2012 (2011.4 - 2012.3) Annual Report - Makino Milling Machine Co

ANNUAL REPORTYear Ended March 31, 2012

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Millions of yenThousands of

dollars

2008 2009 2010 2011 2012 2012

Net sales ¥132,739 ¥100,355 ¥57,881 ¥95,164 ¥110,460 $1,343,959 Net income (loss) 9,002 (4,835) (10,591) 2,167 3,698 44,993 Net assets 98,520 88,704 79,396 79,704 83,750 1,018,980 Total assets 171,652 159,145 165,422 168,280 178,361 2,170,105

Yen Dollars

Net income (loss) per share Basic ¥75.79 ¥ (41.63) ¥ (92.40) ¥19.32 ¥33.24 $0.40

Number of employees 3,773 3,741 3,673 3,834 3,992

Note: US dollar amounts have been translated from yen, for convenience only, at the rate of ¥82.19=US$1, the approximate Tokyo foreign exchange market rate as of March 31, 2012.

MESSAGE TO SHAREHOLDERS AND INVESTORS ........................ 1

CORPORATE GOVERNANCE ....................................................... 3

BUSINESS RISKS ......................................................................... 5

FINANCIAL REVIEW .................................................................... 5

CONSOLIDATED BALANCE SHEETS ............................................ 6

CONSOLIDATED STATEMENTS OF INCOME ................................ 8

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME .... 9

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ......... 10

Makino Milling Machine Co., Ltd. is a manufacturer of advanced machine tools, founded in May 1937. Its corporate

mission is to contribute to the development of industry in Japan and around the world by quickly discerning and

responding to industrial trends with technological innovation.

Makino’s state-of-the-art machine tools and machining technologies are used in the manufacturing systems of

companies in a wide range of industries. Working with local partners possessing strong technical capabilities, Makino has

built an extensive sales network in the United States, Europe and Asia, capable of responding to changes in global

machine tool demand and structural changes in manufacturing operations.

Major products lines: Machining centers, Numerical control (NC) electrical discharge machines (EDM), Milling machines

and other products

PROFILE

CONSOLIDATED STATEMENTS OF CASH FLOWS......................... 11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................. 12

INDEPENDENT AUDITOR'S REPORT ............................................. 32

BOARD OF DIRECTORS AND CORPORATE AUDITORS ................. 34

CORPORATE DATA ..................................................................... 34

GLOBAL NETWORK .................................................................... 35

PRODUCT LINES AND NET SALES TRENDS BY PRODUCT ............ 36

CONTENTS

FIVE-YEAR FINANCIAL SUMMARYMakino Milling Machine Co., Ltd. and Consolidated SubsidiariesYears ended March 31

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(1) Business Environment

During fiscal 2012, the global economy was

characterized by uncertainty, triggered by factors such as

the European debt crisis and the resulting volatility in

currency markets. However, capital spending on industrial

goods, regardless of whether it was conducted by

developed countries or by developing or emerging

nations, continued robust growth across a broad range

of geographic regions.

The Japanese economy has experienced a gradual

recovery, albeit a delayed one due to the disruption

caused following the Great East Japan Earthquake.

Orders received by the Company increased by 24.4%

year on year, to ¥124,465 million, which is higher than

90% of the peak level achieved in fiscal 2007.

The details of operating results by reportable

segment are as follows:

Makino Milling Machine Co., Ltd. and its

subsidiaries in Japan

Even as domestic industry continued to shift overseas,

orders from the domestic market increased by 42.6%

year on year for Makino Milling Machine Co., Ltd.

Orders for horizontal machining centers from major

and mid-sized parts manufacturers in the automotive and

construction machinery industries were particularly

strong since the beginning of the fiscal year. In addition,

large horizontal machining centers for industrial

machinery were the main growth driver for orders.

In the die & mold industry, the recovery of plant

operating rates at companies with high technical

capabilities was noteworthy. However, appetite for

capital investment remained subdued due in part to

uncertainties towards the future.

MAKINO ASIA PTE LTD (Singapore)

Although orders in Asia declined after peaking off during

the first quarter, the decline was believed to have

bottomed out in consideration of inquires that were

received during the fourth quarter. As a result, orders

were up 15.0% year on year, a record-high for full fiscal

year figures.

In China, small and medium local manufacturers in

the coastal regions were significantly affected by the

official policy of raising interest rates to control inflation.

However, orders from foreign manufacturers in the

automotive and construction machinery industries for

horizontal machining centers increased since the second

quarter.

In India, orders were down due to intensified

competition with European machine tool manufacturers

due to the weak euro and the strong yen. On the other

hand, sales activities were reinforced and it is believed

that orders will gradually recover.

MAKINO INC. (USA)

Orders in the United States were strong, increasing

18.5% year on year and setting a new record for the

value of orders received.

The Company received a large number of orders for

the horizontal machining centers a51nx and a61nx from

the auto industry, which was making capital investment

related to low-fuel consumption engines for compact

cars. In the aircraft industry, the Company conducted

sales activities focusing on the MAG/A 5-axis machining

center used in the processing of airframe structures

(aluminum) and the MAG/T used to process titanium as

core products, and concentrated on development of

processing technologies in response to innovations in

materials. It is believed that the Company will be able to

respond to the increased demand expected in connection

with the start of mass production of new passenger

aircraft.

In mid-February, an international forum that is

regularly held in the United States for global aircraft

component customers was held at the Fuji Katsuyama

and the Atsugi offices. The Company will continue to

plan a variety of events in the future in response to the

increasing demand for aircraft.

MAKINO Europe GmbH

Orders expanded, centered on export industries in

Europe. Orders recovered as delivery times lengthened at

competing European machine tool manufacturers,

increasing 42.7% compared to the last fiscal year. This is

close to the peak level achieved in fiscal 2008. Our

exhibit at the EMO Hannover that was held in Germany

in mid-September focused on 5-axis machining centers,

and enjoyed a favorable reception among local visitors.

However, the sales environment is likely to remain severe

because of the weak euro and strong yen.

As a result of the above, the Company achieved net

sales of ¥110,460 million (up 16.1% year on year),

operating income of ¥5,811 million (up 104.6% year on

year), and net income of ¥3,698 million (up 70.7% year

on year) on a consolidated basis.

TO OUR SHAREHOLDERS AND INVESTORS

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MAKINO Europe GmbH

Intense competition with local machine tool

manufacturers in Europe continues. In Europe, general

machining centers account for a small percentage of the

Company’s products, and in contrast inquiries are

received concerning products for specialized niche

markets. For large machining centers for aircraft, there

has not been a significant slowdown in orders due to the

advantages enjoyed in business negotiations, based on

the high performance of these centers and the ability to

meet short deadlines.

Consolidated performance forecasts

Net sales are expected to remain mostly flat year on year.

Profits are expected to increase year on year due to

improved sales conditions arranged in response to the

strong yen and the equalization of production efficiency.

(Million yen) Net salesOperating

income Net income

Forecasts for the first six months(1st and 2nd quarter combined)

55,000*1 up 5.4%

3,0008.8%

2,20049.8%

Forecasts for the full fiscal year

112,000*2 up 1.4%

7,00020.5%

5,50048.7%

*1Compared to the same period of fiscal 2012*2Year on year

July 2012

Jiro Makino

President

(2) Outlook (Fiscal 2013)

For fiscal 2013, the Company believes that performance

will be positive, centering on demand from the

automotive and aircraft industries.

The details of outlook by reportable segment are as

follows:

Makino Milling Machine Co., Ltd. and its

subsidiaries in Japan

The Company believes that a gradual recovery will

continue for domestic orders. Horizontal machining

centers for automotive and industrial machinery

components are expected to be the main driving force.

The domestic manufacturing department is

proceeding with innovations in production methods in

order to allow both short deliveries and production

efficiency. Improvements are being made to reduce lead

times for the assembly of large units and support variable

quantity production for small and medium units.

MAKINO ASIA PTE LTD (Singapore)

The Company believes that the drop in orders in the

main Asian markets of China and India has bottomed

out, and that orders will gradually recover. However, full

fiscal year orders are expected to be down slightly year

on year in comparison to the record high levels that were

achieved during the previous fiscal year.

There are plans to establish technical centers in

China (Chengdu), India (Coimbatore), and Indonesia

(Jakarta) to reinforce sales activities.

MAKINO INC. (USA)

The Company believes that its business in the United

States will remain robust mainly in the automotive and

aircraft industries.

The Company conducts business throughout all of

North America, including Mexico and Canada, and has a

focus on the Great Lakes Region. The Company will also

strengthen its efforts in underrepresented regions such as

California and Texas.

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1. Corporate governanceBasic corporate governance rationaleMakino Milling Machine Co., Ltd. regards strong management oversight functions as a vital element in the strengthening of competitiveness, swifter decision-making and greater transparency.

