246,700) (25,225) (52,650) 553,804 $501,154 The accompanying notes are an integral part of these statements. 18 Thousands of U.S. Dollars (Note 3) 2009 188 2,500 2,030 26,870 1. Basis of Presentation of Consolidated Financial Statements: The accompanying consolidated financial statements have been prepared based on the accounts maintained by Stanley Electric Co., Ltd. (the “Company”) and all of its domestic subsidiaries in accordance with the provisions set forth in the Japanese Corporation Law, the Financial Instruments and Exchange Law and the related accounting regulations, and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accompanying consolidated financial statements also include the accounts of all of its overseas subsidiaries. The financial statements of the Company’s overseas consolidated subsidiaries for consolidation purposes have been prepared in conformity with International Financial Reporting Standards or accounting principles generally accepted in the United States of America. Certain items presented in the consolidated financial statements filed with the Kanto Finance Bureau of the Ministry of Finance in Japan have been reclassified and translated into English for the convenience of readers outside Japan. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not considered necessary for fair presentation, is not presented in the accompanying consolidated financial statements. 2. Summary of Significant Accounting Policies: (a) Principles of Consolidation The consolidated financial statements include the accounts of the Company and all of its subsidiaries. At March 31, 2010 and 2009, the Company had 34 and 33 subsidiaries, respectively. All significant inter-company balances, transactions and unrealized profits have been eliminated. The assets and liabilities of subsidiaries acquired in a business combination are recorded based on their full fair values at the time of consummation. The excess of the cost over the fair value of the underlying net assets of investments in subsidiaries (“goodwill”) is being amortized by the straight-line method over a five-year period. Investments in affiliates are accounted for by the equity method. Investments in certain affiliates are stated at cost because the effect of application of the equity method would be immaterial. (b) Cash and Cash Equivalents Cash and cash equivalents in the consolidated financial statements comprise cash on hand, bank deposits able to be withdrawn on demand and short-term investments with an original maturity of three months or less and for which there is a minor risk of material fluctuations in value. (c) Financial Instruments 1) Derivatives Derivatives designated as hedging instruments by the Company are forward exchange contracts. The related hedged items are accounts receivable denominated in foreign currencies. The Company has a policy of utilizing the above hedging instruments in order to reduce the Company’s exposure to the risk of foreign currency fluctuations. Accordingly, the Company’s purchases of hedging instruments are limited to, at maximum, the amounts of the hedged items. Gains or losses resulting from forward exchange contracts are principally deferred as an asset or a liability. Contract amounts for US$ basis and Euro basis are ¥1,844 million ($19,823 thousand) and ¥463 million ($4,979 thousand), respectively, and fair values for them are ¥1,888 million ($20,296 thousand) and ¥453 million ($4,873 thousand), respectively. The method used to calculate the fair value is based on forward exchange rate. 2) Securities Securities except for investments in affiliates are classified depending on management’s intent as either ‘Held-to-maturity securities’ or ‘Available-for-sale securities’. Held-to-maturity securities which are expected to be held to maturity are carried at amortized cost. Available-for-sale securities, for which fair values are available, are stated at fair value with any unrealized gains or losses reported as a separate component of net assets at a net-of-tax amount. Available-for-sale securities, for which fair values are unavailable, are stated at cost. Cost of securities sold is determined by the moving-average method. (d) Allowance for Doubtful Accounts The allowance for doubtful accounts has been provided based upon estimated uncollectible amounts for individually identified doubtful accounts and historical loss experience for other accounts. (e) Inventories Inventories are mainly stated at cost by the periodic average method (As for the value stated in the balance sheets, the method of book value devaluation based on decline in profitability is used). (f ) Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. In fiscal year 2008, the straight-line method was used for the following property, plant and equipment: • All buildings (excluding attached structures) of the Company and its domestic subsidiaries • Molds and tools of the Company and its domestic subsidiaries • Yamagata plant • Property, plant and equipment of overseas subsidiaries 19 The depreciation of other property, plant and equipment of the Company and its domestic subsidiaries was computed using the declining-balance method at rates based on the estimated useful lives of the assets. In fiscal year 2009, the straight-line method is used for all property, plant and equipment. The range of useful lives is as follows: • Buildings and structures: 3-to-50 years • Machinery, equipment and vehicles: 4-to-15 years (Change to the method of computing the depreciation of property, plant and equipment) Prior to April 1, 2009, the declining-balance method was used to compute the depreciation of all property, plant and equipment other than buildings (excluding attached structures), molds and tools included in tools, furniture and fixtures, and the Yamagata plant. Effective April 1, 2009, however, the Company and its domestic consolidated subsidiaries changed to the straight-line method. The Company has undertaken gradual restructuring and made a plant and equipment investment at the Hatano Factory, which is the Company’s main plant for motor vehicle headlamps in Japan, with the aim of making this plant a model plant where productivity can be pursued to its ultimate. The Company is implementing this restructuring in order to meet its customers’ demand for quality, for example through improvements to the quality of the headlamps, by incorporating the know-how the Company cultivated in its “innovation-in-production” activities into the design stage of the buildings, developing the plant as a plant that pursues maximum investment efficiency, pushing production efficiency to the maximum, and taking exhaustive actions to control waste and dust in order to create a cleaner manufacturing environment. Furthermore, based