UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

o		REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) THE SECURITIES EXCHANGE ACT OF 1934

o		SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-12602

KABUSHIKI KAISHA MAKITA

(Exact name of registrant as specified in its charter)

MAKITA CORPORATION

(Translation of registrant’s name into English)

JAPAN

(Jurisdiction of incorporation or organization)

3-11-8, Sumiyoshi-cho, Anjo City, Aichi Prefecture, Japan
(Address of principal executive offices)

Minobu Kato, +81.566.97.1718, +81.566.98.6907, 3-11-8, Sumiyoshi-cho, Anjo City, Aichi, Japan
(Name, telephone, facsimile number and address of Company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of Class		Name of each exchange on which registered
* American Depositary Shares ** Common Stock		Nasdaq Global Select Market

*		American Depositary Receipts evidence American Depositary Shares, each American Depositary Share representing one share of the registrant’s Common Stock.

**		No par value. Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

		Outstanding as of
		March 31, 2009				March 31, 2009
Title of Class		(Tokyo time)				(New York time)
Common Stock, excluding 2,244,755 shares of Treasury Stock			137,764,005
American Depositary Shares, each representing one share of Common Stock							3,620,303

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

	þYes		o No

If this report is an annual or transition report, indicate by mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

	o Yes		þ No

Note – Checking the box above will not relieve any registrant required to the file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

	þ Yes		o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

	o Yes		oNo (Not Applicable)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ            Accelerated filer o            Non-accelerated filer o

Indicate by check mark basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S.GAAP þ		International Financial Reporting Standards as issued o		Othero
		by the International Accounting Standards Board

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

	oItem 17		oItem 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

	o Yes		þ No

Table of Contents

		Page
PART I
Item 1. Identity of Directors, Senior Management and Advisers			1
Item 2. Offer Statistics and Expected Timetable			1
Item 3. Key Information			1
A. Selected financial data			1
B. Capitalization and indebtedness			2
C. Reasons for the offer and use of proceeds			2
D. Risk factors			3
Item 4. Information on the Company			7
A. History and development of the Company			7
B. Business overview			8
C. Organizational structure			14
D. Property, plants and equipment			14
Item 4A. Unresolved Staff Comments			15
Item 5. Operating and Financial Review and Prospects			16
A. Operating results			16
B. Liquidity and capital resources			31
C. Research and development, patents and licenses, etc.			35
D. Trend information			36
E. Off-balance sheet arrangements			36
F. Tabular disclosure of contractual obligations			37
G. Safe harbor			37
Item 6. Directors, Senior Management and Employees			38
A. Directors and senior management			38
B. Compensation			41
C. Board practices			41
D. Employees			42
E. Share ownership			42
Item 7. Major Shareholders and Related Party Transactions			43
A. Major shareholders			43
B. Related party transactions			44
C. Interests of experts and counsel			44
Item 8. Financial Information			45
A. Consolidated statements and other financial information			45
B. Significant changes			45
Item 9. The Offer and Listing			46
A. Offer and listing details			46
B. Plan of distribution			46
C. Markets			46
D. Selling shareholders			46
E. Dilution			46
F. Expenses of the issue			46
Item 10. Additional Information			47
A. Share capital			47
B. Memorandum and articles of association			47
C. Material contracts			54
D. Exchange controls			54
E. Taxation			55
F. Dividends and paying agents			59
G. Statement by experts			59
H. Documents on display			59
I. Subsidiary information			59
Item 11. Quantitative and Qualitative Disclosures about Market Risk			60
Item 12. Description of Securities Other than Equity Securities			62
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies			62
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds			62

		Page
Item 15. Controls and Procedures			62
A. Disclosure controls and procedures			62
B. Management’s annual report on internal control over financial reporting			62
C. Attestation report of the registered public accounting firm			63
D. Changes in internal control over financial reporting			63
Report of Independent Registered Public Accounting Firm			64
Item 16A. Audit Committee Financial Expert			65
Item 16B. Code of Ethics			65
Item 16C. Principal Accountant Fees and Services			65
Item 16D. Exemptions from the Listing Standards for Audit Committees			66
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers			67
Item 16G. Corporate Governance			67
PART III
Item 17. Financial Statements			70
Item 18. Financial Statements			70
Item 19. Exhibits			70
Ex-1.1 Articles of Incorporation, as amended and effective as of June 25, 2009 (English translation)
Ex-1.2 Regulations of Board of Directors, as amended and effective as of June 25, 2009 (English translation)
Ex-1.3 The Share Handling Regulations, as amended and effective as of January 5, 2009 (English translation)
Ex-12.1 302 Certification of Chief Executive Officer, President and Representative Director
Ex-12.2 302 Certification of Chief Financial Officer, Director and General Manager of Administration Headquarters
Ex-13.1 906 Certifications of Chief Executive Officer and Chief Financial Officer

As used in this annual report, the term “FY” preceding a year means the twelve-month period ended March 31 of the year referred to. For example, “FY 2009” refers to the twelve-month period ended March 31, 2009. All other references to years refer to the applicable calendar year.

All information contained in this annual report is as of March 31, 2009 unless otherwise specified.

In parts of this annual report, amounts reported in Japanese yen have been translated into U.S. dollars for the convenience of readers. Unless otherwise noted, the rate used for this translation was ¥99 = U.S.$1.00, the approximate exchange rate of the noon buying rate for Japanese yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York on March 31, 2009. On June 30, 2009 the noon buying rate for Japanese yen cable transfer in New York City as reported by the Federal Reserve Bank of New York was ¥96.42= U.S.$1.00.

As used herein, the “Company” refers to Makita Corporation and “Makita” or “Makita Group” refer to Makita Corporation and its consolidated subsidiaries unless the context otherwise indicates.

Cautionary Statement with Respect to Forward-Looking Statements

This annual report contains “forward-looking statements” that are based on current expectations, estimates, strategies and projections of the Company’s management in light of the information currently available to it.

The Company and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in the Company’s filings with the Securities and Exchange Commission and in its reports to shareholders, with respect to Makita’s current plans, estimates, strategies and beliefs and other statements that are not historical. Generally, the inclusion of the words “plan,” “strategy,” “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “might” and similar expressions identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections.

All statements addressing operating performance, events, or developments that Makita expects or anticipates to occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements. Makita undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

By their nature, all forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons.

Such risks and uncertainties are generally set forth in Item 3.D. “Risk Factors” of this Form 20-F include but are not limited to:

•		The levels of construction activities and capital investments in Makita’s markets
•		Fluctuations in currency exchange rates
•		Intense competition in global power tools market for professional use
•		Makita’s overseas activities and entry into overseas markets
•		Makita’s inability to develop attractive products
•		Geographic concentration of Makita’s main offices and facilities
•		Failure to maintain cooperative relationships with significant customers and reduction of purchase and sale of Makita’s products by significant customers
•		Failure of Makita’s suppliers to deliver materials or parts required for production as scheduled
•		Failure to protect Makita’s intellectual property rights or infringing intellectual property rights of third parties
•		Procurement of raw materials or sharp rise in prices of raw materials
•		Product liability litigation or recalls
•		Fluctuations in stock market prices
•		Environmental or other government regulations
•		The effectiveness of Makita’s internal control over financial reporting and the related attestation provided by Makita’s auditors
•		Halts or malfunctioning of Makita’s operational network
•		Makita’s ability to retain talented personnel

The foregoing list is not exhaustive. There can be no assurance that Makita has correctly identified and appropriately assessed all factors affecting its business or that the publicly available and other information with respect to these matters is complete and correct.