(1) Corporate governance status1) Governing body

Makino Milling Machine Co., Ltd. is a company with Board of Directors. As of June 22, 2012, the Company’s Board of Directors consists of six directors and at present the Company has no outside directors. The Board of Directors meets once a month and, in addition to carrying out the tasks specified by laws and regulations and by the Articles of Incorporation, makes decisions on important matters and supervises operational duties. Whereas the representative director elected by the Board of Directors engages in execution of operational duties as the representative of the Company, specific operational duties are allocated among non-representative directors and executed by them. The term of office of a director is one year and directors are elected by vote of the annual general meeting of shareholders.Makino Milling Machine Co., Ltd. is also a company with corporate auditors and with Board of Auditors. As of June 22, 2012, the Company’s Board of Auditors consists of three statutory auditors (one of whom is a full-time corporate auditor), of whom two are outside corporate auditors. The statutory auditors attend meetings of the Board of Directors and make remarks, as necessary, in the course of deliberation on the agenda. Also, the Board of Auditors meets periodically and, in addition to items specified by laws and regulations, deliberates and makes decisions on matters necessary for statutory auditors’ activities, and audits directors’ execution of operational duties from an independent standpoint.

2) Internal control systems and risk management systemsAt its meeting held on May 1, 2006, the Company’s Board of Directors passed a resolution concerning ”the development of systems necessary to ensure that the execution of duties by directors complies with laws and regulations and the articles of incorporation, and other systems prescribed by the applicable Ordinance of the Ministry of Justice as systems necessary to ensure the properness of operations of a Stock Company (internal control systems)” provided for in Article 348 Paragraph 4 and in Article 362 Paragraph 5 of the Corporation Law. The Company’s internal control systems and risk management systems are described below.Positioning risk management as the basis of systems

ensuring properness of execution of duties, the Company is putting in place risk management systems not only for the purpose of managing risks that may cause losses to the Company but also for preventing deviation from laws and regulations and the Articles of Incorporation and for ensuring efficient execution of duties. Directors in charge of operations and departmental heads are responsible for management of usual risks. Risks that the directors or the statutory auditors consider material, and moreover, that they consider should be examined by the Board of Directors are examined, judged and dealt with by the Board of Directors.The Company has formulated internal rules, including the Risk Management Rules in which deviation from laws and regulations and the Articles of Incorporation is provided for as a type of risk, Employment Rules and the Security Export Control Program. The Company is endeavoring to ensure compliance with laws and regulations, rules and norms by raising employee awareness through the provision of training for new employees and periodic and non-periodic training. Regarding the recording of operational activities, records are prepared and retained in accordance with the Rules of the Board of Directors in the case of information on execution of duties of directors and in accordance with the Rules for Formal Approvals in the case of decision-making for routine operations. Subsidiaries are required to report to the Company on their execution of duties and risk situations, as necessary, and the Company’s directors or employees are dispatched as directors of subsidiaries to participate in management and be responsible for oversight.Regarding audit by auditors, as well as reporting on important matters at meetings of the Board of Directors, based on the statutory auditors’ requests directors make reports or hold a meeting with statutory auditors, as necessary. Directors and employees are required to report to statutory auditors without delay concerning any eventuality that may cause significant damage or that caused damage to the Company. In the event that statutory auditors request assistants, the Company selects such assistants based on the discussion with statutory auditors about the number of assistants, positions, affiliation, etc., and secures the consent of the Board of Auditors for treatment of such assistants.In addition, with respect to the system specified by a Cabinet Office Ordinance as necessary for ensuring appropriateness of statements on finance and accounting and other information as set forth in Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Law, the Company

CORPORATE GOVERNANCE

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(2) Compensation paid to directors and corporate auditorsThe compensation paid to directors and corporate audi-tors of the Company is as follows:

Note: The Company has no outside directors.

On Introduction of Measures against Large-scale Purchases of the Company’s Shares (Anti-Takeover Measures) The Company aims to produce reliable products, providing the machine tools and technologies that are most suitable for our customers so that they can manufacture their products efficiently. It is an invaluable asset to the Company to satisfy their demand and to maintain strict confidentiality of them.We believe that we must eliminate large-scale purchases of the shares which will damage this relationship based on trust.The introduction of the Anti-takeover Measures was approved by the shareholders at the Ordinary General Meeting of Shareholders on June 20, 2008 and came into effect.

maintains and manages such system in accordance with the basic framework of internal control as indicated in the” On the Setting of the Standards and Practice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting (Council Opinions)” published by the Business Accounting Council.

3) Internal audit and audit by corporate auditorsNecessary audits are performed at the Company on the basis of close cooperation between the corporate auditors, the accounting auditor and relevant staff at the Finance Department, the General Affairs Department and the Internal Audit Office. Internal audit on maintenance and management of internal control over financial reporting is conducted by the Internal Audit Office (consists of three members), which is established as an independent organization and directly reports to the President, in cooperation with relevant departments of the Company and its consolidated subsidiaries. Regarding audits by the accounting auditor, necessary coordination such as scheduling is made internally through discussion between the corporate auditors, the Finance Department, the General Affairs Department and the Internal Audit Office. Corporate auditors and the Finance Department periodically exchange views with the accounting auditor and the necessary coordination is made. In addition, corporate auditors witness the audit process, as deemed necessary, to monitor the accounting auditor’s audit proceedings. Regarding audits by auditors, the statutory auditors gather necessary and sufficient information for conducting audits, including the situation of the Company and situations of its subsidiaries and affiliates, on a routine basis through systematic exchanges of views with directors, managerial personnel, key employees, and the accounting auditor of the Company and its subsidiaries and affiliates. Also, statutory auditors receive reports on the accounting auditor’s audit results, and use such information in conducting stringent audits.

4) Accounting auditsCertified public accountants engaged in the Company’s accounting audits are Mr. Takayuki Nakagawa and Mr. Naruhito Minami, both of whom are with Gyosei & Co. Assistants engaged in the accounting audits comprise five certified public accountants, three junior accountants and two other persons.

5) Relation with outside corporate auditorsThere are no personal, capital or transactional relations between the Company and its two outside corporate auditors.

Number of persons Amount of compensa-tion (Millions of yen)

Directors 9 159Corporate audi-tors excluding outside corporate auditors

2 9

Outside corporate auditors 2 33

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(Assets, Liabilities and Net Assets)Total assets on a consolidated basis at the end of fiscal 2012 increased by ¥10,080 million from the end of fiscal 2011 to ¥178,361 million. This is primarily attributable to a reduction of ¥7,778 million in cash and time deposits, a decrease of ¥555 million in notes and accounts receivable, an increase of ¥11,953 million in inventories and an increase of ¥6,425 million in property, plant and equipment.

Total liabilities increased by ¥6,034 million from the end of fiscal 2011 to ¥94,611 million. This is primarily due to the effect of ¥2,776 million decrease in notes and accounts payable, trade, ¥1,143 million decrease in loans and ¥10,000 million increase in bonds.

Net assets increased by ¥4,045 million from the end of fiscal 2011 to ¥83,750 million, mainly due to an increase of ¥2,788 million in retained earnings and an increase of ¥1,285 million in unrealized gain on available-for-sale securities.

(Cash Flow)Cash used in operating activities at the end of fiscal 2012 was ¥6,126 million, principally reflecting ¥5,039 million in income before income taxes, ¥3,451 million in depreciation and amortization, an increase of ¥11,870 million in inventories, and a decrease of ¥2,526 million in notes and accounts payable, trade.

Cash used in investing activities was ¥9,614 million, principally reflecting the effect of ¥82 million decrease in time deposits and ¥10,100 million payment for purchases of property, plant and equipment.

Cash provided by financing activities was ¥7,137 million. This resulted principally from ¥885 million for dividends paid, ¥3,000 million for repayment of long-term loans payable, as well as from ¥10,000 million for proceeds from issue of bonds.

As a result of the above, cash and cash equivalents on a consolidated basis at the end of fiscal 2012 decreased by ¥8,715 million from the end of fiscal 2011 to ¥27,888 million.

The table below shows trends in cash-flow indicators.

FINANCIAL REVIEW

The Group operates around the world, and the

operations are influenced by a range of different factors,

the most important of which are as follows:

- Changes in global economic conditions: The sales

of the Company heavily depend on capital expenditures

in the manufacturing industry in Japan, Asia and

America. Since the investment appetite of companies is

likely to fall more sharply than the general economy,

there is the possibility that orders and sales of producer

goods will decline rapidly if the global economy slows.

- Trends in individual industries: Many of the

Company’s products are used in automotive companies.

Although trends in capital expenditure in the auto sector

are the most stable in the manufacturing industry, they

have a very substantial effect on sales of the Company

because the capital expenditure, which is large, has a

very significant influence on supply and demand in the

market for machine tools. Sales in growth industries,

including IT and digital home appliances, change sharply

every fiscal year because of violent fluctuations in supply

and demand.

- Exchange rate fluctuations: More than half of the

Company’s products are sold overseas. Moreover, we

have developed a range of operations overseas.

Exchange rates consequently have a significant impact on

the sales and income of the Company.

- Changes in the supply-demand of parts and raw

materials: Machine tools contain many parts and raw

materials. If supply of parts and raw materials tightens,

prices may rise, and this in turn could influence income.

If the needed quality, quantity, and delivery dates are not

secured, it could influence production and sales.

- Country risk: The Company has made inroads into

countries that are modernizing their industries. If

unexpected changes occur in the political, economic, or

social circumstances in these countries, or if legal

regulations are established or tightened, it could affect

the sales and income of the Company.