on the same policy as for the Hatano Factory, the Company has been making a series of plant and equipment investments in other production plants including the Hamamatsu Factory, the Okazaki Factory and the new Hiroshima plant, etc. The culmination of these efforts, the second phase of construction of the new No. 1 Plant at Hatano Factory, was completed during the year under review, and the new plant also commenced operations. The Company took this opportunity to review the method of computing depreciation the Company had been using particularly on plant and equipment investment in the production plants. As a result of this review, the Company judged that allocating the depreciation costs equally over the period that the property, plant and equipment can be used is appropriate for the purpose of matching costs and revenues, because the performance of the plant and equipment has improved, the risk of technological or economic obsolescence is small, and the costs of maintaining the plant and equipment, such as repairs, etc., are averaging out at about the same as conservation costs. Therefore, the Company changed the method of computing depreciation from the declining-balance method to the straight-line method. The Company took the opportunity of the above change to change the method of computing depreciation to the straightline method in its domestic consolidated subsidiaries. Accordingly, the Company and all its consolidated subsidiaries adopted the straight-line method for computing the depreciation of property, plant and equipment effective April 1, 2009. The effect of this change was to increase operating income by ¥3,045 million ($32,737 thousand) and income before income taxes and minority interests by ¥3,189 million ($34,283 thousand) for the year ended March 31, 2010, compared to the results that would have been obtained under the former method. (g) Intangible Assets Software development costs for those that are purposed for internal use are capitalized and amortized. Amortization of such software is computed using the straight-line method over a five-year period. (h) Leases Finance leases of the Company and its domestic subsidiaries in which the ownership of the leased properties does not transfer to the lessees and that started after April 1, 2008 are accounted for in a manner similar to the accounting for ordinary purchase transactions and the leased properties are capitalized as lease assets. Depreciation of lease assets concerning finance lease transactions in which the ownership of the leased properties does not transfer to the lessees is calculated using the straight-line method over the lease terms without residual value. Finance lease transactions in which the ownership of the leased properties does not transfer to the lessees and that started before April 1, 2008 are accounted for in a manner similar to the accounting for ordinary rental transactions. (i) Research and Development Costs Research and development costs are entirely charged to income as incurred. (j) Bond Issue Costs Bond issue costs are charged to income as incurred. (k) Provision for Bonuses Provision for bonuses are provided based on the estimated future bonus payments attributable to employees’ services rendered during the year. (l) Provision for retirement benefits Provision for retirement benefits represent the estimated present value of projected benefit obligations in excess of the fair value of plan assets, unrecognized prior service credit (costs) and unrecognized actuarial differences. Prior service costs are amortized on a straight-line basis over a period within the average remaining service period of 7 to 15 years. Unrecognized actuarial differences are amortized on a straight-line basis over a period within the average remaining service period of 7 to 15 years beginning in the year that follows a year in which they arose. Provision for retirement benefits in the accompanying consolidated balance sheets include unfunded severance benefits for directors and statutory auditors of certain subsidiaries amounting to ¥122 million ($1,309 thousand) and ¥141 million ($1,522 thousand) at March 31, 2010 and 2009, respectively. The amount is accrued based on the internal guideline at an amount of required payout had the covered directors and statutory auditors voluntarily been terminated. The actual payment of these severance benefits is subject to advance approval at a shareholders’ meeting. 20 In accordance with the Defined Benefit Pension Plan Law, the Company and its domestic subsidiaries applied for transfer of the substitutional portion of past pension obligations to the government and obtained approval by the Ministry of Health, Labor and Welfare on March 1, 2010. Based upon this approval, the Company recognized a gain on transfer of benefit obligation relating in the amount of ¥14,539 million ($156,272 thousand) for the year ended March 31, 2010. At the same time, the Company and its domestic subsidiaries implemented a defined contribution pension plan in March 2010 by which the former employees’ pension fund plan was terminated. Based upon this transfer, the Company recognized a loss on abolishment of retirement benefit plan in the amount of ¥2,238 million ($24,051 thousand) for the year ended March 31, 2010. (m) Income Taxes Income taxes are provided based on pre-tax income reported for financial reporting purpose. Deferred income taxes are determined using the asset and liability method, whereby deferred tax assets, net of valuation allowance, and liabilities are recognized for the estimated future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, and tax loss and other credit carryforwards. (n) Accounting for Consumption Taxes In Japan, consumption taxes are imposed at a flat rate of 5 per cent on all domestic consumption of goods and services with certain exceptions. Consumption taxes imposed on the domestic sales of the Company and its domestic subsidiaries are withheld at the time of sale and are paid to the national government and the local public body subsequently. The consumption tax withheld upon sale and the consumption tax paid on the purchases of goods and services are not included in the related amounts in the accompanying consolidated statements of income. (o) Foreign Currency Translation All monetary assets and liabilities denominated in foreign currencies, whether long-term or short-term, are translated into Japanese yen at the exchange rates prevailing at the balance sheet date. Resulting gains and losses are included in net income or loss for the period. All asset and liability accounts on the balance sheets of the foreign subsidiaries are translated into Japanese yen at the exchange rates prevailing at the balance sheet date. Profit and loss accounts for