Additional risks and uncertainties not presently known to Makita or that it currently believes to be immaterial also may adversely impact Makita. Should any risks and uncertainties develop into actual events, these developments could have material adverse effects on Makita’s business, financial condition, and results of operations.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable

Item 2. Offer Statistics and Expected Timetable

Not applicable

Item 3. Key Information

A. Selected financial data

The following data for each of the five fiscal years ended March 31 have been derived from Makita’s audited consolidated financial statements. They should be read in conjunction with Makita’s audited consolidated balance sheets as of March 31, 2008 and 2009, the related consolidated statements of income, shareholder’s equity and cash flows for each of the three years ended March 31 and the notes thereto that appear elsewhere in this annual report. Makita’s consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, and were also included in its Japanese Securities Reports filed with the Director of the Kanto Local Finance Bureau.

		Japanese yen																				U.S. dollars
		(In millions)																				(In thousands)
		Fiscal year ended March 31,
Income Statement Data:		2005				2006				2007				2008				2009				2009
Net sales		¥	194,737			¥	229,075			¥	279,933			¥	342,577			¥	294,034			$	2,970,040
Operating income		¥	31,398			¥	45,778			¥	48,176			¥	67,031			¥	50,075			$	505,808
Net income		¥	22,136			¥	40,411			¥	36,971			¥	46,043			¥	33,286			$	336,222

Net income per share of Common stock and per ADS:		Japanese yen																				U.S. dollars
Basic			153.9				281.1				257.3				320.3				236.9				2.39
Diluted			148.8				281.1				257.3				320.3				236.9				2.39

		Japanese yen																				U.S. dollars
		(In millions)																				(In thousands)
		Fiscal year ended March 31,
Balance Sheet Data:		2005				2006				2007				2008				2009				2009
Total assets		¥	289,904			¥	326,038			¥	368,494			¥	386,467			¥	336,644			$	3,400,444
Cash and cash equivalents, time deposits and marketable securities		¥	91,189			¥	88,672			¥	102,211			¥	98,142			¥	66,308			$	669,778
Net working capital		¥	149,666			¥	181,808			¥	212,183			¥	230,699			¥	199,586			$	2,016,020
Short-term borrowings		¥	9,060			¥	1,728			¥	1,892			¥	1,724			¥	239			$	2,414
Long-term indebtedness		¥	88			¥	104			¥	53			¥	908			¥	818			$	8,263
Common stock		¥	23,805			¥	23,805			¥	23,805			¥	23,805			¥	23,805			$	240,455
Treasury stock		¥	(3,517	)		¥	(258	)		¥	(298	)		¥	(263	)		¥	(6,435	)		$	(65,000	)
Shareholders’ equity		¥	219,640			¥	266,584			¥	302,675			¥	316,498			¥	283,485			$	2,863,485
Total number of shares outstanding			143,777,607				143,711,766				143,701,279				143,773,625				137,764,005				137,764,005

Note: 1.		Net income per share equals net income divided by the number of average outstanding shares of common stock.
2.		Net working capital equals current assets less current liabilities.

Exchange rates (Japanese yen amounts per U.S. dollar)
The following table sets forth information concerning the exchange rates for Japanese yen and U.S. dollar based on the noon buying rates for cable transfers in Japanese yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York. The average Japanese yen exchange rates represent average noon buying rates on the last business day of each month during the previous period.

		(Japanese yen per U.S. $1.00)
Fiscal year ended March 31,		High				Low				Average				Year-end
2005			102.26				114.30				107.47				107.22
2006			104.41				120.93				113.15				117.48
2007			110.07				121.81				116.92				117.56
2008			96.88				124.09				114.31				99.85
2009			87.80				110.48				100.85				99.15
2010 (through June 30, 2009)		94.45				100.71				96.91				96.42

		(Japanese yen per U.S. $1.00)
2009		January				February				March				April				May				June
High			87.80				89.09				93.85				96.49				94.45				95.19
Low			94.20				98.55				99.34				100.71				99.24				98.56

On June 30, 2009 the noon buying rate for Japanese yen cable transfer in New York City as reported by the Federal Reserve Bank of New York was ¥96.42 = U.S.$1.00

Cash dividends declared per share of common stock and per ADS:

		Japanese yen								U.S. dollars
Fiscal year ended March 31,		Interim				Year-end				Interim				Year-end
2005			11				36				0.10				0.34
2006			19				38				0.16				0.32
2007			19				55				0.16				0.47
2008			30				67				0.30				0.67
2009			30				50				0.31				0.53

Makita’s basic dividend policy on the distribution of profits is to maintain a dividend payout ratio of 30% or greater, with a lower limit on annual cash dividends of 18 Japanese yen per share. However, in the event special circumstances arise, computation of the amount of dividends will be based on consolidated net income after certain adjustments.

Note:		Cash dividends in U.S. dollars are based on the exchange rates as of the respective payment date, using the noon buying rates for cable transfers in Japanese yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York.

B. Capitalization and indebtedness

Not applicable

C. Reasons for the offer and use of proceeds

Not applicable

D. Risk factors

The following is a summary of some of the significant risks that could affect Makita. Other risks that could affect Makita are also discussed elsewhere in this annual report. Additionally, some risks that may be currently unknown to Makita and other risks that are currently believed to be immaterial, may become material.

Some of these statements are forward-looking statements that are subject to the “Cautionary Statement with Respect to Forward-Looking Statements” appearing elsewhere in this annual report.

Makita’s sales are affected by the levels of construction activities and capital investments in its markets.
The demand for power tools, Makita’s main products, is affected to a large extent by the levels of construction activities, capital investment and consumption trends in the relevant regions.

Generally speaking, the levels of construction activities and capital investment and consumption trends depend largely on the economic conditions in the market.

As a result, when economic conditions weaken in the principal markets for Makita’s activities, including Japan, Western Europe, Eastern Europe and Russia, North America, Asia, Central and South America, the Middle East, and Oceania, this may have an adverse impact on Makita’s financial condition and results of operations.

In addition, fluctuations in prices of crude oil or mineral resources and volatility in the stock market may affect construction demand, public investment, capital expenditure and consumption trends, which in turn, may have a negative impact on Makita’s financial condition.

The downturn of the world economy stemming from the financial crisis in 2008 resulted in a decline in construction investments and lower level of consumption. As a result, competition in the markets intensified, and an increase in inventories and a downward pressure of product prices significantly affected Makita’s sales and profits starting in the second half of FY 2009. If such economic condition persists, it may further impact Makita’s sales, resulting in an increase in the ratio of selling, general and administrative expenses and a decline in Makita’s profitability.

Further more, if such economic conditions persist, Makita may need to reorganize or restructure production facilities and sales and distribution bases, which may have an adverse impact on Makita’s financial condition and results of operations.

Currency exchange rate fluctuations may affect Makita’s financial results.
The functional currency for all of Makita’s significant foreign operations is the local currency. The transactions denominated in local currencies of Makita’s subsidiaries around the world are translated into Japanese yen using the average market conversion rate during each financial period. Assets and liabilities of overseas subsidiaries denominated in their local currencies are translated at the exchange rate in effect at each fiscal year-end, and income and expenses are translated at the average rates of exchange prevailing during each fiscal year. The local currencies of the overseas subsidiaries are regarded as their functional currencies. The resulting currency translation adjustments are included in accumulated other comprehensive income (loss) in shareholders’ equity.