BUSINESS RISKS

69th term 70th term 71st termTerm ended March 2008

Term ended March 2009


Shareholders’ equity ratio (%) 55.8 55.0 47.6

Shareholders’ equity ratio on a market value basis (%) 48.4 19.0 42.0

Ratio of interest-bearing debt to cash flows (%) 2.5 15.6 18.1

Interest coverage ratio (times) 17.0 4.9 3.4

72nd term 73rd termTerm ended March 2011


Shareholders’ equity ratio (%) 47.0 46.6

Shareholders’ equity ratio on a market value basis (%) 46.7 44.2

Ratio of interest-bearing debt to cash flows (%) 10.4 —

Interest coverage ratio (times) 4.2 —

Shareholders’ equity ratio: Shareholders’ equity / Total assetsShareholders’ equity ratio on a market value basis: Market capitalization / Total assetsRatio of interest-bearing debt to cash flows: Interest-bearing debt / Cash flowsInterest coverage ratio: Cash flows / Interest payment

* Each indicator is calculated from consolidated financial data.* Market capitalization is computed based on the number of

shares issued, excluding treasury stock.* Cash flows mean cash flows from operating activities.* Interest-bearing debt includes all liabilities bearing interest

posted in the consolidated balance sheets.Interest payment is interest paid recorded in the consolidated statements of cash flows.

* The ratio of interest-bearing debt to cash flows and interest coverage ratio are not stated because cash flows from operating activities were negative in fiscal 2012.

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dollars

2010 2011 2012 2012

ASSETS

Current assets:

Cash and time deposits (Notes 3 and 14) ¥ 51,022 ¥ 36,714 ¥ 28,935 $ 352,050

Marketable securities (Notes 2.e, 3 and 4) 2,019 2,021 1,000 12,166

Notes and accounts receivable (Notes 2.k, 3 and 5) 24,153 31,626 31,071 378,038

Inventories (Notes 2.f and 6) 29,655 37,234 49,188 598,466

Deferred income taxes (Notes 2.j and 10) 791 1,906 2,032 24,723

Other current assets 2,682 3,865 3,907 47,536

Allowance for doubtful accounts (Notes 2.h and 3) (800) (893) (731) (8,894)

Total current assets 109,523 112,476 115,404 1,404,112

Investments and other assets:

Investment securities (Notes 2.e, 3 and 4) 10,383 11,790 13,183 160,396

Long-term loans receivable 671 662 626 7,616

Deferred income taxes (Notes 2.j and 10) 990 937 840 10,220

Other long-term assets 5,728 5,735 5,072 61,710

Allowance for doubtful accounts (Notes 2.h and 3) (566) (603) (471) (5,730)

Total investments and other assets 17,207 18,523 19,251 234,225

Property, plant and equipment (Note 2.g):

Land 9,856 9,769 14,865 180,861

Buildings and structures 49,499 49,592 51,442 625,891

Machinery and equipment 23,298 23,365 23,977 291,726

Lease assets (Note 9) 2,400 2,584 3,222 39,201

Construction in progress 461 213 166 2,019

85,515 85,526 93,674 1,139,725

Accumulated depreciation (46,825) (48,245) (49,968) (607,957)

Total property, plant and equipment 38,690 37,280 43,706 531,767

Total assets ¥ 165,422 ¥ 168,280 ¥ 178,361 $ 2,170,105

The accompanying notes are an integral part of these statements.

CONSOLIDATED BALANCE SHEETSMakino Milling Machine Co., Ltd. and Consolidated Subsidiaries March 31, 2010, 2011 and 2012

US$1=¥82.19

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dollars

2010 2011 2012 2012

LIABILITIES AND NET ASSETSCurrent liabilities:

Notes and accounts payable (Note 3):Trade ¥ 14,278 ¥ 24,673 ¥ 21,896 $ 266,407 Other 2,051 5,569 4,932 60,007

Short-term loans (Notes 3 and 7) 5,186 2,322 4,211 51,234 Current portion of long-term debt

(Notes 2.k, 3, 5 and 7) 14,677 3,011 3,075 37,413 Short-term lease obligations (Note 7) 624 678 497 6,046 Accrued expenses 4,129 4,632 5,656 68,816 Income taxes payable 581 1,116 819 9,964 Other current liabilities 941 1,519 2,092 25,453 Total current liabilities 42,471 43,523 43,181 525,380

Long-term liabilities:Long-term debt (Notes 2.k, 3, 5 and 7) 35,146 36,268 43,172 525,270 Long-term lease obligations (Note 7) 2,207 2,103 2,166 26,353 Allowance for employees'

retirement benefits (Notes 2.i and 8) 827 462 499 6,071 Allowance for directors' and corporate

auditors' retirement benefits (Note 2.i) 279 295 31 377 Deferred income taxes (Notes 2.j and 10) 3,477 3,944 3,766 45,820 Other long-term liabilities 1,615 1,978 1,791 21,790 Total long-term liabilities 43,554 45,052 51,429 625,733

Net assets:Shareholders' equity

Common stock, no par value 19,263 19,263 19,263 234,371Authorized : 300,000,000 sharesIssued :119,944,543 shares

as of March 31, 2010, 2011 and 2012Capital surplus 32,595 32,595 32,595 396,581 Retained earnings (Note 12) 31,832 34,099 36,887 448,801 Treasury stock (Note 2.m) (2,767) (4,772) (4,777) (58,121)

5,316,080, 8,683,036 and 8,690,111 shares as of March 31, 2010, 2011 and 2012, respectively

Total shareholders' equity 80,924 81,185 83,969 1,021,644 Accumulated other comprehensive loss

Unrealized gain on available-for-salesecurities (Note 2.e) 3,563 4,299 5,585 67,952

Deferred gains (losses) on hedges (Note 2.k) — (58) (2) (24)Foreign currency

translation adjustments (Note 2.d) (5,680) (6,318) (6,451) (78,488)Total accumulated other comprehensive loss (2,116) (2,077) (869) (10,573)

Minority interests 588 597 649 7,896 Total net assets 79,396 79,704 83,750 1,018,980 Total liabilities and net assets ¥ 165,422 ¥ 168,280 ¥ 178,361 $ 2,170,105


US$1=¥82.19

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CONSOLIDATED STATEMENTS OF INCOMEMakino Milling Machine Co., Ltd. and Consolidated Subsidiaries For the years ended March 31, 2010, 2011 and 2012


dollars

2010 2011 2012 2012

Net sales ¥ 57,881 ¥ 95,164 ¥ 110,460 $ 1,343,959

Cost of sales 50,529 70,603 81,287 989,013

Gross profit 7,352 24,561 29,172 354,933

Selling, general and administrative expenses 17,780 21,720 23,361 284,231

Operating income (loss) (10,427) 2,840 5,811 70,702

Other income (expenses):

Interest and dividend income 212 258 291 3,540

Interest expense (896) (949) (865) (10,524)

Gain on sales of property, plant and equipment 56 77 50 608

Loss on disposal of property, plant and equipment (34) (30) (56) (681)

Loss on valuation of investment securities — (1) — —

Exchange gain (loss), net (328) (873) (269) (3,272)

Other, net 429 305 77 936

Income (loss) before income taxes (10,989) 1,626 5,039 61,309

Income taxes (Notes 2.j and 10) - Current 147 672 1,501 18,262

- Deferred (541) (1,240) (229) (2,786)

Income (loss) before minority interests (10,595) 2,193 3,767 45,832

Minority interests in earnings (losses)

of consolidated subsidiaries (3) 26 68 827

Net income (loss) ¥ (10,591) ¥ 2,167 ¥ 3,698 $ 44,993

Yen Dollars

Per share of common stock:

Net income (loss) ¥ (92.40) ¥ 19.32 ¥ 33.24 $ 0.40

Cash dividends applicable to the period 0.00 4.00 8.00 0.09

US$1=¥82.19

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEMakino Milling Machine Co., Ltd. and Consolidated Subsidiaries For the years ended March 31, 2010, 2011 and 2012


dollars

2010 2011 2012 2012

Income before minority interests ¥ — ¥ 2,193 ¥ 3,767 $ 45,832

Other comprehensive income (Notes 2.o and 13):

Unrealized gain on available-for-sale securities

(Note 2.e) — 735 1,285 15,634

Deferred gains (losses) on hedges (Note 2.k) — (58) 55 669

Foreign currency translation adjustments (Note 2.d) — (640) (133) (1,618)

Other comprehensive income — 36 1,208 14,697

Total comprehensive income ¥ — ¥ 2,230 ¥ 4,975 $ 60,530

Total comprehensive income attributable to

(Notes 2.o and 13):

Owners of the parent — 2,205 4,907 59,703

Minority interests — 24 68 827

¥ — ¥ 2,230 ¥ 4,975 $ 60,530

US$1=¥82.19

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dollars

2010 2011 2012 2012

Common stock:

Balance at beginning of year ¥ 19,263 ¥ 19,263 ¥ 19,263 $ 234,371

Balance at end of year ¥ 19,263 ¥ 19,263 ¥ 19,263 $ 234,371

Capital surplus:



Retained earnings (Note 12):


Net income (loss) (10,591) 2,167 3,698 44,993

Cash dividends — — (890) (10,828)

Other (31) 98 (19) (231)


Treasury stock (Note 2.m):

Balance at beginning of year ¥ (2,764) ¥ (2,767) ¥ (4,772) $ (58,060)

Acquisition of treasury stock (2) (2,005) (4) (48)

Balance at end of year ¥ (2,767) ¥ (4,772) ¥ (4,777) $ (58,121)

Unrealized gain on available-for-sale securities

(Note 2.e):


Net change during the year 1,871 735 1,285 15,634


Deferred gains (losses) on hedges (Note 2.k):