the year are translated into Japanese yen using the average exchange rate during the year. The resulting differences in yen amounts arising from the use of different rates are presented as a separate component of net assets under “foreign currency translation adjustments”. (p) Net Income and Dividends per Share Net income per share of common stock is calculated by dividing net income available to common shareholders by the weightedaverage number of shares of common stock outstanding during each year. The number of common shares used in the net income per share computations was 174,337 thousand and 176,945 thousand in the years ended March 31, 2010 and 2009, respectively. Diluted net income per share information is not presented in the consolidated financial statements because the Company does not have any dilutive common shares. Cash dividends per share shown for each year in the accompanying consolidated statements of income represent dividends declared for each respective year. 3. United States Dollar Amounts: The Company and its domestic subsidiaries maintain their accounting records in Japanese yen. The dollar amounts included in the consolidated financial statements and notes thereto represent the arithmetical results of translating yen to dollars at a rate of ¥93.04=US$1, the rate of exchange prevailing on March 31, 2010. The inclusion of such dollar amounts is solely for the convenience of readers outside Japan and is not intended to imply that yen amounts have been or could be readily converted, realized or settled in U.S. dollars at this or any other rate. 4. Inventories: Inventories at March 31, 2010 and 2009 consisted of the following: Millions of Yen Finished goods Work in process Raw materials and supplies 2010 ¥8,023 2,054 3,939 2009 ¥8,284 1,491 4,758 Thousands of U.S. Dollars 2010 $86,240 22,081 42,338 2009 $89,039 16,035 51,150 5. Financial Instruments: <Additional Information> Effective from the fiscal year ended March 31, 2010, the Company adopted the revised Accounting Standard, “Accounting Standard for Financial Instruments” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 10 revised on March 10, 2008) and the “Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.19 revised on March 10, 2008). Information on financial instruments for the year ended March 31, 2010 required pursuant to the revised accounting standards is as follows. 21 <Financial Instruments> 1. Qualitative information on financial instruments (1) Policies for using financial instruments The Company and its consolidated subsidiaries place importance on “safety”, the first priority, “liquidity”, the second priority, and “profitability”, the third priority, to manage financial instruments. The ways of raising capital are mainly based on bond issue and bank loans. Derivatives are utilized for mitigating risks which will hereinafter be described, and not for speculation purposes. (2) Details of financial instruments used, the exposures to risk and policies and processes for managing the risk Cash and cash equivalents and time deposits are exposed to credit-related losses of correspondent financial institutions. In order to mitigate this risk, the Company and its consolidated subsidiaries conduct a transaction with only high credit-rating financial institutions as a result of attaching importance to safety, which is stated in “Policy of Dealing with Financial Institutions”. Notes and accounts receivable-trade, which are operating receivables, are exposed to credit-related losses of customers. In order to mitigate this risk, the Company and its consolidated subsidiaries establish a system in which business administration staff of each department conduct due date controls and management of balance by collection of debts during a specified period under the terms and conditions. The Company and its consolidated subsidiaries sell the products in Japan, the Americas, and other regions, and operating receivables in foreign currency are exposed to currency rate fluctuation risks. In order to mitigate this risk, the Company and its consolidated subsidiaries offset the risk with forward exchange contracts, and execute and manage them in departments in charge of Accounting and Overseas. In addition, forward exchange contracts are conducted based on company regulations decided in management conferences etc. which are a decision-making setting of each company. Investment securities are mainly composed of the stock of companies with on-the-job relationship, and they are exposed to market fluctuation risks. The Company and its consolidated subsidiaries keep track of fair value every month for risk mitigation. As for notes and accounts payable-trade, which are operating payables, most of the due for payments are set within a year. Shortterm loans are mainly for raising operating capital, and bonds are for raising operating capital and equipment fund. Operating payables, debts, and bonds are exposed to the risk of liquidity. The Company and its consolidated subsidiaries manage the risk by preparing statements of cash receipts and disbursement. 2. Fair value of financial instruments (1) The carrying amount recorded on the consolidated balance sheets, fair value and unrealized gains (losses) as of March 31, 2010 were as follows. The financial instruments for which fair value is extremely difficult to identify are not included in the following chart (Note 2). 2010 Millions of Yen Carrying amount (1) Cash and cash equivalents (2) Time deposits (3) Notes and accounts receivable-trade Allowance for doubtful accounts (Note) (4) Short-term investment securities and investment securities: Available-for-sale securities (including investments in affiliates) Total assets of financial instruments ¥66,839 4,336 49,043 (50) 48,993 Fair value ¥66,838 4,336 48,993 Unrealized gains (losses) ¥(1) — — Thousands of U.S. Dollars Unrealized gains Fair value (losses) Carrying amount $718,400 46,612 527,118 (546) 526,572 $718,380 46,612 $(20) — 526,572 (Note 2) Financial instruments for which fair value is extremely difficult to identify were as follows: 2010 Millions of Yen Thousands of U.S. Dollars ¥3,395 $36,494 Unlisted shares This is not included in the “(4) Short-term investment securities and investment securities” because the market price does not exist and fair value is extremely difficult to identify. (Note 3) The redemption schedule for monetary claims and securities with maturity dates subsequent to March 31, 2010 is summarized as follows: 2010 Millions of Yen Due in one year or less Cash and cash equivalents Time deposits Notes and accounts receivable-trade Other Total ¥16,541 4,337 49,024 — ¥69,902 Due after one year through five years ¥— — 18 2,063 ¥2,081 Thousands of U.S. Dollars Due in one year or less Over