Currently, over 80% of Makita’s overall production and sales are generated overseas and a significant portion thereof are dominated in currencies other than Japanese yen. Consequently, fluctuations in exchange rates may have a significant impact on Makita’s results of operations, assets and liabilities and shareholders’ equity when translated into Japanese yen.

Among others, Makita is affected by fluctuations in the value of the euro, the U.S. dollar and Chinese Renmin yuan, the euro and the U.S. dollar are the primary foreign currency on which Makita bases its foreign sales and the U.S. dollar and Chinese Renmin yuan are the primary foreign currency on which Makita bases its foreign costs and liabilities. In an effort to minimize the impact of short-term exchange rate fluctuations between major currencies, mainly the euro, the U.S. dollar, and the Japanese yen, Makita engages in hedging transactions.

However, medium-to long-term fluctuations of exchange rates may affect Makita’s ability to execute procurement, production, logistics, and sales activities as planned and may have an adverse impact on Makita’s financial condition and results of operations.

In particular, currency exchange rates are increasingly affected by other currency exchange rates, and fluctuations in certain currency exchange rates may affect exchange rates among other currencies, which may significantly affect Makita’s financial condition and results of operations. In FY 2009, Makita’s consolidated results of operations after the translation of foreign currencies into Japanese yen were significantly affected by fluctuations in exchange rates due to the rapid appreciation of the Japanese yen against other currencies in the second half of FY 2009. Further appreciation of the Japanese yen, especially against the euro, may have an adverse impact on Makita’s financial condition and results of operations.

Makita faces intense competition in the global market for its power tools for professional use.
The global market for power tools for professional use is highly competitive. Factors that affect competition in the markets for Makita’s products include the quality, functionality of products, technological developments, the pace of new product development, price, reliability of products, such as durability, after-sale service and the rise of new competitors. While Makita strives to ensure its position as a leading international supplier of power tools for professional use, there is no guarantee that it will be able to effectively maintain its competitiveness in the future. If Makita is unable to compete effectively, it may lose market share and its earnings may be adversely affected. Given the current downturn of the world economy, competition is expected to further intensify globally due to excess inventory and production capacity, leading to downward pressure on the prices of Makita’s products, which may adversely impact Makita’s financial condition and results of operations.

Makita’s overseas activities and entry into overseas markets entail risks, which may have a material adverse effect on Makita’s business activities.
Makita derives a significant majority of its sales from markets located outside of Japan, including Western Europe, Eastern Europe and Russia, North America, Asia, Central and South America, the Middle East, and Oceania. During FY 2009, approximately 84% of Makita’s consolidated net sales were derived from products sold overseas. Moreover, approximately 81% of global production volume was derived from overseas production. The high percentage of overseas sales and production gives rise to a number of risks. If such risks materialize, they may have a material adverse impact on Makita’s financial condition and results of operations. Such risks include the following:

(1)		Unexpected changes in laws and regulations;
(2)		Disadvantageous political and economic factors;
(3)		The outflow of technical know-how and knowledge due to increased personnel turnover enabling Makita’s competitors to strengthen their position;
(4)		Potentially unfavorable tax systems and tariffs;
(5)		Terrorism, war, and other factors that lead to social turbulence; and
(6)		The interruption of or disruption to Makita’s operation due to labor disputes.

In particular, under the current deteriorating economic condition, countries to which Makita exports its products may adopt new protectionist trade policies or strengthen its tariff policy. Such policy change may have the impact of reducing Makita’s exports and sales, and may have an adverse impact on Makita’s financial condition and results of operations.

If Makita is not able to develop attractive products, Makita’s sales activities may be adversely affected.
Makita’s principal competitive strengths are its diverse range of high-quality, high-performance power tools for professional use, and the strong reputation of the MAKITA brand supported by its strong global sales and after-service network, both of which depend in part on Makita’s ability to continue to develop attractive and innovative products that are well received by the market. There is no assurance that Makita will be able to continue to develop such products. If Makita is no longer able to develop new products that meet the changing needs and correspond to market price for high-end, professional users, in a timely manner, it may have an adverse impact on Makita’s financial condition and results of operations.

Geographic concentration of Makita’s main offices and facilities may have adverse effects on Makita’s business activities.
Makita’s principal management functions, including its headquarters, and most suppliers on which it relies for supplying major parts are located in Aichi Prefecture (“Aichi”), Japan.

Makita’s manufacturing facilities in Aichi and Kunshan, Jiangsu Province, China, account for 19.4% and 60.4%, respectively, of Makita’s total production volume on a consolidated basis during FY 2009. Due to this geographic concentration of Makita’s major functions, including plants and other operations in certain regions of Japan and China, Makita’s performance may be significantly affected by the occurrence of any major natural disasters and other catastrophic events, including earthquakes, floods, fires, power outages, and suspension of water supplies. In addition, Makita’s facilities in China may also be affected by changes in political and legal environments, changes in economic conditions, revisions in tariff rates, appreciation of Japanese yen, labor disputes, epidemics, power outages resulting from inadequacies in infrastructure, and other factors. In the event that such developments cannot be foreseen or measures taken to alleviate their damaging impact are inadequate, it may have an adverse impact on Makita’s financial condition and results of operations.

If Makita fails to maintain cooperative relationships with its significant customers or if such significant customers reduce their purchase and sale of Makita’s products, Makita’s sales may be seriously affected.
Although Makita does not have any customer that exceeds 10% of its consolidated sales, it has significant customers in each country. If Makita loses these customers and is unable to develop new sales channels to take their place, or if any such customer faces significant financial difficulties or accumulates a considerable amount of bad debt, sales to such customers may decline and have an adverse impact on Makita’s financial condition and results of operations. Under the current deteriorating economic condition stemming from the financial crisis, Makita’s significant customers are reducing sales activities, experiencing a sharp decline in sales and an increase in bad debt, which may deteriorate their cash flow and have an adverse impact on Makita’s net sales and profits.

In addition, if significant customers of Makita select power tools of Chinese manufacturers or select products other than those produced by Makita and sell such products under their own brand instead of Makita’s products, this may have an adverse impact on Makita’s financial condition and results of operations.

If any of Makita’s suppliers fail to deliver materials or parts required for production as scheduled, Makita’s production activities may be adversely affected.
Makita’s production activities are greatly dependent on the on-schedule delivery of materials and parts from its suppliers. Purchases of production-use materials from Chinese manufacturers have increased in recent years. When launching new products, sales commencement dates can slip if Chinese manufacturing technology does not satisfy our demands, or if it takes an inordinate amount of time in order to satisfy our demands. There is a concern that this can result in lost sales opportunities.

Makita purchases its significant component parts for its products from sole suppliers. There is no assurance that Makita will be able to find alternate suppliers that can provide materials and parts of similar quality and price in a sufficient quantity and in a timely manner. If the supplier cannot deliver the required quality and quantity of parts on schedule due to reasons including natural disasters, government regulations, its production capacity, weakened business or financial condition, this may have an adverse effect on Makita’s production schedules and cause a delay in Makita’s own product deliveries. This may cause Makita to lose some customers or require Makita to purchase replacement materials or parts from alternate sources at a higher price. Any of these occurrences may have an adverse impact on Makita’s financial condition and results of operations.