Balance at beginning of year ¥ — ¥ — ¥ (58) $ (705)

Net change during the year — (58) 55 669

Balance at end of year ¥ — ¥ (58) ¥ (2) $ (24)

Foreign currency translation adjustments

(Note 2.d):

Balance at beginning of year ¥ (5,786) ¥ (5,680) ¥ (6,318) $ (76,870)

Net change during the year 106 (638) (132) (1,606)

Balance at end of year ¥ (5,680) ¥ (6,318) ¥ (6,451) $ (78,488)

Minority interests:

Balance at beginning of year ¥ 1,249 ¥ 588 ¥ 597 $ 7,263

Net change during the year (661) 9 52 632

Balance at end of year ¥ 588 ¥ 597 ¥ 649 $ 7,896


CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSMakino Milling Machine Co., Ltd. and Consolidated Subsidiaries For the years ended March 31, 2010, 2011 and 2012

US$1=¥82.19

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CONSOLIDATED STATEMENTS OF CASH FLOWSMakino Milling Machine Co., Ltd. and Consolidated Subsidiaries For the years ended March 31, 2010, 2011 and 2012


dollars

2010 2011 2012 2012Cash flows from operating activities:

Income (loss) before income taxes ¥ (10,989) ¥ 1,626 ¥ 5,039 $ 61,309Adjustments for:

Income taxes (paid) refund 379 (170) (1,769) (21,523)Depreciation and amortization 3,377 3,262 3,451 41,988 Amortization of goodwill 33 15 (23) (279)Increase (decrease) in allowance for directors'

and corporate auditors' retirement benefits (1,030) 15 (263) (3,199)Increase (decrease) in allowance for

employees' retirement benefits 299 (177) 65 790Increase (decrease) in allowance for

doubtful accounts 142 159 (276) (3,358)(Gain) loss on sales of property, plant and equipment (56) (77) (50) (608)Loss on disposal of property, plant and equipment 34 30 56 681 (Increase) decrease in notes and accounts receivable, trade (156) (8,110) 338 4,112 (Increase) decrease in inventories 4,465 (8,054) (11,870) (144,421)Increase (decrease) in notes and accounts payable, trade 3,412 10,834 (2,526) (30,733)Other, net 3,123 4,640 1,701 20,695

Net cash provided by (used in) operating activities 3,035 3,994 (6,126) (74,534)

Cash flows from investing activities:(Increase) decrease in time deposits (8,980) 8,120 82 997 Purchases of investment securities (51) (3) (3) (36)Purchases of property, plant and equipment (1,738) (2,312) (10,100) (122,885)Proceeds from sales of property, plant and equipment 477 190 343 4,173Other, net (320) (693) 62 754

Net cash provided by (used in) investing activities (10,613) 5,300 (9,614) (116,972)

Cash flows from financing activities:Increase (decrease) in short-term loans, net 924 (2,534) 1,909 23,226 Repayment of lease obligations (333) (296) (866) (10,536)Proceeds from long-term loans payable 535 4,750 — —Repayment of long-term loans payable (611) (5,264) (3,000) (36,500)Proceeds from issue of bonds 10,000 — 10,000 121,669 Redemption of bonds — (10,000) — —Purchases of treasury stock (2) (2,005) (4) (48)Purchases of treasury stock of subsidiaries

in consolidation (316) (14) (14) (170)Dividends paid (1) (0) (885) (10,767)

Net cash provided by (used in) financing activities 10,194 (15,365) 7,137 86,835

Effect of exchange rate changes on cash and cash equivalents 194 (116) (112) (1,362)

Net increase (decrease) in cash and cash equivalents 2,811 (6,186) (8,715) (106,034)Cash and cash equivalents, beginning of

period (Notes 2.b and 14) 39,978 42,790 36,604 445,358Cash and cash equivalents, end of period

(Notes 2.b and 14) ¥ 42,790 ¥ 36,604 ¥ 27,888 $ 339,311

US$1=¥82.19

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1. Basis of Presenting Financial Statements The accompanying consolidated financial statements of Makino Milling Machine Co., Ltd. (the “Company”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles and practices generally accepted and applied in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.

In preparing the consolidated financial statements, certain reclassifications and rearrangements have been made to the financial statements issued domestically in Japan in order to present these statements in a form, which is more familiar to the readers outside Japan.

In addition, the notes to the consolidated financial statements include information, which is not required under generally accepted accounting principles and practices in Japan but is presented herein as additional information.

Amounts of less than one million yen have been omitted as permitted under generally accepted accounting principles and practices in Japan. As a result, the totals shown in the accompanying consolidated financial statements (both in yen and dollars) do not necessarily agree with the sum of individual amounts.

The United States dollar amounts presented in the accompanying consolidated financial statements are included solely for convenience and are stated, as a matter of arithmetical computation only, at the rate of ¥82.19 = US$1, which was the prevailing exchange rate on March 31, 2012.

2. Summary of Significant Accounting Policies(a) Principles of consolidationThe accompanying consolidated financial statements include the accounts of the Company and its subsidiaries (26 subsidiaries for 2010 and 2011 and 27 for 2012). The significant subsidiaries, which are consolidated with the Company, are listed below:

MAKINO ASIA PTE LTDMAKINO INC.MAKINO Europe GmbHMAKINO RESOURCE DEVELOPMENT PTE LTDMakino J Co., Ltd.Makino Denso Co., Ltd.Makino Technical Service Co., Ltd.Kanto Bussan Kaisha, Ltd.Makino Giken Co., Ltd.Makino Logistics Co., Ltd.

The remaining four subsidiaries, whose assets, net sales, net income and the underlying net equity of retained earnings in the aggregate are not significant in the consolidated totals, have not been consolidated with the Company.

The fiscal year of the consolidated subsidiaries is the same as the Company’s except for three subsidiaries: Makino do Brasil Ltda., Single Source Technologies S. de R.L. de C.V. and MAKINO CHINA Co., LTD., whose fiscal years end on December 31. Significant transactions between January 1 and March 31 are reflected in the consolidated financial statements.

The equity method is not applied since the combined net profit and loss and the underlying net equity of retained earnings in the aggregate in the four unconsolidated subsidiaries and an affiliate are not significant in the consolidated totals.

All significant intercompany accounts and transactions are eliminated in consolidation. The difference between acquisition cost and the underlying net equity at the time of acquisition is amortized evenly over five years.

(b) Cash equivalentsCash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits and certificate of deposits, all of which mature or become due within three months of the date of acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSMakino Milling Machine Co., Ltd. and Consolidated Subsidiaries

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(c) Foreign currency translationsAll short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statements of income unless they are hedged by forward exchange contracts.

(d) Foreign currency financial statementsThe balance sheet accounts of the overseas consolidated subsidiaries are translated into Japanese yen at the rates of exchange at the balance sheet date except as to capital, which is translated at the historical rates of exchange at dates of acquisition. The revenue and expense accounts of those subsidiaries are translated into Japanese yen at the average rates of exchange in effect during each fiscal year. Differences arising from translation are shown as “Foreign currency translation adjustments” in the net assets in the accompanying consolidated balance sheets.

(e) Marketable securities and investment securitiesInvestments in the unconsolidated subsidiaries and the affiliate are stated at cost. Equity method is not applied as in Note 2(a). Marketable securities and investment securities other than investment securities in the subsidiaries and the affiliate are stated at market value. However, such securities without market value are stated at cost if they are not significantly impaired. The Company credits or charges unrealized gain or loss, net of income taxes, on the above securities to net assets as “Unrealized gain on available-for-sale securities”.

The cost of sold securities is calculated using the gross average method.

(f) Inventories Finished products and work in process are principally valued at the lower of cost or net realized value, determined by the specific identification method. Raw materials and supplies are stated at the most recent purchase prices.

(g) Property, plant, equipment and depreciationProperty, plant and equipment, including significant renewals and additions, are carried at cost. The cost of property, plant and equipment retired or otherwise disposed of and accumulated depreciation in respect thereof are eliminated from the related accounts, and the resulting gain or loss is reflected in income. Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.

Depreciation of the Company and the domestic consolidated subsidiaries is mainly computed by the declining balance method using the rates based on estimated useful lives of the assets. Depreciation of the overseas consolidated subsidiaries is computed by the straight-line method. The range of useful lives is principally from 5 to 50 years for buildings and structures and from 3 to 12 years for machinery and equipment.

(h) Allowance for doubtful accountsThe Group provides for possible losses due to uncollectibility of notes, accounts, loans receivable, etc. based on the Company’s past credit loss experience and management’s estimate.

(i) Allowance for employees’ retirement benefits and directors’ and corporate auditors’ retirement benefitsEmployees, excluding directors and corporate auditors, of the Company and most of its domestic consolidated subsidiaries are covered by a retirement plan whereby each employee, under most circumstances, upon mandatory retirement at the age of 60 years or earlier termination of employment, is entitled to either a lump sum retirement payment or pension payment based on compensation at the time of retirement and years of service. These employees’ retirement plans are funded.

The employees’ retirement benefits are accounted for as the liability for retirement benefits based on projected benefit obligations and plan assets in conformity with the accounting standard for the employees’ retirement benefits.

Directors and corporate auditors are not covered by these plans. However, liabilities for directors’ and corporate auditors’ retirement benefits include amounts equal to management’s estimate of the amounts which would be payable to them if they retired at the balance sheet date. Amounts payable to directors and corporate auditors upon retirement are subject to the approval of shareholders.