five years ¥— — — — ¥— $177,780 46,612 526,923 — $751,315 Due after one year through five years Over five years $— — 195 22,173 $22,368 $— — — — $— (Note 4) The repayment schedule for bonds payable and lease obligations subsequent to March 31, 2010 is summarized as follows: Millions of Yen — 40,113 2,103 408,533 431,144 22,611 158,178 160,280 2,102 1,700,117 1,722,708 22,591 35,533 6,515 10,000 172 35,533 6,515 10,287 172 — — 287 — 381,898 70,031 107,481 1,855 381,898 70,031 110,567 1,855 — — 3,086 — 52,220 52,507 287 561,265 564,351 3,086 ¥— ¥— ¥— $— $— (Note) Allowance for doubtful accounts for certain customers is deducted from notes and accounts receivable-trade. $— (Note 1) The method used to calculate fair value of financial instruments, securities, and derivatives is as follows: Assets (1) Cash and cash equivalents, (2) Time deposits, and (3) Notes and accounts receivable-trade The carrying amount is used to determine fair value because fair value is almost equivalent to the carrying amount. However, fair value of debt securities and MMF is based on the price presented by correspondent financial institutions. (4) Short-term investment securities and investment securities Fair value of short-term investment securities and investment securities is determined by the stock exchange price. Please refer to <Securities> for the notes of each security. 22 Derivatives Details of derivatives are stated in the “2. Summary of Significant Accounting Policies; (c) Financial Instruments”. 2010 38,010 (1) Notes and accounts payable-trade (2) Short-term loans payable (3) Bonds payable (4) Lease obligations Total liabilities of financial instruments Derivatives Liabilities (1) Notes and accounts payable-trade, and (2) Short-term loans payable The carrying amount is used to determine fair value because fair value is almost equivalent to the carrying amount. (3) Bonds payable Fair value of bonds issued by the Company is based on the price presented by correspondent financial institutions. (4) Lease obligations The carrying amount is used to determine fair value because fair value is almost equivalent to the carrying amount. Due in one year or less Bonds payable Lease obligations Total ¥— 52 ¥52 Due after one year through five years ¥10,000 118 ¥10,118 Thousands of U.S. Dollars Due in one year or less Over five years ¥— 1 ¥1 $— 566 $566 Due after one year through five years Over five years $107,481 1,269 $108,750 $— 21 $21 <Securities> (1) The fair value recorded on the consolidated balance sheets, acquisition cost, and unrealized gains (losses) of available-for-sale securities for which fair values are available as of March 31, 2010 and 2009 were as follows: 2010 Millions of Yen Fair value Available-for-sale securities whose fair value exceeds acquisition cost : Equity securities Available-for-sale securities whose acquisition cost exceeds fair value: Equity securities Acquisition cost Thousands of U.S. Dollars Unrealized gains (losses) Fair value Acquisition cost Unrealized gains (losses) ¥29,954 ¥6,880 ¥23,074 $321,954 $73,953 $248,001 ¥238 ¥30,192 ¥283 ¥7,163 ¥(45) ¥23,029 $2,549 $324,503 $3,043 $76,996 $(494) $247,507 23 Millions of Yen Acquisition cost Available-for-sale securities whose fair value exceeds acquisition cost : Equity securities Available-for-sale securities whose acquisition cost exceeds fair value: Equity securities Debt securities ¥3,038 Fair value ¥18,733 At March 31, 2010 and 2009, significant components of deferred tax assets and liabilities were as follows: 2009 Unrealized gains (losses) Thousands of U.S. Dollars Unrealized gains Acquisition cost Fair value (losses) ¥15,695 $32,651 $201,350 ¥3,835 ¥2,971 ¥(864) $41,224 $31,932 1,000 0 (1,000) 10,748 0 ¥7,873 ¥21,704 ¥13,831 $84,623 $233,282 In the year ended March 31, 2010 and 2009, there were no sales transactions of available-for-sale securities. $168,699 $(9,292) (10,748) $148,659 a) Investments in affiliated companies b) Available-for-sale securities: Unlisted shares ¥7,463 Thousands of U.S. Dollars $80,217 2,120 ¥9,583 22,782 $102,999 6. Short-term Loans and Long-term Debt: Short-term loans principally consisted of notes payable to banks at a weighted average interest rate of 2.0% and 3.1% as of March 31, 2010 and 2009, respectively. Customarily, these notes are renewed at maturity, subject to renegotiations of interest rates and other terms. Long-term debt at March 31, 2010 and 2009 consisted of the following: Millions of Yen 1.67% unsecured straight bonds due April 2014 Lease obligations Less current portion 2009 ¥— 156 156 (43) ¥113 2010 ¥10,000 172 10,172 (53) ¥10,119 Thousands of U.S. Dollars 2009 $— 1,677 1,677 (455) $1,222 2010 $107,481 1,855 109,336 (566) $108,770 The aggregate annual maturities of bonds subsequent to March 31, 2010 are summarized as follows: Years ending March 31, 2015 Millions of Yen Thousands of U.S. Dollars ¥10,000 $107,481 The aggregate annual maturities of lease obligations subsequent to March 31, 2010 are summarized as follows: Years ending March 31, Millions of Yen Thousands of U.S. Dollars ¥53 49 37 21 12 ¥172 $566 536 407 235 111 $1,855 2011 2012 2013 2014 2015 and thereafter 7. Commitment Lines In order to facilitate efficient working capital management, the Company maintains committed lines of credit with 10 financial institutions. The unused balance of credit lines under these commitments was as follows: Millions of Yen Total amount of committed credit lines Less amount borrowed against credit lines Credit lines unused 2010 ¥10,000 — ¥10,000 2009 ¥10,000 — ¥10,000 Thousands of U.S. Dollars 2010 $107,481 — $107,481 2009 $107,481 — $107,481 8. Income Taxes: The statutory tax rate used for calculating deferred tax assets and liabilities in the years ended March 31, 2010 and 2009 was approximately 40.4%. 