Makita may not be able to protect its intellectual property rights and could incur significant liabilities, litigation costs or licensing expenses or be prevented from selling its products if it is determined to be infringing the intellectual property of third parties.
In regions where Makita’s sales and production are significant, Makita applies for patents, designs and trademarks, and strives to protect intellectual property rights proactively. However, Makita may not be able to eliminate completely third party products that infringe on the intellectual property rights of Makita or third party products similar to Makita’s product. This may have a negative influence on Makita’s results of operations.

Moreover, while Makita believes that it does not infringe on intellectual property rights of third parties, it is subject to infringement claims from third parties. When infringement of intellectual property rights is claimed by a third party, the obligation to pay damage may arise or an injunction in production and sales of a product may be ordered. This may have an adverse impact on Makita’s financial condition and results of operations.

If the procurement of raw materials used by Makita becomes difficult or prices of these raw materials rise sharply, this may have an adverse effect on Makita’s performance.
Makita purchases raw materials and components, including silicon steel plates, aluminum, steel products, copper wire, and electronic parts to manufacture power tools. In recent years, demand for these materials in China has risen substantially. If Makita is unable to obtain the necessary quantities of these materials, especially in China and Japan, this may have an adverse effect on production schedules. As many of Makita’s suppliers are currently working to reduce their production capacity, in the event that demand rapidly recovers from the current level of low activity, delivery of raw materials and components by the suppliers may be delayed. This in turn may cause significant delay in Makita’s production schedule. In addition, the limitation of the suppliers’ production capacity may be a factor for increased prices of materials and components needed for manufacturing Makita products. If the increase in prices of such materials cannot be absorbed by Makita’s productivity or through other internal cost cutting efforts and/or if prices of final products cannot be raised sufficiently, this may have an adverse impact on Makita’s financial condition and results of operations.

Product liability litigation or recalls may harm Makita’s financial statements and reputation.
Makita is developing a variety of products including power tools under the safety standard of each country, and is manufacturing them globally based on the quality standards of the factory. However, a large-scale recall and a large-scale product liability lawsuit may significantly damage Makita’s brand image and reputation.

In addition, the related cost and time incurred through the recall or lawsuit may affect business performance and financial condition of Makita in case insurance policy does not cover the related cost.

Fluctuations in stock market prices may adversely affect Makita’s financial statements.
Makita holds certain investments in Japanese equities and investments in trust, and records these investments as marketable securities and investment securities on its consolidated financial statements. The value of these investments change based on fluctuations in the quoted market prices. Fluctuations in the value of these securities may have an adverse impact on Makita’s financial condition and results of operations.

Environmental or other government regulations may have a material adverse impact on Makita’s business activities.
Makita believes it maintains strict compliance with environmental, commercial, export and import, tax, safety and other regulations that are applicable to its activities in all the countries and areas in which it operates.

If Makita is unable to continue its compliance with existing regulations or is unable to comply with any new or amended regulations, it may be subject to fines and other penalties and its activities may be significantly restricted. The costs related to compliance with any new or amended regulations may also result in significant increases in overall costs and may have an adverse impact on Makita’s financial condition and results of operations.

Investor confidence and the value of Makita’s ADRs and ordinary shares may be adversely impacted if Makita’s management concludes that Makita’s internal control over financial reporting is not effective or if Makita’s independent registered public accounting firm is unable to provide adequate attestation over the effectiveness of the internal control over Makita’s financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.
The Securities and Exchange Commission, as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public companies to include a report in its Annual Report that contains an assessment by management of the effectiveness of corporate internal control over financial reporting. In addition, Makita’s independent registered public accounting firm is required to attest to the effectiveness of Makita’s internal control over financial reporting. If Makita’s management concludes that Makita’s internal control over financial reporting is not effective, or if Makita’s independent registered public accounting firm is not satisfied with Makita’s internal control over its financial reporting or the level at which its controls are documented, designed, operated or reviewed, and declines to attest or issues a report that is qualified, there could be an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of Makita’s financial statements, which ultimately could negatively impact the market price of Makita’s ADRs and ordinary shares.

If Makita’s operational network halts or malfunctions, Makita’s production and shipment schedule may be adversely affected.
Makita’s headquarters and its major sales and R&D bases are located in Japan, and its procurement, manufacturing, sales and product development site are located worldwide. In addition, Makita’s major manufacturing facilities are concentrated in China and Japan. These sites are connected globally through an operational network. If Makita’s information system computer network halts or malfunctions due to any natural disaster, such as earthquakes, fires and floods, wars, or terrorist acts, or computer viruses, such an event may delay production and shipments of Makita’s products. This may have an adverse impact on Makita’s financial condition and results of operations.

If Makita is unable to retain talented personnel, this may have an adverse affect on Makita’s competitiveness and results of operations.
Makita considers the retention and development of talented personnel with the expertise and technological skills is critical to its competitiveness. However, competition for recruiting such personnel has become increasingly challenging. Makita also considers important the development and retention of personnel in management challenging in Makita’s nearly 50 group companies. However, the competition to retain such excellent personnel is difficult in Japan, where the rapid aging of the population resulting from a decline in the birthrate is accelerating and the employment environment has been rapidly changing due to a declining labor population.

Given such a labor and social climate, if the employment, retention or the development of talented human resources cannot be satisfied in accordance with Makita’s management plan, the Group’s business development, results of operations and growth prospects could be affected on a long-term basis.

Item 4. Information on the Company

A. History and development of the Company

The Company is a limited liability, joint-stock company incorporated under the Commercial Code of Japan and continues to exist under the Companies Act of Japan. The Company traces its origin to an electrical repair workshop founded in Nagoya in 1915 and was incorporated on December 10, 1938 under the name of Makita Electric Works, Ltd. as a joint stock corporation.

Under the presidency of Mr. Jujiro Goto, Makita commenced the manufacture of electric power tools in 1958 and was listed on the Second Section of the Nagoya Stock Exchange in 1962. By 1969, Makita became the leading power tools maker in the Japanese market and was listed on the First Section of the Tokyo Stock Exchange in 1970. That same year, the Company decided to take advantage of overseas markets and established its first overseas subsidiary in the United States. It also constructed the Okazaki plant, which remains as the primary plant of the Makita Group in Japan. Since then, Makita has expanded its export activity and has established a number of overseas subsidiaries. In 1971, Makita incorporated its first European subsidiary in France, followed by another European subsidiary in the United Kingdom in 1972, thus solidifying its operational bases in Europe.

In 1977, American Depositary Shares were issued with respect to the Company’s shares of common stock, and the American Depositary Shares were listed on NASDAQ.

As part of its efforts to minimize trade friction, Makita started manufacturing operations in Canada, Brazil and the United States in 1981, 1983 and 1985 respectively. Makita established a manufacturing subsidiary in the United Kingdom in 1989.

In 1991, the Company changed its name from Makita Electric Works, Ltd. to Makita Corporation. Makita also acquired Sachs-Dolmar GmbH, a German company, primarily engaged in manufacturing engine driven chain saws, and subsequently renamed it Dolmar GmbH (Dolmar).

In 1995, Makita established a holding company in the United Kingdom to manage and control the operation of its European subsidiaries and also constructed a power tool manufacturing plant in China to reinforce its global production system. The power tool manufacturing plant in China commenced production in the same year. In 2005, Makita established Makita EU S.R.L., a new subsidiary in Romania, to serve growing markets in Eastern Europe, Russia, Western Europe and the Middle East.