(j) Income taxesDeferred income taxes are recognized applying the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax basis of the assets and

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liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company and some of its consolidated subsidiaries have obtained approval from the Commissioner of the National Tax Agency for the application of the consolidated taxation system from the year ending March 31, 2013. Therefore related accounting procedures have been adopted since the fiscal year ended March 31, 2012 in accordance with “Practical Solution on Tentative Treatment of Tax Effect Accounting under the Consolidated Taxation System (Part 1)” (Accounting Standards Board of Japan PITF No. 5) and “Practical Solution on Tentative Treatment of Tax Effect Accounting under the Consolidated Taxation System (Part 2)” (Accounting Standards Board of Japan PITF No. 7) on the assumption that the Company and the subsidiaries will apply the consolidated taxation system.

(k) Hedge accountingThe Group uses derivative financial instruments to manage exposures to fluctuations in foreign exchange and interest rates and does not enter into the derivatives for trading or speculative purposes.

Forward exchange contracts are used for accounts receivable and payable denominated in foreign currencies. If the contracts meet certain hedging criteria, the hedged items are translated at the contracted rates, and the Group defers recognition of gains and losses resulting from changes in the fair value of the derivatives for future transactions until the related losses and gains on the hedged transactions are recognized.

The Group enters into interest rate swap contracts for long-term loans. The swaps which qualify for hedge accounting are not re-measured at market value, but the differential to be paid or received under the swap contracts are accrued and included in interest expense or income (the special hedge accounting short-cut method for interest rate swaps).

The Company assesses the effectiveness of the forward exchange contracts by comparing the contracted rate and spot rate at the balance sheet date and expiration date. The effectiveness assessment of the interest rate swaps, however, is not undertaken as they meet the hedging criteria for the special hedge accounting short-cut method.

(l) Appropriations of retained earningsAppropriations of retained earnings are accounted for and reflected in the accompanying consolidated financial statements basically when they are approved by the shareholders or resolved by the board of directors.

(m) Treasury stockThe portion of treasury stock attributable to minority shareholders is deducted from minority interests in the accompanying consolidated balance sheets, and the portion attributable to the Company is deducted from shareholders’ equity.

(n) ReclassificationsCertain reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year’s presentation.

(o) Comprehensive incomeEffective from the fiscal year ended March 31, 2011, “Accounting Standard for Presentation of Comprehensive Income” (Accounting Standards Board of Japan Statement No. 25) was adopted. In accordance with the standard, consolidated statement of comprehensive income for the year ended March 31, 2010 is not presented. The comparative information for the year ended March 31, 2010 is disclosed in Note 13.

(p) Accounting changes and error correctionsThe following accounting standard and guidance have been applied to accounting changes and error corrections made on or after April 1, 2011: “Accounting Standard for Accounting Changes and Error Corrections” (Accounting Standards Board of Japan Statement No. 24) and “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (Accounting Standards Board of Japan Guidance No. 24).

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3. Financial InstrumentsEffective from the fiscal year ended March 31, 2010, “Accounting Standard for Financial Instruments” (Accounting Standards Board of Japan Statement No. 10) and “Guidance on Disclosures about Fair Value of Financial Instruments” (Accounting Standards Board of Japan Guidance No. 19) were adopted.

(1) Management policyIn consideration of plans for capital expenditure, the Group raises funds through loans and bonds. Temporary cash surpluses are invested in low-risk financial assets, and short-term capital is raised through loans. The Group uses derivatives for the purpose of reducing risk and does not enter into derivatives for speculative or trading purposes.

(2) Financial instruments and risk managementNotes and accounts receivable are exposed to customer credit risk. The Group identifies and reduces risk of bad debt by reviewing the financial positions of major customers and outstanding balances.

Notes and accounts receivable denominated in foreign currencies are also exposed to foreign exchange risk. To reduce the risk, the Group enters into forward exchange contracts.

The Group holds marketable securities and investment securities, most of which are shares of other companies with which the Group has business relationships, the subsidiaries and the affiliate. Those securities are exposed to market risk, and the Group regularly reviews the fair values of the securities and the financial positions of the issuers.

The purpose of loans, bonds and finance leases is mainly to finance capital expenditure. Interest rate swaps are used to avoid interest rate risk from loans with floating interest rates.

The Group manages liquidity risk by preparing and updating cash flow plans and maintaining sufficient funds.

The amount of financial instruments on the consolidated balance sheets and the fair value are as follows:Year ended March 31,

Millions of yen

2010Amount on

balance sheetFair value Difference

AssetsCash and time deposits ¥ 51,022 ¥ 51,022 —Notes and accounts receivable 24,153 n/a n/aAllowance for doubtful accounts (800) n/a n/aMarketable securities and investment securities 12,310 12,310 —

Total assets ¥ 86,686 ¥ 86,686 —Liabilities

Notes and accounts payable ¥ 14,278 ¥ 14,278 —Short-term loans 5,186 5,186 —Current portion of bonds 10,000 10,000 —Current portion of long-term loans 4,677 4,677 —Bonds 20,000 20,030 30Long-term loans 15,146 15,231 84

Total liabilities ¥ 69,289 ¥ 69,401 ¥ 114Derivatives — — —

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Year ended March 31,

Millions of yen

2011Amount on




Notes and accounts payable ¥ 24,673 ¥ 24,673 —Short-term loans 2,322 2,322 —Current portion of long-term loans 3,011 3,011 —Bonds 20,000 20,031 31Long-term loans 16,268 16,414 145

Total liabilities ¥ 66,275 ¥ 66,451 ¥ 176Derivatives ¥ 8 ¥ 8 —


Millions of yen

2012Amount on




Notes and accounts payable ¥ 21,896 ¥ 21,896 —Short-term loans 4,211 4,211 —Current portion of long-term loans 3,075 3,075 —Bonds 30,000 30,387 387 Long-term loans 13,172 13,250 77

Total liabilities ¥ 72,356 ¥ 72,820 ¥ 464Derivatives ¥ (4) ¥ (4) —


Thousands of dollars

2012Amount on


AssetsCash and time deposits $ 352,050 $ 352,050 —Notes and accounts receivable 378,038 n/a n/aAllowance for doubtful accounts (8,894) n/a n/aMarketable securities and investment securities 171,322 171,322 —

Total assets $ 892,529 $ 892,529 —Liabilities

Notes and accounts payable $ 266,407 $ 266,407 —Short-term loans 51,234 51,234 —Current portion of long-term loans 37,413 37,413 —Bonds 365,007 369,716 4,708 Long-term loans 160,262 161,211 936

Total liabilities $ 880,350 $ 885,995 $ 5,645 Derivatives $ (48) $ (48) —

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4. Marketable Securities and Investment Securities(1) Marketable securities and investment securities quoted at an exchange as of March 31, 2010, 2011 and 2012

As of March 31,

Millions of yen

2010

Acquisition costAmount on

balance sheetDifference

Available-for-sale securities whose amount on balance sheet exceeds acquisition cost(1) Stocks ¥ 4,357 ¥ 10,261 ¥ 5,904(2) Other 1,018 1,019 0

Subtotal ¥ 5,376 ¥ 11,280 ¥ 5,904Available-for-sale securities whose amount on balance sheet does not exceed acquisition cost(1) Stocks ¥ 39 ¥ 30 ¥ (9)(2) Other 20 19 (0)

Subtotal ¥ 60 ¥ 49 ¥ (10)Total ¥ 5,436 ¥ 11,330 ¥ 5,893

As of March 31,

Millions of yen

2011



Available-for-sale securities whose amount on balance sheet exceeds acquisition cost(1) Stocks ¥ 3,427 ¥ 10,861 ¥ 7,434(2) Other 1,020 1,020 0

Subtotal ¥ 4,448 ¥ 11,882 ¥ 7,434Available-for-sale securities whose amount on balance sheet does not exceed acquisition cost(1) Stocks ¥ 972 ¥ 836 ¥ (135)(2) Other 20 19 (0)

Subtotal ¥ 992 ¥ 856 ¥ (135)Total ¥ 5,440 ¥ 12,738 ¥ 7,298

As of March 31,

Millions of yen

2012



Available-for-sale securities whose amount on balance sheet exceeds acquisition cost(1) Stocks ¥ 3,427 ¥ 12,198 ¥ 8,771 (2) Other — — —

Subtotal ¥ 3,427 ¥ 12,198 ¥ 8,771 Available-for-sale securities whose amount on balance sheet does not exceed acquisition cost(1) Stocks ¥ 974 ¥ 882 ¥ (91)(2) Other 20 17 (2)

Subtotal ¥ 994 ¥ 900 ¥ (94)Total ¥ 4,422 ¥ 13,099 ¥ 8,677

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As of March 31,


2012



Available-for-sale securities whose amount on balance sheet exceeds acquisition cost(1) Stocks $ 41,696 $ 148,412 $ 106,716 (2) Other — — —

Subtotal $ 41,696 $ 148,412 $ 106,716 Available-for-sale securities whose amount on balance sheet does not exceed acquisition cost(1) Stocks $ 11,850 $ 10,731 $ (1,107)(2) Other 243 206 (24)

Subtotal $ 12,093 $ 10,950 $ (1,143)Total $ 53,802 $ 159,374 $ 105,572

5. Derivative Financial Instruments(1) Derivatives to which hedge accounting is not applied

(a) Currency relatedAs of March 31,

Millions of yen

2010

Contracted amountContracted amount

over one yearFair value Unrealized gain (loss)