24 1. Current assets Deferred tax assets: Accrued defined contribution transferred Provision for bonuses Loss on liquidation of business Accrued expenses Tax loss carry forwards Accrued enterprises taxes Other Less valuation allowance Total deferred tax assets Deferred tax liabilities: Undistributed earnings of subsidiaries and affiliates Other Total deferred tax liabilities Net deferred tax assets (2) Major categories of securities for which fair values are unavailable as of March 31, 2009 were as follows: 2009 Millions of Yen Millions of Yen 2009 2010 2. Non-current assets Deferred tax assets: Tax loss carry forwards Loss on liquidation of business Provision for retirement benefits Unrealized intercompany profit on plant, property and equipment Loss on retirement of noncurrent assets Other Less valuation allowance Total deferred tax assets Deferred tax liabilities: Valuation difference on available-for-sale securities Reserve for advanced depreciation of noncurrent assets Total deferred tax liabilities Net deferred tax assets 3. Current liabilities Deferred tax liabilities: Allowance for doubtful accounts Other Total deferred tax liabilities 4. Non-current liabilities Deferred tax liabilities: Valuation difference on available-for-sale securities Reserve for advanced depreciation of noncurrent assets Depreciation Other Total deferred tax liabilities Deferred tax assets: Provision for retirement benefits Loss on retirement of noncurrent assets Other Total deferred tax assets Net deferred tax liabilities Thousands of U.S. Dollars 2009 2010 ¥2,780 1,271 476 305 202 68 654 5,756 (661) 5,095 ¥— 1,320 — 203 449 118 509 2,599 (17) 2,582 $29,882 13,667 5,119 3,288 2,174 731 7,005 61,866 (7,098) 54,768 $— 14,188 — 2,192 4,830 1,276 5,458 27,944 (181) 27,763 (279) (30) (309) ¥4,786 (270) (46) (316) ¥2,266 (3,002) (324) (3,326) $51,442 (2,907) (493) (3,400) $24,363 ¥1,473 487 303 281 — 141 2,685 (1,827) 858 ¥— — 8,902 332 559 1,885 11,678 (521) 11,157 $15,842 5,241 3,260 3,022 — 1,503 28,868 (19,643) 9,225 $— — 95,681 3,571 6,017 20,248 125,517 (5,597) 119,920 — — — ¥858 (5,990) (998) (6,988) ¥4,169 — — — $9,225 (64,381) (10,728) (75,109) $44,811 ¥1 12 ¥13 ¥3 6 ¥9 $21 126 $147 $39 68 $107 ¥9,308 995 703 111 11,117 ¥— — 765 103 868 $100,050 10,700 7,561 1,183 119,494 $— — 8,228 1,112 9,340 (1,506) (351) (895) (2,752) ¥8,365 — — (431) (431) ¥437 (16,191) (3,783) (9,606) (29,580) $89,914 — — (4,637) (4,637) $4,703 A reconciliation of the statutory tax rate to the effective income tax rate for the years ended March 31, 2010 and 2009 is as follows: Statutory income tax rate Increase (decrease) in taxes resulting from: Lower statutory tax rates Entertainment and other non-deductible expenses Dividends income not taxable Per capita levy of local resident income taxes Tax credits for research and development Other tax credits Dividends income from foreign subsidiaries Increase in valuation allowance Other Effective income tax rate 2010 40.4% 2009 40.4% (7.2%) 0.9% (2.9%) 0.2% (1.0%) (1.5%) 1.7% 5.8% 1.6% 38.0% (10.9%) 1.7% (2.6%) 0.2% (1.4%) (9.6%) 13.0% — 2.2% 33.0% 25 9. Provision for Retirement Benefits: 10. Leases: The Company and its domestic subsidiaries had operated employees’ pension fund plan, qualified pensions plan, and the severance lump-sum payment plan. On March 1, 2010, the Company and its domestic subsidiaries implemented a defined contribution pension plan by which the former employees’ pension fund plan was terminated. The obligation for pensioners of employees’ pension fund plan was transferred to defined benefit pension fund which was established on the same day along with qualified pensions plan and the severance lump-sum payment plan. Certain overseas consolidated subsidiaries operate defined benefits pension plan as well as defined contribution pension plan. The Company and its domestic subsidiaries obtained approval by the Ministry of Health, Labor and Welfare for exemption from the future obligation on April 1, 2008, and for transfer of the substitutional portion of the past pension obligation to the government on March 1, 2010. The balance of provision for retirement benefits as of March 31, 2010 and 2009 is analyzed as follows: (1) Finance leases (capitalized) Effective April 1, 2008, the Company and its domestic subsidiaries have adopted Accounting Standard for Lease Transactions, and finance lease transactions other than those that are expected to transfer ownership of the assets to the lessee are accounted for as lease assets and lease obligations. The lease assets acquired after April 1, 2008, include mainly information technology device and vehicles as of March 31, 2010 and 2009. The depreciation is calculated using the straight-line method over the lease term of the lease assets assuming no residual value. Millions of Yen 2010 ¥67,187 (49,282) 17,905 (13,495) (1) 4,409 (122) 4,531 122 ¥4,653 Projected benefit obligations Plan assets Unfunded status Unrecognized actuarial loss Unrecognized prior service credit (cost) Total Prepaid pension expenses Provision for employees’ retirement benefits Provision for directors’ retirement benefits Total provision for retirement benefits Thousands of U.S. Dollars 2009 ¥100,639 (46,252) 54,387 (37,190) 4,953 22,150 — 22,150 141 ¥22,291 2010 $722,138 (529,684) 192,454 (145,052) (11) 47,391 (1,315) 48,706 1,309 $50,015 2009 $1,081,678 (497,115) 584,563 (399,727) 53,236 238,072 — 238,072 1,522 $239,594 (Note) The effects of the transition from a portion of employees’ pension fund plan to defined contribution pension plan for the year ended March 31, 2010 were as follows: Millions of Yen Thousands of U.S. Dollars Components of net periodic pension expenses relating to the retirement benefits for the years ended March 31, 2010 and 2009 were as follows: 2010 ¥2,407 1,930 (1,786) 3,637 (442) 121 5,867 Service costs Interest costs Expected return on plan assets Amortization of actuarial loss Amortization of prior service cost (credit) Other (Note) Net periodic pension expenses Gain on transfer of benefit obligation relating to employees’ pension (14,539) fund Loss on abolishment of retirement benefit plan 2,238 Total ¥(6,434) (Note) “Other” consists of mainly contributions to defined contribution pension plan. 26 Acquisition costs (Note) Machinery, equipment and vehicles Tools, furniture and fixtures Other Accumulated depreciation Machinery, equipment and vehicles Tools, furniture and fixtures Other Net book value Machinery, equipment and vehicles Tools, furniture and fixtures Other 2009 ¥2,422 1,982 (2,280) 2,700 (474) — 4,350 2010 $25,875 20,747 (19,198) 39,100 (4,758) 1,298 63,064 Thousands of U.S. Dollars 2009 2010 2009 ¥182 628 122 ¥255 1,118 102 $1,967 6,759 1,312 $2,742 12,015 1,098 108 474 68 156 717 37 1,166 5,103 737 1,679 7,706 394 74 154 54 99 401 65 801 1,656 575 1,063 4,309 704 Both of lease payments and pro-forma depreciation expense for the years ended March 31, 2010 and 2009 amounted to ¥256 million ($2,759 thousand) and ¥328 million ($3,526 thousand), respectively. The pro-forma depreciation is calculated using the straightline method over the lease term of the lease assets assuming no residual value. The scheduled maturities of future lease rental payments of finance leases as of March 31, 2010 and 2009 were as follows: Millions of Yen Thousands of U.S. Dollars 2009 $26,036 21,311 (24,511) 29,023 (5,100) — 46,759 — (156,272) — — ¥4,350 24,051 $(69,157) — $46,759 Assumptions used in the calculation of the above information for the years ended March 31, 2010 and 2009 were as follows: Method of attributing the projected benefits to periods of service Discount rate Expected rate of return on plan assets Amortization period of prior service cost Amortization period of