In 2006, the Company purchased the automatic nailer business of Kanematsu Nissan-Norin in order to strengthen its pneumatic tool business.

In 2007, Makita expanded the production capacity of its China factory by constructing a second production facility. In addition, a new factory in Romania commenced production in April 2007 in order to reduce foreign exchange risks, and provide stable supply capacity for the growing European market.

Also in 2007, Makita acquired all outstanding shares of Makita Numazu Corporation (“Makita Numazu”), formerly Fuji Robin Industries, Ltd., or Fuji Robin, for approximately ¥2.7 billion in cash and 81,456 Makita shares.

In 2008, Makita established new sales subsidiaries in Bulgaria, Colombia, India and Morocco to expand sales and service activities into the emerging markets. Makita also transferred and consolidated the Canada plant with U.S. plant in order to increase the efficiency of production in North America.

Makita presently sells its products in 150 or more countries and regions around the world and manufactures power tools in seven countries (Japan, China, the United Kingdom, the United States, Germany, Brazil, and Romania).

Makita has 48 consolidated subsidiaries and 1 equity method affiliate as of March 31, 2009.

Makita Corporation’s registered office is located at 3-11-8, Sumiyoshi-cho, Anjo City, Aichi Prefecture 446-8502, Japan, and its telephone number is +81.566.97.1718.

B. Business overview

In FY 2009, approximately 84% of Makita’s sales were outside of Japan, most of which made to professional users worldwide, including those engaged in timber and metal processing, carpentry, forestry and concrete and masonry works.

Makita’s geographic segments are Japan, Europe, North America, Asia and Other regions. Makita’s biggest market is Europe. The Other regions segment is further divided into Central and South America, the Middle East and Africa, and Oceania.

Makita produces its products in seven countries. The China Plant yields Makita’s highest production volume, the Okazaki Plant in Japan is the base for the production of new and high-value-added products, and Makita also has plants in the United Kingdom, the United States, Brazil, Germany and Romania.

The headquarters and the major sales and R&D bases of Makita are located in Japan, and the bases for procurement, manufacturing, sales and product development are located worldwide. Makita strives to improve not only production efficiency but also logistics, sales and service efficiencies by expanding the use of IT networks each year. Makita also strives to establish a system that can flexibly respond to short-term changes in market demand.

Makita aims to further solidify its position in the industry as an international integrated supplier of power tools that benefit people’s daily lives and housing improvements. In order to achieve this goal, Makita declared the following four management philosophies: “Makita strives to exist in harmony with society, emphasizing compliance, ethical conduct and detachment from anti-social organizations,” “Makita values its customers as a market-driven company,” “Makita is managed in a consistent and proactive manner with a sound profit structure” and “Encouraging each individual to perform at the highest level with Makita’s simple and robust corporate culture.” With these principles underlying all of its corporate activities, Makita pursues continued growth with stakeholders including shareholders, users, local communities and employees through a solid profit-generating system. Makita’s management goal is to generate substantial profits and maintain a 10% operating margin (ratio of operating income to net sales) through sustainable growth on a consolidated basis.

Furthermore, as a medium- to long-term strategy, Makita aims to enhance its brand value to attain and maintain the position as a leading multinational, integrated supplier of all types of tools such as power tools for professional use, pneumatic tools and gardening equipments. Makita believes that this goal can be attained through the development of new products that bring high satisfaction to commercial users; concerted global production systems targeting both high quality and cost competitiveness; and the maintenance of industry-leading sales and after-sales service systems nurtured in Japan and extended overseas.

To implement the foregoing, Makita is working to maintain a solid financial structure that responds well to short-term savings in the business environment, including volatile demand, exchange rate fluctuations and various country risks, and concentrate its management resources in the area of professional-use power tools.

Products
The following table sets forth Makita’s consolidated net sales by product categories for periods presented. Makita specializes in power tools manufacturing and sales, as a single line of business, and conducts its business globally.

Makita also provides “Gardening and Household Products” based on the mainstay products in that product category.

Makita is making efforts to expand the sales of cordless power tools to professional users as well as to general users.

		Consolidated Net Sales by Product Categories
		Japanese yen																								U.S. dollars
		(In millions, except for percentage amounts)																								(thousands)
		Fiscal year ended March 31,
		2007								2008								2009								2009
Power Tools		¥	210,894				75.3	%		¥	255,869				74.7	%		¥	214,703				73.0	%		$	2,168,717
Gardening and Household Products			28,123				10.0				40,410				11.8				36,916				12.6				372,889
Parts, repairs and accessories			40,916				14.7				46,298				13.5				42,415				14.4				428,434
Total		¥	279,933				100.0	%		¥	342,577				100.0	%		¥	294,034				100.0	%		$	2,970,040

Makita aims to increase its market share not only in the power tool market for professional users, but also in the air tools and gardening equipment markets. To achieve this goal, Makita is continuing to strive to improve its global sales and service framework and develop high-value-added products. Makita is currently placing greater emphasis on developing user-friendly and environment-friendly products that feature smaller and lighter, lower vibration and lower noise level with reduced dust emission. In addition, Makita is enhancing its lineup with more affordable products by simplifying the functions of the products.

a) Power Tools

Power tools consist mainly of drills, grinders and sanders, rotary hammers and hammer drills, demolition hammers and electric breakers, cordless impact drivers, circular saws, slide compound saws and cutters.

Drills are typical power tools used to drill metals, woods and plastics. They are classified into pistol-grip drills, D-handle drills, spade-handle drills and angle drills, according to their configuration. Makita also manufactures various kinds of cordless drills. Some of them are equipped with a screw-driving mechanism and are called cordless driver drills.

Grinders and sanders are used for smoothing and finishing. Sanders may also be used for polishing. Grinders are mainly used on metal and sanders are used on metal, wood, stone and concrete. Grinders are divided into portable disc grinders and bench grinders and sanders are classified into disc sanders and orbital sander and belt sanders. Rotary hammers, which are used for drilling concrete primarily in the construction industry, can also be used as ordinary hammers without using the rotary mechanism.

Hammer drills are equipped with a hammering function, but can also be used as conventional drills; these drills are used principally on metal and masonry in the civil engineering and electrical contracting industries. Demolition hammers are used to shatter hard surfaces, principally concrete. Makita aims to improve the working environment in the construction industry through the provision of power tools which incorporate Makita proprietary low vibration mechanisms. These tools meet the strong demand of drilling holes in stone and concrete, and of other uses.

Cordless impact drivers are particularly in high demand across Japanese construction sites. In February 2005, Makita introduced cordless impact drivers powered by lithium-ion batteries instead of the prevailing nickel- metal-hydride batteries for the first time in the industry. Cordless impact drivers employing lithium-ion batteries are smaller and lighter, and the batteries last much longer. Combined with Makita’s proprietary Optimum Charging System, this new product features long-life operation, and has been well received within Japan by professional users. The Optimal Charge System communicates with individual batteries, when charging, and recognizes charging records, and analyzes the condition, such as the heat, over-discharge, and weakening of the battery. This is Makita’s original technology, which can prolong the life of a battery through optimal and gradual charge carrying out “Active Current Control,” “Active Thermal Control”, and “Active Voltage Control” based on the above analysis result.