Forward exchange contractsSales contracts

US$ ¥465 — — —Total ¥465 — — —

As of March 31,

Millions of yen

2011




US$ ¥498 — — —

Currency option contractsSales contracts

US$ 4,631 — 118 (54)Total ¥5,130 — ¥118 ¥(54)

As of March 31,

Millions of yen

2012




US$ ¥452 — — —Total ¥452 — — —

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As of March 31,


2012




US$ $5,499 — — —Total $5,499 — — —

(2) Derivatives to which hedge accounting is applied(a) Currency related

As of March 31,

Millions of yen

2010Hedge accounting

methodNature of

transactionHedged item Contracted amount

Contracted amount over one year

Fair value

Method where hedged items are translated at contracted rates

Forward exchange contracts

Sales contracts

US$Account receivable

¥337 — ¥ (8)

EuroAccount receivable

649 — 45

Total ¥986 — ¥36

As of March 31,

Millions of yen


methodNature of



Fair value



Sales contracts


¥1,160 — ¥ (42)

Principle method Forward exchange contracts

Sales contracts


2,307 1,908 (110)

Total ¥3,468 ¥1,908 ¥(152)

010_0774001372408.indd 19 2012/08/22 21:04:50

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As of March 31,

Millions of yen


methodNature of



Fair value



Sales contracts


¥5,092 — ¥(214)


2,140 — (91)


Sales contracts


1,989 791 (4)

Total ¥9,222 ¥791 ¥(309)

As of March 31,



methodNature of



Fair value



Sales contracts


$61,954 — $(2,603)


26,037 — (1,107)


Sales contracts


24,200 9,624 (48)

Total $112,203 $9,624 $(3,759)

(b) Interest relatedAs of March 31,

Millions of yen


methodNature of



Fair value

Special hedge accounting short-cut method for interest rate swaps

Interest rate swap contracts Receive floating, pay fixed

Long-term loans ¥16,194 ¥12,637 *

Total ¥16,194 ¥12,637 *

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As of March 31,

Millions of yen


methodNature of



Fair value



Long-term loans ¥16,959 ¥14,615 *

Total ¥16,959 ¥14,615 *

As of March 31,

Millions of yen


methodNature of



Fair value



Long-term loans ¥14,621 ¥12,271 *

Total ¥14,621 ¥12,271 *

As of March 31,



methodNature of



Fair value



Long-term loans $177,892 $149,300 *

Total $177,892 $149,300 *

* Interest rate swaps are accounted for as part of long-term loans. Therefore the fair value of the swaps is included in the fair value of the underlying long-term loans.

6. Inventories Inventories as of March 31, 2010, 2011 and 2012 comprise the following:

As of March 31,


dollars

2010 2011 2012 2012Finished products ¥ 9,591 ¥ 8,640 ¥16,115 $196,070Work in process 7,331 10,922 14,652 178,269Raw material and supplies 12,733 17,671 18,420 224,114

Total ¥29,655 ¥37,234 ¥49,188 $598,466

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7. Short-term and Long-term Debts and Lease Obligations As of March 31, 2012, the Company has line of credit agreements with four banks and delayed draw term loan agreements with 21 financial institutions. The agreements provide for lines of credit in the aggregate principal amount of ¥5,000 million ($60,834 thousand) and delayed draw term loans in the aggregate principal amount of ¥10,000 million ($121,669 thousand). No amounts were drawn under the agreements.

The table below shows information on short-term and long-term debts and lease obligations:As of March 31,


dollars

Interest rate Date of maturity 2010 2011 2012 2012Short-term loans 1.66* — ¥ 5,186 ¥ 2,322 ¥ 4,211 $ 51,234Current portion of long-term loans 2.23* — 4,677 3,011 3,075 37,413

Long-term loans less current portion 2.23* from June 30, 2013 to June 30, 2015 ¥ 15,146 ¥ 16,268 ¥ 13,172 $ 160,262

Yen unsecured bonds 1.23 September 10, 2010 10,000 — — —Yen unsecured bonds 1.70 July 26, 2013 10,000 10,000 10,000 121,669Yen unsecured bonds 1.73 March 19, 2015 10,000 10,000 10,000 121,669Yen unsecured bonds 1.00 October 17, 2016 — — 10,000 121,669

Short-term lease obligations — — ¥ 624 ¥ 678 ¥ 497 $ 6,046

Long-term lease obligations — from April 30, 2013 to October 31, 2028 2,207 2,103 2,166 26,353

* the weighted average interest rate

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2012 are as follows:

Long-term debt Lease obligations

Year ending March 31,Millions of yen


Millions of yen Thousands of

dollars

2013 ¥ 3,075 $ 37,413 ¥ 497 $ 6,0462014 22,046 268,232 478 5,8152015 10,125 123,190 353 4,2942016 1,000 12,166 254 3,0902017 10,000 121,669 193 2,348

8. Employees’ Retirement BenefitsThe Company and its domestic consolidated subsidiaries have defined benefit pension plans, which consist of a benefit plan provided under the Welfare Pension Insurance Law of Japan, a corporate pension plan and a lump-sum payment plan as well as defined contribution pension plans. As of March 31, 2012, the fair value of the plan assets exceeds the projected benefit obligations at the Company and five of its domestic consolidated subsidiaries. The excess is accounted for as prepaid pension cost, which is included in “Other long-term assets” on the consolidated balance sheets.

Some of the overseas consolidated subsidiaries have defined contribution plans as well as defined benefit plans.

(1) The multi-employer pension plan under which required contributions are accounted for as benefit costs(a) Funded status

As of March 31,


dollars

2009 2010 2011 2011Fair value of plan assets ¥ 93,997 ¥ 108,492 ¥ 105,046 $ 1,278,087 Benefit obligation 148,468 136,167 132,729 1,614,904

Net amount ¥ (54,471) ¥ (27,675) ¥ (27,683) $ (336,817)

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(b) The Group’s proportion of the contributions to the aggregate pension contributions

As of March 31,

2009 2010 2011The Group’s proportion 7.48% 7.29% 7.86%

(2) The liability (asset) for employees’ retirement benefits As of March 31,


dollars

2010 2011 2012 2012Projected benefit obligation ¥ 14,299 ¥ 14,199 ¥ 14,746 $ 179,413 Fair value of plan assets (12,293) (12,032) (11,928) (145,127)Unrecognized actuarial loss (3,874) (3,880) (3,991) (48,558)Unrecognized prior service cost 332 273 215 2,615 Prepaid pension cost 2,364 1,902 1,458 17,739

Allowance for employees’ retirement benefits ¥ 827 ¥ 462 ¥ 499 $ 6,071

(3) The components of net periodic benefit costsYear ended March 31,


dollars

2010 2011 2012 2012Service cost ¥ 436 ¥ 453 ¥ 478 $ 5,815 Interest cost 470 420 408 4,964 Expected return on plan assets (320) (377) (375) (4,562)Amortization of unrecognized actuarial loss 1,115 596 571 6,947 Amortization of unrecognized prior service cost (56) (76) (74) (900)Contribution for Welfare Pension Insurance Fund 428 448 545 6,630 Extra retirement benefit and others 7 16 13 158 Contribution for defined contribution pension plan 166 167 168 2,044 Net periodic benefit costs ¥2,248 ¥1,650 ¥1,735 $21,109

(4) Assumptions used in accounting for the plans


2010 2011 2012Period allocation method for estimated retirement benefits Mainly straight-line Mainly straight-line Mainly straight-lineDiscount rate Mainly 2.0% Mainly 2.0% Mainly 2.0%Expected rate of return on plan assets Mainly 2.0% Mainly 2.0% Mainly 2.0%Amortization of prior service cost Mainly 10 years Mainly 10 years Mainly 10 yearsRecognition period of actuarial gain/loss Mainly 10 years Mainly 10 years Mainly 10 years

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9. LeasesLease assets accounted for as finance leases are depreciated using the same methods applied to the tangible fixed assets which the Company owns, except for those not accompanying the transfer of ownership, which are depreciated to residual value of zero by the straight-line method over the lease terms.