unrecognized actuarial differences Millions of Yen 2010 (Note) Pro-forma acquisition costs include interest costs since such costs were not significant. This treatment is in accordance with accounting standards for leases generally accepted in Japan. Decrease in projected benefit obligations ¥(2,220) $(23,861) Unrecognized actuarial loss 4,457 47,912 Decrease in provision for retirement benefits ¥2,237 $24,051 The assets to be transferred to defined contribution pension plan amount to ¥12,378 million ($133,049 thousand). Millions of Yen (2) Finance leases (non-capitalized) The certain finance lease transactions other than those that are expected to transfer ownership of the assets to the lessee, of which lease assets were acquired prior to April 1, 2008, continue to be accounted for in a manner similar to the accounting for ordinary rental transactions. Pro-forma information relating to the assumed capitalization of those finance leases as of and for the years ended March 31, 2010 and 2009 is as follows: 2010 2009 Benefit and year of service approach Benefit and year of service approach 2.0% 4.0% 7 to 15 years (straight-line basis) 2.0% 4.0% 7 to 15 years (straight-line basis) 7 to 15 years (straight-line basis) 7 to 15 years (straight-line basis) Due within one year Due after more than one year 2010 ¥153 129 ¥282 2009 ¥261 304 ¥565 Thousands of U.S. Dollars 2010 $1,652 1,380 $3,032 2009 $2,807 3,269 $6,076 Future lease payments include interest costs since such costs were not significant. This treatment is in accordance with accounting standards for leases generally accepted in Japan. (3) Operating leases The schedule of future lease rental payments of operating leases as of March 31, 2010 and 2009 is as follows: Millions of Yen Due within one year Due after more than one year 2010 ¥162 83 ¥245 2009 ¥159 295 ¥454 Thousands of U.S. Dollars 2010 $1,746 896 $2,642 2009 $1,714 3,175 $4,889 11. Appropriation of Retained Earnings: Appropriation of retained earnings are not accrued in the financial statements for the period to which they relate, but are recorded in the subsequent accounting period after board of directors’ approval has been obtained. Retained earnings at March 31, 2010 included amounts representing final cash dividends of ¥2,262 million ($24,319 thousand) which were approved at the board meeting held on May 24, 2010. 12. Commitments and Contingent Liabilities: The Company was contingently liable as guarantor for loans of ¥10 million ($108 thousand) from certain financial institutions in respect of employees’ housing, as of March 31, 2010. 27 13. Selling, General & Administrative Expenses: The major components of selling, general & administrative expenses for each of the years ended March 31, 2010 and 2009 included the following: Millions of Yen Salaries and bonuses Net periodic pension expenses Provision for bonuses Provision for directors’ bonuses Provision of allowance for doubtful accounts Provision for directors’ retirement benefits 2010 ¥10,683 2,054 1,164 176 31 30 2009 ¥11,001 1,574 1,131 142 95 13 Thousands of U.S. Dollars 2010 $114,829 22,084 12,512 1,894 336 327 2009 $118,241 16,922 12,160 1,537 1,027 144 14. Research and Development Costs: Total research and development costs included in selling, general and administrative expenses for the years ended March 31, 2010 and 2009 were ¥3,586 million ($38,548 thousand) and ¥4,087 million ($43,935 thousand), respectively. 15. Segment Information: The operations of the Company and its subsidiaries are classified into three business segments: (a) automotive equipment business, consisting of the automotive lighting business, the motorcycle lighting business, the electronic equipment for automobiles business, and the accessory & parts business, (b) electronic equipment business, consisting of the component business, and the electric application business, and (c) other business. Operating income represents sales less cost of sales and selling, general and administrative expenses. Under geographical segments, ”Other Regions” primarily includes the French Republic, the Federal Republic of Germany, the United Kingdom, and the Republic of Hungary. The operating information is attributed to countries and regions based on geographical proximity. Effective for the year ended March 31, 2010, the Company established a new subsidiary in Brazil and included the figures for the new subsidiary in the former “North America” category. Therefore, the Company has changed the name of the segment category from “North America” to “The Americas” beginning from the year ended March 31, 2010. Information by business segments and geographical segments for the years ended March 31, 2010 and 2009 is as follows: Millions of Yen 2010 Business segments: Sales: Automotive Equipment Business: Sales to outside customers Intersegment sales or transfer Electronic Equipment Business: Sales to outside customers Intersegment sales or transfer Other Business: Sales to outside customers Intersegment sales or transfer Elimination or Corporate Operating income : Automotive Equipment Business Electronic Equipment Business Other Business Elimination or Corporate Total assets: Automotive Equipment Business Electronic Equipment Business Other Business Elimination or Corporate Depreciation and amortization: Automotive Equipment Business Electronic Equipment Business Other Business Elimination or Corporate 28 2009 Thousands of U.S. Dollars 2010 2009 ¥178,840 606 179,446 ¥208,497 148 208,645 $1,922,192 6,511 1,928,703 $2,240,945 1,586 2,242,531 59,618 7,534 67,152 74,511 11,855 86,366 640,784 80,970 721,754 800,852 127,424 928,276 429 2,018 2,447 (10,157) ¥238,888 ¥21,178 4,693 77 25,948 (1,612) ¥24,336 ¥137,962 51,654 829 190,445 111,590 ¥302,035 ¥15,451 3,465 58 18,974 1,429 ¥20,403 293 4,619 3,026 21,691 3,319 26,310 (15,028) (109,172) ¥283,302 $2,567,595 ¥18,339 4,926 49 23,314 78 ¥23,392 ¥125,133 59,286 758 185,177 87,925 ¥273,102 ¥17,812 5,168 64 23,044 2,174 ¥25,218 $227,624 50,449 827 278,900 (17,327) $261,573 $1,482,826 555,190 8,901 2,046,917 1,199,376 $3,246,293 $166,072 37,245 620 203,937 15,358 $219,295 3,158 32,522 35,680 (161,532) $3,044,955 $197,110 52,946 526 250,582 842 $251,424 $1,344,948 637,220 8,137 1,990,305 945,018 $2,935,323 $191,451 55,549 688 247,688 23,363 $271,051 Capital expenditures: Automotive Equipment Business Electronic Equipment Business Other Business Elimination or Corporate ¥16,378 1,629 78 18,085 2,362 ¥20,447 ¥18,813 3,615 217 22,645 4,064 ¥26,709 Millions of Yen 2010 Geographical segments: Sales: Japan: Sales to outside customers Intersegment sales or transfer The Americas: Sales to outside customers Intersegment sales or transfer Asia-Pacific: Sales to outside customers Intersegment sales or transfer China: Sales to