The cordless impact drivers are a strong addition to our Japanese product line-up of new 14.4V cordless power tools powered by lithium-ion batteries including cordless circular saws, cordless angle grinders, cordless nailers, cordless hammer drills, and cordless reciprocal saws. Makita began offering cordless power tools powered by lithium-ion batteries in the United States through major home centers in the fall of 2005. In addition to 14.4V cordless power tools available in Japan, Makita offers 18V Combo kits of cordless drills, cordless drills, cordless circular saws, and cordless lights in the United States where users demand more powerful tools. Makita also rolled out its 18V cordless power tools powered by lithium-ion batteries across major European markets since the summer of 2006, amid strong interest in the construction industry. In the beginning of 2009, Makita introduced the rotary hammers equipped with 36V lithium-ion batteries.

Circular saws, which are primarily sold to carpenters in the homebuilding industry, account for a substantial portion of Makita’s sales of saws. The balance of saw sales is made up of jigsaws, sold primarily to carpenters and other woodworkers for delicate work, and reciprocal saws used for working in confined spaces unsuitable for conventional saws.

Cutters and cutting machines are roughly classified into two categories: cutting machines that are equipped with a metal whetstone and are used for cutting metals and cutters that are equipped with a diamond whetstone and are mainly used for cutting stones.

Subsequent to taking over the operations of Kanematsu-Nissan Norin Corp. in January 2006, Makita introduced into the Japanese market its “Red Series” high-pressure air nailer, which are becoming as popular as the well-accepted cordless impact drivers used in housing construction, completing our mainstay product line-up.

b) Gardening and Household Products

Gardening products, including brush-cutters, chain-saws, sprayers, blowers, hedge trimmers, are used for agricultural and forestry operations. Household products, including vacuum cleaner and cordless cleaner, are used not only for housekeepers but also for professional cleaners. Among others, there is a strong demand for cordless cleaners at construction sites because cutting, drilling and grinding work using power tools generates debris. In addition, small, light and high-suction cordless cleaners offered to home users are increasingly popular. New products launched during FY 2009 included cordless cleaners and sprayers powered by lithium-ion batteries, low-vibration hedge trimmers and backpack-type, mini 4-stroke engine-equipped grass cutters.

Makita’s lineup also includes electric hedge trimmers, grass cutters, chain saws and lawn mowers. The acquisition of Fuji Robin in FY 2008 is contributing to strengthening Makita’s lineup of gardening and engine-powered gardening tools.

c) Parts, Repairs and Accessories

Makita manufactures and markets a variety of parts and accessories for its products and performs repair work as part of its after-sale services. In particular, Makita offers a variety of parts and accessories with respect to high-quality and durable professional power tools, and at the same time commits major management resources to enhancing post-sales services. Makita is working hard toward strengthening its parts supply system and three-day repair program, while developing a worldwide sales network. Makita is also working to strengthen its range of authentic Makita accessories such as saw blades, drill bits, and grinding wheels.

Principal Markets, Distribution and After-Sale Services
The following table sets forth Makita’s consolidated net sales by geographic area based on customers locations for the periods presented:

		Consolidated Net Sales by Geographic Area
		Japanese yen																								U.S. dollars
		(In millions, except for percentage amounts)																								(thousands)
		Fiscal year ended March 31,
		2007								2008								2009								2009
Japan		¥	46,860				16.7	%		¥	52,193				15.2	%		¥	46,222				15.7	%		$	466,889
Europe			124,020				44.3				160,360				46.8				137,113				46.6				1,384,980
North America			51,472				18.4				56,422				16.5				42,289				14.4				427,162
Asia (excluding Japan)			19,469				7.0				22,629				6.6				21,995				7.5				222,172
Other			38,112				13.6				50,973				14.9				46,415				15.8				468,837
Total		¥	279,933				100.0	%		¥	342,577				100.0	%		¥	294,034				100.0	%		$	2,970,040

Japan

Makita believes that most of its domestic sales are made to commercial users. The Japanese Do-It-Yourself, or DIY, market for power tools is growing but the pace of growth is slow. Makita has maintained its leading position in the Japanese market by maintaining close and frequent contact with retailers and users of Makita products. While Makita’s major competitors rely primarily on wholesalers for all aspects of distribution and servicing, Makita has approximately 758 employees directly responsible for the promotion, sale and delivery and after-sale servicing of its products. These employees, operating from 19 branches and 114 sales offices throughout Japan, are assigned sales territories.

In addition, Makita has two distribution centers in Osaka and Saitama prefectures. These distribution centers strengthen Makita’s distribution and after-sale service functions.

The majority of Makita’s products are sold through its 13 independent wholesalers. Each wholesaler bears the risk of any bad debts of the retailers for which it has responsibility. The payments by the wholesalers to Makita are in most cases made within 30 to 60 days after sale. In FY 2009, Makita sold its products, directly or through wholesalers, to approximately 30,000 retail outlets, and no single retailer accounted for more than 2% of Makita’s domestic sales. In FY 2009, Makita’s three largest wholesalers accounted, in the aggregate, for approximately 36% of Makita’s domestic net sales.

Repairs, including free repair service and after-sale services are carried out by Makita’s sales offices.

To strengthen its business in Pneumatic Tools, Makita purchased the nailer business of Kanematsu-Nissan Norin Corp. in January 2006 and has expanded its lineup of pneumatic tools.

During the first half of FY 2008, Makita acquired Fuji Robin Industries Ltd.(now named Makita Numazu Corporation), a manufacturer of gardening tools, as part of its full-scale entry into the gardening tool business. Fuji Robin’s “mini-4 stroke engine”, its original engine technology is recognized globally as an environmentally “clean engine”. Makita’s agricultural and gardening equipments are expected to have synergistic effect with Fuji Robin’s original engine business.

Cordless power tools are becoming increasingly prevalent, and the ratio of Makita’s cordless power tools has exceeded 35% of its total domestic products sales. In the Japanese market, the ratio of DIY sales is comparatively low, accordingly the ratio of commercial users is relatively high, compared with the markets in North America and Europe. And also medium-and high-grade products with high operability and durability and high-value-added products are preferred in the Japanese market.

As the market for housing construction is contracting compared with FY 2008, there is a concern over an imbalance occurring between demand and supply.

Overseas

As a leading global manufacturer and marketer of power tools, the ratio of overseas production exceeds 81% on a unit basis, and 84% of consolidated sales came from overseas markets in FY 2009.

Overseas sales, distribution, and service are carried out through a network of 40 sales subsidiaries and over 100 branch offices or service centers located in the United States, Canada, Brazil, Mexico, Argentina, Chile, Peru, Australia, New Zealand, Singapore, Taiwan, China, Korea, the United Kingdom, France, the Netherlands, Belgium, Italy, Greece, Germany, Denmark, Austria, Poland, the Czech Republic, Hungary, Spain, Portugal, the United Arab Emirates, Romania, Switzerland, Finland, Russia, Ukraine, Slovakia, Bulgaria, Colombia, India and Morocco. In addition, the Company exports its products directly, as well as through trading companies, to various countries throughout the world. Makita has 11 production bases worldwide, out of which 8 are located overseas, comprising of 2 plants in each of China and Brazil, one plant in the United States, the United Kingdom, Germany and Romania.

Makita products are sold principally under the “Makita” brand name and the remaining products are sold under the “Dolmar” or “Maktec” brand names. Makita offers warranties to overseas customers.

After-sale services and repairs overseas are provided by local sales subsidiaries, service depots designated by Makita, or by service stores designated by the applicable local importers.