Note that finance leases not accompanying the transfer of ownership which commenced before March 31, 2008 continue to be accounted for as operating leases in accordance with accounting principles and practices generally accepted in Japan. A summary of assumed amounts of acquisition cost which includes interest portion, accumulated depreciation and net book value of those leases as of March 31, 2010, 2011 and 2012 is as follows:

As of March 31,

Millions of yenThousands of dollars

2010 2011 2012 2012Acquisition cost ¥2,063 ¥1,621 ¥736 $8,954 Accumulated depreciation 1,420 1,283 639 7,774Net book value ¥ 643 ¥ 337 ¥ 97 $1,180

Future lease payments, including interest portion, subsequent to March 31, 2010, 2011 and 2012 for finance leases accounted for as operating leases are as follows:


2010 2011 2012 2012Due within one year ¥319 ¥234 ¥82 $ 997 Due after one year 323 103 14 170Total ¥643 ¥337 ¥97 $1,180

Lease payments, including interest portion, for finance leases accounted for as operating leases are as follows:Year ended March 31,


2010 2011 2012 2012Lease payments ¥483 ¥327 ¥229 $2,786 Equivalent of depreciation expense ¥483 ¥327 ¥229 $2,786

Future lease payments, including interest portion, subsequent to March 31, 2010, 2011 and 2012 for non-cancelable operating leases are as follows:


2010 2011 2012 2012Due within one year ¥ 521 ¥ 551 ¥ 687 $ 8,358 Due after one year 3,318 2,958 3,689 44,883Total ¥3,839 ¥3,510 ¥4,376 $53,242

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10. Income TaxesBreakdown of deferred tax assets and deferred tax liabilities by their main occurrence causes is as follows:



dollars

2010 2011 2012 2012Deferred tax assets:

Tax loss carry forward ¥ 6,891 ¥ 6,870 ¥ 6,344 $ 77,187 Accrued expenses 665 970 996 12,118 Directors’ and corporate auditors’ retirement benefits 117 124 11 133

Valuation loss on investment securities 875 845 740 9,003 Long-term accounts payable 428 427 323 3,929 Employees’ retirement benefits 131 45 33 401 Other 1,269 1,168 1,145 13,931

Subtotal 10,378 10,451 9,595 116,741 Valuation allowance (8,486) (7,499) (6,589) (80,167)

Deferred tax assets ¥ 1,891 ¥ 2,952 ¥ 3,006 $ 36,573

Deferred tax liabilities:Unrealized gain on available-for-sale securities ¥ (2,329) ¥ (2,998) ¥ (3,099) $ (37,705)

Prepaid pension cost (878) (691) (449) (5,462)Tax depreciation over book (324) (311) (300) (3,650)Other (55) (51) (51) (620)

Deferred tax liabilities (3,587) (4,052) (3,900) (47,451)Net deferred tax assets (liabilities) ¥ (1,695) ¥ (1,100) ¥ (894) $ (10,877)

Reconciliation between the statutory and effective tax rates is as follows:Year ended March 31,

2011 2012Statutory tax rate 40.6% 40.6%Valuation allowance (60.8) (6.5)Difference in statutory tax rates for subsidiaries (31.1) (11.1)Losses for which no deferred tax is recognized 22.1 —Other (9.6) 2.2 Effective tax rate (38.7)% 25.2%

Reconciliation for the year ended March 31, 2010 is not shown as loss before income taxes was recorded for the year.

The corporation tax rate changed on April 1, 2012 because of promulgation of two acts on December 2, 2011: “Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating Taxation System Responding to Changes in Economic and Social Structures” (Act No. 114 of 2011) and “Act on Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake” (Act No. 117 of 2011). As a result, deferred tax assets and liabilities at March 31, 2012 have been calculated using the following effective tax rates depending upon the periods of reversal of temporary differences:

Between April 1, 2012 and March 31, 2015: 37.96%On or after April 1, 2015: 35.58%

The impact of the change of rate decreased net deferred tax liabilities by ¥434 million ($5,280 thousand) and increased income taxes–deferred and unrealized gain on available–for–securities by ¥5 million ($60 thousand) and ¥440 million ($5,353 thousand), respectively.

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11. Research and Development CostsResearch and development costs are as follows:



2010 2011 2012 2012Research and development costs ¥4,408 ¥4,784 ¥4,795 $58,340

12. Retained Earnings and per Share DataIn accordance with the Japanese Corporation Law, dividends and the related appropriations of retained earnings may be approved by the shareholders or resolved by the board of directors after the end of each fiscal year. The dividends and the related appropriations of retained earnings are not reflected in the financial statements at the end of such fiscal years but recorded at the time they are approved or become effective. However, dividends per share shown in the accompanying consolidated statements of income are included in the periods to which they are applicable.

Net income (loss) per share is based on the weighted average number of shares of common stock outstanding during each period.

Cash dividends per share are based on cash dividends declared as applicable to the respective periods. Diluted net income per share is not disclosed because potentially dilutive securities were not issued for the fiscal years

ended March 31, 2010, 2011 or 2012.A summary of information regarding dividends is as follows:

(1) Dividends paid in the year ended March 31, 2010No dividends were paid.

(2) Dividends in respect of the year ended March 31, 2010 which become payable after the balance sheet dateSuch dividends were not declared.

(3) Dividends paid in the year ended March 31, 2011No dividends were paid.

(4) Dividends in respect of the year ended March 31, 2011 which become payable after the balance sheet date

ResolutionClass of shares

Amount of dividends Dividend per share

Funds for dividends

Record date Effective date

General shareholders’ meeting (June 23, 2011)

Common stock

¥ 445 million ¥ 4.00 Retained earnings

March 31, 2011 June 24, 2011$ 5,414 thousand $ 0.04

(5) Dividends paid in the year ended March 31, 2012



Funds for dividends



Common stock



Board of directors (October 31, 2011)

Common stock


September 30, 2011 December 5, 2011$ 5,414 thousand $ 0.04

(6) Dividends in respect of the year ended March 31, 2012 which become payable after the balance sheet date



Funds for dividends



Common stock



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13. Comprehensive IncomeInformation on comprehensive income for the year ended March 31, 2010 is as follows:


Millions of yen

2010 Other comprehensive income

Unrealized gain on available-for-sale securities ¥1,870 Foreign currency translation adjustments 199

Total ¥2,070


Millions of yen

2010 Total comprehensive income attributable to:

Owners of the parent ¥(8,613)Minority interests 88

Total ¥(8,524)

Reclassification adjustments and tax effects relating to components of other comprehensive income are as follows:Year ended March 31,


dollars

2012 2012Unrealized gain on available-for-sale securities:

Gains arising during the period ¥ 1,392 $ 16,936 Reclassification adjustment (5) (60)Tax effect (101) (1,228)Unrealized gain on available-for-sale securities ¥ 1,285 $ 15,634

Deferred gains on hedges:Gains arising during the period 88 1,070 Tax effect (32) (389)Deferred gains on hedges ¥ 55 $ 669

Foreign currency translation adjustments:Adjustments arising during the period ¥ (133) $ (1,618)

Other comprehensive income ¥ 1,208 $ 14,697

14. Cash and Cash EquivalentsReconciliation of cash and time deposits on the consolidated balance sheets to cash and cash equivalents on the consolidated statements of cash flows is as follows:

As of March 31,


dollars

2010 2011 2012 2012 Cash and time deposits ¥51,022 ¥36,714 ¥28,935 $352,050 Marketable securities 2,019 2,021 1,000 12,166

Subtotal 53,042 38,735 29,935 364,217Time deposits with maturities over three months (10,251) (2,131) (2,047) (24,905)Cash and cash equivalents ¥42,790 ¥36,604 ¥27,888 $339,311

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15. Segment Information(1) Change of accounting standardEffective from the fiscal year ended March 31, 2011, the Group adopted “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (Accounting Standards Board of Japan Statement No. 17) and “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (Accounting Standards Board of Japan Guidance No. 20).

(2) Segment information under the previous accounting standard(a) Geographical segment information

Year ended March 31, 2010 (Millions of yen)

Japan Asia Americas Europe Subtotal Elimination TotalNet sales:

External customers ¥ 27,545 ¥ 13,113 ¥ 12,059 ¥ 5,163 ¥ 57,881 — ¥ 57,881 Intersegment 12,067 1,272 180 29 13,549 (13,549) —Total 39,612 14,386 12,239 5,192 71,431 (13,549) 57,881

Operating expenses 48,355 14,942 13,228 6,104 82,631 (14,321) 68,309 Operating loss ¥ (8,742) ¥ (556) ¥ (988) ¥ (911) ¥ (11,199) ¥ 771 ¥ (10,427)Total assets ¥ 142,435 ¥ 22,300 ¥12,150 ¥ 7,086 ¥ 183,972 ¥(18,550) ¥165,422

(b) Overseas salesYear ended March 31, 2010 (Millions of yen)

Americas Europe Asia Other TotalOverseas sales ¥12,220 ¥6,094 ¥21,261 ¥1,253 ¥40,830 Consolidated sales — — — — ¥57,881 Proportion of overseas sales to consolidated sales 21.1% 10.5% 36.7% 2.2% 70.5%

(3) Reportable segment informationThe Group’s reportable segments are defined as individual units where independent financial information is available and which are subject to regular review by the board of directors to evaluate their results and decide the allocation of management resources. The reportable segments are summarized as follows:

Reportable segment I is a segment for which Makino Milling Machine Co., Ltd. and its subsidiaries in Japan are responsible. Its main areas are Japan, the Republic of Korea, China, Oceania, Russia, Norway, the United Kingdom, and all other areas not included in reportable segments II, III or IV.

Reportable segment II is a segment for which MAKINO ASIA PTE LTD (Singapore) is responsible. Its main areas are China, ASEAN and India.

Reportable segment III is a segment for which MAKINO INC. (Mason, Ohio, the United States of America) is responsible. It covers all countries in North and South America.

Reportable segment IV is a segment for which MAKINO Europe GmbH (Hamburg, Germany) is responsible. It covers all countries in the European continent except Norway.

The accounting policies on the reportable segments are consistent with those presented in Note 2. Income for each reportable segment denotes operating income, and intersegments are based on market prices in general.