outside customers Intersegment sales or transfer Other Regions: Sales to outside customers Intersegment sales or transfer Elimination or Corporate Operating income: Japan The Americas Asia-Pacific China Other Regions Elimination or Corporate Total assets: Japan The Americas Asia-Pacific China Other Regions Elimination or Corporate 2009 $176,037 17,512 830 194,379 25,394 $219,773 $202,209 38,863 2,326 243,398 43,679 $287,077 Thousands of U.S. Dollars 2010 2009 ¥122,160 24,756 146,916 ¥158,597 28,540 187,137 $1,312,991 266,075 1,579,066 $1,704,611 306,760 2,011,371 32,768 6 32,774 39,491 39 39,530 352,196 63 352,259 424,455 416 424,871 32,317 9,535 41,852 32,358 11,344 43,702 347,348 102,491 449,839 347,783 121,933 469,716 42,443 9,152 51,595 38,370 11,768 50,138 456,184 98,367 554,551 412,410 126,485 538,895 9,199 292 9,491 (43,740) ¥238,888 ¥6,907 623 5,473 8,842 (81) 21,764 2,572 ¥24,336 ¥112,252 20,920 16,579 34,984 5,710 190,445 111,590 ¥302,035 14,486 98,875 261 3,140 14,747 102,015 (51,952) (470,135) ¥283,302 $2,567,595 ¥6,923 1,136 4,323 7,239 1,240 20,861 2,531 ¥23,392 ¥110,581 21,167 15,977 32,076 5,376 185,177 87,925 ¥273,102 $74,246 6,696 58,828 95,044 (888) 233,926 27,647 $261,573 $1,206,500 224,854 178,198 376,016 61,349 2,046,917 1,199,376 $3,246,293 155,696 2,808 158,504 (558,402) $3,044,955 $74,419 12,218 46,465 77,813 13,301 224,216 27,208 $251,424 $1,188,534 227,513 171,722 344,760 57,776 1,990,305 945,018 $2,935,323 Overseas net sales of the Company and its subsidiaries for the years ended March 31, 2010 and 2009 were as follows: Millions of Yen 2010 Overseas net sales: The Americas Asia-Pacific China Other Regions Consolidated net sales Overseas net sales as a percent of consolidated net sales 2009 Thousands of U.S. Dollars 2010 2009 ¥32,959 32,105 46,669 6,952 ¥118,685 ¥39,709 32,754 43,124 10,907 ¥126,494 $354,247 345,074 501,608 74,712 $1,275,641 $426,795 352,053 463,500 117,223 $1,359,571 ¥238,888 ¥283,302 $2,567,595 $3,044,955 49.7% 44.7% 49.7% 44.7% “The Americas” primarily includes the United States of America and Brazil. “Asia-Pacific” primarily includes the Kingdom of Thailand, Hong Kong, the Socialist Republic of Vietnam, the Republic of India, the Republic of Indonesia, Taiwan, and the Republic of Korea. “Other Regions” primarily includes the French Republic, the Federal Republic of Germany, the United Kingdom, and the Republic of Hungary. 29 Report of Independent Auditors Directory (As of March 31, 2010) DOMESTIC Head Office 2-9-13, Nakameguro, Meguro-ku, Tokyo 153-8636, Japan Telephone: 81-3-3710-2222 Facsimile: 81-3-3792-0007 URL http://www.stanley.co.jp/ Osaka Office 4-14-24, Kigawahigashi, Yodogawa-ku, Osaka-shi, Osaka 532-0012, Japan Telephone: 81-6-6304-1111 Facsimile: 81-6-6304-5224 Nagoya Office 2-252, Takayashiro, Meito-ku, Nagoya-shi, Aichi 465-0095, Japan Telephone: 81-52-777-5111 Facsimile: 81-52-774-6524 R&D laboratory 1-3-1, Edanishi, Aoba-ku, Yokohama-shi Kanagawa 225-0014, Japan Telephone: 81-45-911-1111 Facsimile: 81-45-911-0007 Tsukuba Research Laboratory 5-9-5, Tokodai, Tsukuba-shi, Ibaraki 300-2635, Japan Telephone: 81-29-847-8883 Facsimile: 81-29-847-4165 Utsunomiya Technical Center 2-797-1 Miyanouchi, Utsunomiya-shi, Tochigi 321-0131, Japan Telephone: 81-28-654-2288 Facsimile: 81-28-655-1759 Yokohama Technical Center 2-14-1, Edanishi, Aoba-ku, Yokohama-shi Kanagawa 225-0014, Japan Telephone: 81-45-912-9222 Facsimile: 81-45-912-9281 Opto Technical Center 1-3-3, Edanishi, Aoba-ku, Yokohama-shi Kanagawa 225-0014, Japan Telephone: 81-45-910-2000 Facsimile: 81-45-910-2007 30 Hatano Factory 400, Soya, Hadano-shi Kanagawa 257-8555, Japan Telephone: 81-463-81-1111 Facsimile: 81-463-82-5323 Okazaki Factory 3-33 Iwata, Makihira, Okazaki-shi Aichi 444-3698 Japan Telephone: 81-564-82-2111 Facsimile: 81-564-82-2135 Hamamatsu Factory 1705 Nakagawa, Hosoe-cho, Kita-ku, Hamamatsu-shi Shizuoka 431-1304 Japan Telephone: 81-53-527-2222 Facsimile: 81-53-527-2601 OVERSEAS European Liaison Office Residence Tercoigne, Avenue Charles Michiels, No.176 Bte.No.8 1170 Brussels, Belgium Telephone: 32-2-672-0858 Facsimile: 32-2-660-6123 Stanley Electric European Technical Office Waldecker Strasse 5 D-64546, Moerfelden-Walldorf Germany Telephone: 49-6105-930530 Facsimile: 49-6105-930555 OVERSEAS SUBSIDIARIES & AFFILIATES Stanley Electric U.S. Co., Inc. 420 E. High St., London, Ohio 43140 U.S.A. Telephone: 1-740-852-5200 Facsimile: 1-740-852-5201 I I Stanley Co., Inc. • Head Office & Factory 1500 Hill-Brady Rd., Battle Creek, Michigan 49037, U.S.A. Telephone: 1-269-660-7777 Facsimile: 1-269-660-5555 • Detroit Sales Office 46855 Magellan Drive, Suite 300-C Novi, Michigan 48377, U.S.A. Telephone: 1-248-669-7350 Facsimile: 1-248-669-7480 Stanley Electric Sales of America,Inc. 1 Musick Irvine, California 92618-1638, U.S.A. Telephone: 1-949-222-0777 Facsimile: 1-949-222-0555 Stanley Electric Holding of America, Inc. 1500 Hill-Brady Rd., Battle Creek, Michigan 49037, U.S.A. Telephone: 1-616-660-2315 Facsimile: 1-616-660-2459 Stanley Electric Hungary Kft. 3200 Gyongyos, Gabor Denes ut 1, Hungary Telephone: 36-37-511-206 Facsimile: 36-37-511-213 Stanley Electric GmbH Waldecker Strasse 5 D-64546, Moerfelden-Walldorf, Germany Telephone: 49-6105-930530 Facsimile: 49-6105-930555 Stanley Electric (U.K.) Co., Ltd. Atrium Court, The Ring, Bracknell, Berkshire RG12 1BW, United Kingdom Telephone: 44-1344-393053 Facsimile: 44-1344-393153 STANLEY - IDESS S.A.S. 39, rue des Peupliers, 92000 Nanterre, France Telephone: 33-1-47-81-85-85 Facsimile: 33-1-47-86-09-16 31 Company Profile Board of Directors (As of June 24, 2010) Taiwan Branch StanleyElectric ElectricCo., Holding Europe Co., Ltd. Chongqing Hua-yu Stanley Lighting Stanley Ltd., was founded in 1920• by Takaharu No.375 Atrium In Court, Ring, Bracknell, Berkshire Kitano. thoseThe days, there were no more than7F 8,000 cars Sung-Chiang Road, Taipei 104, Co., Ltd. Taiwan, R.O.C. 1BW, United Kingdom No.68, Long-Shan Road, Yubei District, inRG12 Japan—all imported models. Under the circumstances, Telephone: 44-1344-393055 Chongqing 400021, China itTelephone: certainly took courage, vision, and a challenging spirit to886-2-2512-1758 886-2-2512-1750 Facsimile: 44-1344-393054 Telephone: 86-23-676-59032 start a company devoted to the manufacturing Facsimile: of automotive Facsimile: 86-23-676-59356 light bulbs. Electric Korea Co., Ltd. Taiwan Stanley Electric Co., Ltd. The Company was named after the intrepidStanley 19th-century #2502 TRADE No.31 Huangdung Sec.2,Stanley, who was renowned Shanghai Stanley Electric Co., Ltd. explorer Sir HenryRd., Morton for TOWER, World Trade Center, Shanhua Tainan, Taiwan, 74144 the visionTownship, and courage he had so abundantly demonstrated R. O. C. • Head Office during his exploits on the continent of Africa. 