Although the ratio of Makita’s cordless power tools has exceeded 30% of its total overseas sales, the ratio varies significantly by region. In Western Europe, North America and Oceania, the ratio is relatively high. Western Europe and Oceania are characterized by the general preference for products with advanced operability and durability, and there is significant demand for products that contribute to the working environment and are environmentally friendly. In North America, where DIY consumers account for a large share of the market, there is significant demand for low-priced goods. Accordingly, price competition in North America, including in connection with medium- and high-grade products, is intense.

In Asia, popular long-selling models for which spare parts are easy to obtain are preferred over high-value-added products, and cordless products have not yet gained widespread acceptance.

In China, local manufacturers are overwhelmingly dominant with approximately 80% of the market share. A decisive factor is the difference in product prices. The construction market in China has contracted since the second half of FY 2009, due to the global financial crisis.

Seasonality
Makita’s business has no significant seasonality that affects sales or profits.

Competition
The markets in which Makita sells its products are generally highly competitive. Makita believes that competition in the portable electric power tool market is based on price, product reliability, design and after-sale services and that its products are generally competitive as to price and enjoy competitive advantage due to their reputation for quality, product reliability and after-sale services. Makita is the largest manufacturer of portable electric power tools in Japan and, together with one other Japanese competitor, accounts for a substantial majority of the total sales of such products in Japan.

In overseas markets, Makita competes with a number of manufacturers, some of which are well established in their respective local markets as well as internationally.

In recent years, in the U.S. power tool industry, some leading home centers have introduced their own brands of power tools for professionals, and a high level of M&A activity is in progress within the power tool industry. Makita has also experienced increasing competition, particularly in countries with lower purchasing power, from China-based power tool manufacturers who often offer lower-priced products.

Just as competitors’ investments were becoming increasingly focused on global business development, the companies were affected by the deterioration of the world economy. As a result, price competition may further intensify from price-reduction pressure due to excess production capacity and excess inventories caused by the rapid decline in sales.

Raw Materials and Sources of Supply
Makita purchases raw materials and parts to manufacture its products. The principal raw materials and parts purchased by Makita include plastics, pressed steel plates, aluminum castings, copper wires, switches, gears, blades, batteries, and bearings. The Company procures most of its raw materials from multiple sources, although most of its parts are each obtained from single suppliers. Although there were periods in which the prices of crude oil and natural resources increased substantially in FY 2009 significant changes in demand trends in the second half of FY 2009 have resulted in crude oil and natural resources prices to decline.

Makita’s purchases of raw materials and parts in FY 2009, amounted to ¥ 152,368 million. Raw materials and parts are purchased from 373 suppliers in Japan and a number of local suppliers in each country in which Makita performs manufacturing operations, with the largest single source accounting for approximately 10% of Makita’s total purchases of raw materials and parts.

Makita also purchases from outside sources finished products such as electric generators, lawn mowers and laser levels and resells to its customers under the Makita brand.

Makita has not experienced any difficulty in obtaining raw materials, parts or finished products.

Government Regulations
Makita is subject to different government regulations in the countries and areas in which it does business, such as required business and investment regulations approvals, export regulations based on national-security or other reasons, and other export and import regulations such as tariffs, as well as commercial, antitrust, patent, consumer and business taxation, exchange control, and environment and recycling laws and regulations.

In particular, under the current deteriorating economic conditions, countries to which Makita exports its products may adopt new protectionist trade policies or strengthen its tariff policy, which may affect Makita’s exports and sales. Makita has expanded sales, service and production activities worldwide, and has a diverse investment portfolio. Consequently, Makita believes that the impact of the adoption of a new protectionist trade policy in a particular region would be immaterial.

The most part of major capital investment planned as of March 31, 2009 at Makita’s global sales and production bases were completed by the end of FY 2009.

The Makita Group recognizes the importance of information security in modern corporate activities and has accordingly instituted the “Makita Information Security Policy.”

The Group conducts internal audits as an information security measure in compliance with the Policy’s guidelines. In addition, as a systematic reaction in compliance with Section 404 of the Sarbanes-Oxley Act of 2002, the Group addresses the development of global information systems to conduct information security activities in cooperation with overseas subsidiaries.

Overseas subsidiaries operate in compliance with the “Makita’s Information Security Implementation Procedure Manual.”

Intellectual Property Rights
Makita is committed to technical development in anticipation of user needs as a leading global company in the professional-use power tool industry. Makita considers its proprietary technologies as the source of its competitive edge, and registers these technologies as intellectual property rights and strives to protect the intellectual property rights proactively worldwide.

As of March 31, 2009, Makita owned 543 patents and 327 design rights in Japan and 535 patents, 113 utility model registrations and 583 design rights outside Japan. A utility model registration is a right granted under Japanese law to inventions having a practical utility in terms of form, composition or assembly, but embodying less originality than that required for patents. As of March 31, 2009, Makita had made 691 applications for additional patents and 55 applications for additional design rights in Japan as well as 540 patent and 116 design rights applications outside Japan.

The number of Makita’s patents and pending applications has been increasing annually both in Japan and overseas. As of March 31, 2009, the patents held by Makita in Japan consisted of 424 patents in connection with power tools, 116 patents in connection with other products (such as gardening tools and pneumatic tools) and 3 patents in connection with production engineering. Patents held by Makita outside of Japan consisted of 412 patents in connection with power tools and 123 patents in connection with other products.

While Makita considers all of its intellectual property to be important, it does not consider any one or group of patents, trademarks or utility model registrations to be so significant that their expiration or termination would materially affect Makita’s business.

C. Organizational structure

As of March 31, 2009, the Makita Group consisted of 48 consolidated subsidiaries and 1 equity method affiliate. The Company is the parent company of the Makita Group. The Company heads the development of products. Domestic sales are made by the Company and other two domestic subsidiaries and overseas sales are made almost entirely through sales subsidiaries and wholesalers. The following is a list of significant subsidiaries of the Makita Group.

				Proportion of
		Country of		Ownership and
Company Name		Incorporation		Voting Interest
Makita Numazu Corporation		Japan			100.0	%
Makita U.S.A., Inc.		U.S.A.			100.0
Makita Corporation of America		U.S.A.			100.0
Makita Canada Inc.		Canada			100.0
Makita International Europe Ltd.		U.K.			100.0
Makita (U.K.) Ltd.		U.K.			100.0
Makita Manufacturing Europe Ltd.		U.K.			100.0
Makita France S.A.		France			55.0
Makita Benelux B.V.		The Netherlands			100.0
S.A. Makita N.V.		Belgium			100.0
Makita S.p.A.		Italy			100.0
Makita Werkzeug GmbH		Germany			100.0
Dolmar GmbH		Germany			100.0
Makita Werkzeug Gesellschaft m.b.H.		Austria			100.0
Makita Sp. z o. o.		Poland			100.0
Makita SA		Switzerland			100.0
Makita Oy		Finland			100.0
Makita (China) Co., Ltd.		China			100.0
Makita (Kunshan) Co., Ltd.		China			100.0
Makita (Australia) Pty. Ltd.		Australia			100.0
Makita Gulf FZE		U.A.E.			100.0

D. Property, plants and equipment

 

The following table sets forth information relating to Makita’s principal production facilities as of March 31, 2009.