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I II III IV TotalNet sales:

External customers ¥ 27,545 ¥13,113 ¥12,059 ¥5,163 ¥ 57,881 Intersegment 12,067 1,272 180 29 13,549 Total 39,612 14,386 12,239 5,192 71,431

Segment loss ¥ (8,742) ¥ (556) ¥ (988) ¥ (911) ¥ (11,199)Segment assets ¥142,435 ¥22,300 ¥12,150 ¥7,086 ¥183,972 Depreciation and amortization 2,651 490 151 124 3,418 Amortization of goodwill 0 — — 39 39 Capital expenditure ¥ 1,602 ¥ 677 ¥ 201 ¥ 295 ¥ 2,777



External customers ¥ 44,039 ¥26,086 ¥18,806 ¥6,231 ¥ 95,164 Intersegment 29,335 3,866 190 — 33,392 Total 73,375 29,953 18,996 6,231 128,557

Segment income (loss) ¥ 937 ¥ 1,836 ¥ 633 ¥ (405) ¥ 3,001 Segment assets ¥143,737 ¥31,077 ¥16,132 ¥6,573 ¥197,519 Depreciation and amortization 2,552 491 142 100 3,287 Amortization of goodwill 0 — — 39 39 Capital expenditure ¥ 2,034 ¥ 832 ¥ 93 ¥ 165 ¥ 3,124



External customers ¥ 48,911 ¥25,731 ¥26,762 ¥9,056 ¥110,460 Intersegment 35,030 6,454 177 124 41,785 Total 83,941 32,185 26,939 9,180 152,246

Segment income ¥ 1,660 ¥ 2,225 ¥ 1,645 ¥ 127 ¥ 5,658 Segment assets ¥149,487 ¥28,605 ¥22,267 ¥8,974 ¥209,334 Depreciation and amortization 2,753 489 129 101 3,474 Amortization of goodwill 0 — — — 0 Capital expenditure ¥ 9,372 ¥ 1,218 ¥ 149 ¥ 232 ¥ 10,971

Year ended March 31, 2012 (Thousands of dollars)


External customers $ 595,096 $313,067 $325,611 $110,183 $1,343,959 Intersegment 426,207 78,525 2,153 1,508 508,395 Total 1,021,304 391,592 327,764 111,692 1,852,366

Segment income $ 20,197 $ 27,071 $ 20,014 $ 1,545 $ 68,840 Segment assets $1,818,797 $348,035 $270,921 $109,186 $2,546,952 Depreciation and amortization 33,495 5,949 1,569 1,228 42,267 Amortization of goodwill 0 — — — 0 Capital expenditure $ 114,028 $ 14,819 $ 1,812 $ 2,822 $ 133,483

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Reconciliation of reportable segment information to consolidated financial statementsYear ended March 31,


dollars

2010 2011 2012 2012Net sales ¥71,431 ¥128,557 ¥152,246 $1,852,366 Elimination (13,549) (33,392) (41,785) (508,395)Consolidated net sales ¥57,881 ¥ 95,164 ¥110,460 $1,343,959



dollars

2010 2011 2012 2012Segment income (loss) ¥(11,199) ¥3,001 ¥5,658 $68,840 Elimination 771 (160) 152 1,849 Consolidated operating income (loss) ¥(10,427) ¥2,840 ¥5,811 $70,702



dollars

2010 2011 2012 2012Segment assets ¥183,972 ¥197,519 ¥209,334 $2,546,952 Elimination (18,550) (29,238) (30,973) (376,846)Consolidated total assets ¥165,422 ¥168,280 ¥178,361 $2,170,105



dollars

2010 2011 2012 2012Depreciation and amortization ¥3,418 ¥3,287 ¥3,474 $42,267 Elimination (27) (24) (25) (304)Amount on consolidated financial statements ¥3,390 ¥3,262 ¥3,449 $41,963



dollars

2010 2011 2012 2012Capital expenditure ¥2,777 ¥3,124 ¥10,971 $133,483 Elimination — (42) — —Amount on consolidated financial statements ¥2,777 ¥3,082 ¥10,971 $133,483

(4) Geographical informationYear ended March 31,


dollars

2011 2012 2012Sales by destination

Japan ¥21,305 ¥ 30,759 $ 374,242U.S.A. 15,188 22,791 277,296Americas, excluding U.S.A. 3,650 3,573 43,472China 30,765 23,545 286,470Asia, excluding China 16,004 18,303 222,691Europe 7,250 9,730 118,384Other 999 1,755 21,352

Total ¥95,164 ¥110,460 $1,343,959

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As of March 31,


dollars

2011 2012 2012Property, plant and equipment

Japan ¥28,092 ¥34,321 $417,581Americas 1,382 1,387 16,875Asia 6,147 6,342 77,162Europe 1,657 1,655 20,136

Total ¥37,280 ¥43,706 $531,767

(5) Information on major customerYear ended March 31,


dollars

2011 2012 2012Net sales

EA-SUN PRECISION TECHNOLOGY CORPORATION ¥15,793 * *

* Information on major customer is not disclosed as sales to any single external customer did not total 10% or over of the consolidated net sales.

16. Quarterly Net Income per ShareQuarterly net income per share is as follows:

Net income (loss) per share

Yen Dollars

Three months ended 2010 2011 2012 2012 June 30 ¥(32.04) ¥(15.40) ¥(0.82) $(0.00) September 30 (33.95) 0.89 14.02 0.17 December 31 (29.05) (8.09) 6.47 0.07 March 31 2.65 42.50 13.57 0.16

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President Jiro Makino

Executive Vice President, Director Shun Makino

Director Tatsuaki Aiba

Director Shingo Suzuki

Director Yasuyuki Tamura

Director Toshiyuki Nagano

Corporate Auditor Eiji Fukui

Corporate Auditor Kazuo Hiruta

Corporate Auditor Jiro Nakashima

As of June 22, 2012

Makino Milling Machine Co., Ltd.

Date of Foundation May 1, 1937

Paid-in Capital ¥19,263 million

Activities Manufacture, sale and export of machine tools

Head Office 3-19, Nakane 2-chome, Meguro-ku, Tokyo 152-8578, Japan

Phone : +81-3-3717-1151

Fax : +81-3-3725-2105

Research Laboratory Atsugi (Kanagawa)

Domestic Works Atsugi (Kanagawa), Fuji-Katsuyama (Yamanashi)

Overseas Works MAKINO ASIA PTE LTD (Singapore)

MAKINO CHINA CO., LTD (China)

MAKINO INDIA PRIVATE LIMITED (India)

Sales & Service Offices Tokyo, Osaka, Nagoya and 14 other offices

Overseas Sales & Service Offices

U.S.A., Germany, Singapore, Korea, China, India and others

Consolidated Subsidiaries

See page 12.

As of June 30, 2012

BOARD OF DIRECTORS AND CORPORATE AUDITORS

CORPORATE DATA

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GLOBAL NETWORK

INDIA

CHINA

Head QuarterPlant / Technical CenterTechnical CenterSales & Service Office

NORTH AMERICA∙CENTRAL AMERICA

EUROPE

ASIA

MAKINO ASIA PTE LTD (Singapore)http://www.makino.com.sg/

MAKINO China Co., Ltd.http://www.makino.com.cn/

MAKINO INDIA PRIVATE LIMITEDhttp://makinoindia.co.in/

MAKINO INC.http://www.makino.com/

Makino Europe GmbHhttp://www.makino.de

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INDIA

CHINA

Head QuarterPlant / Technical CenterTechnical CenterSales & Service Office

NORTH AMERICA∙CENTRAL AMERICA

EUROPE

ASIA

MAKINO ASIA PTE LTD (Singapore)http://www.makino.com.sg/

MAKINO China Co., Ltd.http://www.makino.com.cn/

MAKINO INDIA PRIVATE LIMITEDhttp://makinoindia.co.in/

MAKINO INC.http://www.makino.com/

Makino Europe GmbHhttp://www.makino.de

PRODUCT LINES AND NET SALES TRENDS BY PRODUCT

Machining Centers

Electrical Discharge Machines

Milling Machines

Net Sales Trends by Product

Milling Machines 0.5%

Others 24.6%

Machining Centers 67.3%

Electrical Discharge Machines 7.6%

¥95,164 million(Fiscal 2011, Consolidated)

Milling Machines 0.5%

Others 21.8%

Machining Centers 71.3%

Electrical Discharge Machines 6.4%

¥110,460 million(Fiscal 2012, Consolidated)

Milling machines use rotating tools to process flat surfaces, curved surfaces, grooves, etc. We have multi-purpose milling machines and NC milling machines.

Our vertical machining centers are primarily used for die/mold processing.

Our horizontal machining centers are widely used in component processing in industries such as the automotive, aircraft, construction machinery, energy, and semiconductor manufacturing equipment industries.

Sinker electrical discharge machines are mainly used in plastic mold and die cast mold processing for automobiles, IT products and electrical products.

Wire electrical discharge machines are primarily used in precision die/molds processing of automobiles, IT products, electrical products, semiconductors, and the like, as well as precision component processing of medical instruments, etc.

A machining center is a type of machine tool which can automatically select and switch tools, making it possible to perform multiple processes such as drilling and facing with a single machine.

We have vert ica l machin ing centers , with tools at tached to perpendicularly oriented rotation axes, and horizontal machining centers, whose rotation axes are horizontal.

Electrical discharge machines use discharged energy to perform processing.We have sinker electrical discharge machines and wire electrical discharge machines.

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3-19, Nakane 2-chome, Meguro-ku, Tokyo 152-8578, JapanPhone : +81-3-3717-1151Fax : +81-3-3725-2105URL : http://www.makino.co.jp/

Printed in Japan

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2012 (2011.4 - 2012.3) Annual Report - Makino Milling Machine Co

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