159-1, Samsung-dong, Gangnam-gu, 135-731, Korea Telephone: 886-6-5050185 A~C/8F, Sun Tong Infoport Plaza, 55, Stanley Electric has carried on that spirit ofSeoul challenge, Telephone: 82-2-3453-7190 Facsimile: 886-6-5052418 Huai Hai Road (W), Shanghai, constantly responding to the demand of the times. Through 200030 China our dedication in the pursuit of the potential ofFacsimile: light, we82-2-3453-7194 Telephone: 86-21-5298-9431 Stanley Electric Engineering have grown in influence, ability,India and knowledge. Facsimile: 86-21-5298-9448 Stanley Holding Asia-Pacific Pvt. Ltd. We have, in fact, maintained a position as leader in Electric the STANLEY GROUP VISION Plot No.164 Sector-5, IMT-Manesar, Pte. Ltd. automotive-equipment industry, developing cutting-edge 1 Kim Sengand Promenade, Gurgaon-122050, Haryana, India equipment, accessories, • Tianjin Branch products in automotive lighting World City Tower West Telephone:components 91-124-229-0852 Room 305, No.18 Guo Mao Road, electronic through the applicationGreat of innovative Singapore 237994 Facsimile: 91-124-229-0870 Free Trade Zone, technologies. Accordingly, we have contributed#12-10/11, to the safety STANLEY SPIRIT Tianjin, 300456 China Telephone: 65-67342683 Telephone: 86-22-2576-0237 and satisfaction of a modern automotive lifestyle. Outshining Light We shall blaze our own trail to a brilliant future by daring to‘‘outshine light.” Facsimile: 86-21-2576-0239 Asian Stanleyelectronic International Co., Ltd. Stanley Facsimile: Regarding components, Electric 65-67342087 48/1 Moo 1, TambolinKukwang, Ladlumkaew has been successful the research and development of BUSINESS PHILOSOPHY Pathumthanee 12140, Thailand • Huabei Branch value-added products, such as semiconductors,Suzhou parts forStanley Electric Co., Ltd. The boundless pursuit of the Value of Light No.158-70A Huashan Road, Telephone: 66-2-599-1260 Roomthe802, Scitech Tower Place, information and communication devices, automotive We shall contribute broadly to society by exploring infinite possibilities of light and bringing its value to humankind. Fengqiao, Facsimile: 66-2-599-1263 No.22 Jian Gu WaiasAvenue, Beijing, electronics products, and, of course, lighting devices. By Suzhou New District, Business innovation by maximizing our Men potential a manufacturer We China shall continually reinvent our processes 100022 to draw out further value and quality from our business base in manufacturing. Jiansurange Province, 215129 China offering a large variety of products for use in a wide Telephone: Telephone: 86-10-65671442 T. Indonesia Electrichave become a part of those who truly support our mission ofP industries, we,Stanley as a company, of the 86-512-6661-6450 Ensuring the welfare We shall value those who truly support Stanley and endeavor to ensure their welfare. Facsimile: 86-512-6661-6449 Jalan Bhumimas I No.17 Kawasan Industri Facsimile: 86-10-65671445 success our customers enjoy. Cikupamas 388, Group Tangerang 15001, Based onPo theBox Stanley Vision shared by the THE FIVE WAYS OF CREATING VALUE WITH LIGHT Banten, Indonesia Suzhou Stanley LED Lighting Lumax Industries Ltd. management and employees of the Stanley Group around We shall create new benefits to humankind by dedicating ourselves to the Five Ways of Creating Value with Light. Telephone: 62-21-59-404-506 Industrial Area, Phase-I, Technology Co., Ltd. the globe, we successfully completed the first three-year CREATINGB-86 Mayapuri creating light RECOGNIZING sensing and recognizing No.158-70A Facsimile: 62-21-59-404-510 New Delhi 110064 Indiawith light management plan in March 2004 and the second three-yearHuashan Road, INFORMING processing information with light Fengqiao, Suzhou New District, Telephone: 91-11-28117336 management plan in March 2007, achieving steady results. ENERGIZING harnessing light's energy Jiansu Province, Facsimile: 91-11-2811-5779 Vietnam Stanley Electric Co., Ltd.plan, the Group With the three-year management Vision is 215129 China EXPRESSING producing feeling with light Telephone: Duong Xa,into Gia specific Lam District, translated measures for action. In April 2007,86-512-6661-6450 GUIDELINES FOR ACTION Facsimile: Hanoi, Vietnam Thai Stanley Electric Public Co., Ltd. we embarked on the third three-year management plan. 86-512-6661-6449 CHALLENGE Telephone: 84-4-38766245 29/3 1 Bangpoon-Rungsit In the third three-year management plan, we have Always challenge yourself withMoo the highest standards and set out to reachRd., them. Facsimile: 84-4-38766188 Banklang, Pathumthanee 12000, Thailand Shenzhen Stanley Electric Co., Ltd. “visualized” strategies from the perspectives of financing, INNOVATE Combine boundless creativity and user understanding to create new value. No.46, Changfu Rd., Guoxie District, Telephone: 66-2-581-5462 provision of value to customers, operational processes, COLLABORATE diverse total know-how to enhance our overall value. Taifeng Industrial, Bogang Village, Share and leverage our Facsimile: 66-2-581-5397 Stanley Electric (Asia Pacific) Ltd. human resources, and corporate culture in deciding HUMANIZE Shajing Western District, measures to be implemented. By steadily implementing these Industrial, Bao An Be considerate of society in general and our environment to develop your humanity. Shenzhen China • Head Office Hella-Stanley measures, Stanley Electric is making itself sufficiently strong GLOBALIZEHolding Pty Ltd Respect and understand global diversity. Telephone: 86-755-2975-5074 Suites 2001-4,20/F., Towerthe 1, changing environment, 54-76 Southern Road, Mentone, and flexible to withstand and to Facsimile: 86-755-2975-5077 The Gateway, 25 Canton Road, Victoria 3194 Australia continue to grow powerfully. Tsimshatsui, Kowloon, Kong As we continue ourHong pursuit of the value of light, we Telephone: 852-2730-1738 Tianjin Stanley Electric Co., Ltd. will challenge the industry to “outshine light.” Through No.140we Nanhai Road, TEDA, Tianjin, China Facsimile: 852-2730-1933 our exploration of light and its limitless possibilities, Telephone: 86-22-2532-0174 will master the philosophy of manufacturing and open new Facsimile: 86-22-2532-0173 • Singapore Branch avenues to the future. 1Kim Seng Promenade, Great World City Tower West #12-10/11, Singapore 237994 Telephone: 65-67342683 Facsimile: 65-67342087 32 Guangzhou Stanley Electric Co., Ltd. No.138, Jun Ye Road, Eastern section, GETDD, Guangzhou, 510760 China Telephone: 86-20-8226-5721 Facsimile: 86-20-8226-6206 President Takanori Kitano Senior Managing Director Makio Natsusaka Managing Directors Shinichi Katano Hidenari yamazaki Katsumi Kondo Director Shigeki Muto Yutaka Hiratsuka Statutory Corporate Auditors Ryuta Yamaguchi Shigeru Furuya Yoshiaki Yamauchi Yoichiro Sakuma Mitsuhiro Amitani