		Floor space
Location		(Square meters)				Principal products manufactured
Japan;
Makita Corp. Okazaki Plants			135,029			Electric power tools, etc.
Makita Numazu Corporation			21,199			Engine powered agricultural and gardening equipments
Overseas;
Makita (China) Co., Ltd.			61,302			Electric power tools, etc.
Makita Corporation of America			24,053			Electric power tools, etc.
Makita (Kunshan) Co., Ltd.			17,969			Electric power tools, etc.
Dolmar GmbH			17,747			Engine powered forestry equipments
Makita Manufacturing Europe Ltd.			11,520			Electric power tools, etc.
Makita EU S.R.L.(Romania)			13,788			Electric power tools, etc.

The figures stated above only count in production facilities excluding other facilities, such as warehouse facilities, R&D facilities, sales offices and guard house.

In addition, the Company owns an aggregate of 161,814 square meters of floor space occupied by the head office, R&D facilities warehouse facilities, a training center, dormitories and sales offices.

Makita’s overseas manufacturing operations are conducted in China, the United Kingdom, the United States, Brazil, Germany and Romania.

All buildings and land in these countries, except for land in China which is held under long-term land lease, are owned by Makita.

None of the buildings or land that Makita owns in Japan is subject to any mortgage or lien.

Makita leases most of its sales offices in Japan and a substantial majority of its overseas sales offices and premises, except for the following locations which are owned by the respective subsidiary companies;

	•		Head offices and certain branch offices of Makita U.S.A., Makita Canada and Makita Australia; and
	•		Head offices of Makita Germany, Makita France, Makita Benelux (the Netherlands), Makita Belgium, Makita Italy, Makita Brazil, Makita Taiwan and Makita Singapore.

Makita considers all of its principal manufacturing facilities and other significant properties to be in good condition and adequate to meet the needs of its operations. Makita adjusts production capacity based on its assessment of markets demands and prospects for demands, according to market conditions and Makita’s business objectives, by opening, closing, expanding or downsizing manufacturing facilities or by increasing or decreasing output from the facilities accordingly. Makita, therefore, believes that it is difficult and would require unreasonable effort or expense to determine the exact productive capacity and the extent of utilization of each of its manufacturing facilities with a reasonable degree of accuracy. Makita, however, believes that its manufacturing facilities are currently operating at a normal capacity of production facility.

In FY 2009, Makita invested the expansion of the Makita Romania plant, the construction of the second plant in Brazil and the construction of the headquarter building of the sales office in France.

Item 4A. Unresolved Staff Comments

None

Item 5. Operating and Financial Review and Prospects

A. Operating results

The following table sets forth Makita’s income statement for each of the years ended March 31, 2007, 2008 and 2009.

																														U.S. dollars
		(Japanese yen in millions, except for percentage amounts)																												(thousands)
		2007								2008								2009												2009
																										Change
NET SALES		¥	279,933				100.0	%		¥	342,577				100.0	%		¥	294,034				100.0	%			(14.2	)%		$	2,970,040
Cost of sales			163,909				58.6				199,220				58.2				170,894				58.1				(14.2	)			1,726,202
GROSS PROFIT			116,024				41.4				143,357				41.8				123,140				41.9				(14.1	)			1,243,838
Selling, general and administrative expenses			66,802				23.9				76,198				22.2				72,635				24.7				(4.7	)			733,687
Losses (gains) on disposals or sales of property, plant and equipment, net			(249	)			(0.1	)			128				0.0				430				0.2				235.9				4,343
Impairment of long-lived assets			1,295				0.4				—				—				—				—				—				—
OPERATING INCOME			48,176				17.2				67,031				19.6				50,075				17.0				(25.3	)			505,808
OTHER INCOME(EXPENSES)
Interest and dividend income			1,364				0.5				2,092				0.6				1,562				0.5				(25.3	)			15,778
Interest expense			(316	)			(0.1	)			(269	)			(0.1	)			(236	)			(0.1	)			(12.3	)			(2,384	)
Exchange gains (losses) on foreign currency transactions, net			(418	)			(0.2	)			(1,233	)			(0.4	)			(3,408	)			(1.1	)			176.4				(34,424	)
Realized gains (losses) on securities, net			918				0.3				(1,384	)			(0.4	)			(3,548	)			(1.2	)			156.4				(35,838	)
Other, net			(401	)			(0.1	)			(466	)			(0.1	)			(428	)			(0.1	)			(8.2	)			(4,324	)
Total			1,147				0.4				(1,260	)			(0.4	)			(6,058	)			(2.0	)			380.8				(61,192	)
INCOME BEFORE INCOME TAXES			49,323				17.6				65,771				19.2				44,017				15.0				(33.1	)			444,616
PROVISION FOR INCOME TAXES			12,352				4.4				19,728				5.8				10,731				3.7				(45.6	)			108,394
NET INCOME		¥	36,971				13.2	%		¥	46,043				13.4	%		¥	33,286				11.3	%			(27.7	)%		$	336,222

General Overview

Makita’s principal business is manufacture and sale of power tools for professional users worldwide. Makita has eleven production bases, three located in Japan, two in China and Brazil and one each in the United States, the United Kingdom, Germany and Romania. For FY 2009, approximately 84% of Makita’s sales were from outside of Japan. Makita is affected to a large extent by demand for power tools worldwide, which in turn is influenced by factors including new housing construction, demand for household renovations, public investment and private capital expenditures. The nature and the extent to which each of these factors influence Makita differ in each country and region in which Makita sells its products.

In FY 2009, the primary sale products were power tools such as drills, rotary hammers, hammer drills, demolition hammers, grinders and cordless impact drivers. The sale of these products accounted for more than 70% of the total net sales. In addition, the sale of gardening and household products, including engine-equipped grass cutters and cordless cleaners, accounted for approximately 13% of the total net sales.

Developed countries in North America and Europe have matured market for DIY products and demand for power tools is rather affected by changes in consumer spending. Demand for power tools in developing countries is expected to expand as the economic growth increases.

Developments in technology have also driven the market for power tools. In particular, in recent years the development of rechargeable electric tools featuring small, light and high-capacity lithium-ion batteries has resulted in an increased demand of rechargeable electric tools as more users began to replace their conventional power tools which used NiCad or nickel hydride batteries with those that use the new lithium-ion batteries.

Makita has established a solid presence worldwide as a provider of portable power tools, however, competition is becoming more severe on a global basis.

During FY 2009, while the business climate in Japan and the United States was severely impacted by the downturn of the economy and a decrease in new housing construction, product sales were relatively strong in Europe mainly due to the continued appreciation of the euro. Additionally, sales increased in Russia, Brazil and the Middle East reflecting active construction investments utilizing their abundant resources and wealth from the hike of crude oil and natural resource prices during the first half of FY 2009.

However, the U.S. financial crisis in September 2008 rapidly affected the real economy throughout the world accompanied by tumbling stock prices and sharp declines in the currencies of several countries. As a consequence, not only developed countries such as Japan and Western European countries but also Eastern European countries, Russia and the emerging markets in Central and South America and the Middle East all suffered from recessionary conditions.

In light of the unprecedented global economic recession, construction and housing investments fell considerably worldwide, resulting in a rapid decline in demand for power tools and worsening Makita’s business conditions in the second half of FY 2009.

Under this challenging economic climate, Makita strengthened its development efforts to enhance the lineup of its industry-leading products such as power tools, rechargeable electric tools and gardening tools, which incorporate features that serve to improve usability and meet the needs for smaller and lighter products with lower noise and vibration. Makita built its second plant in Brazil and expanded its Romania plant to reinforce its production globally, and both plants started their business successfully. Makita also endeavored to improve sales and after-sales service in developed countries as a leading company in the industry. These measures included the reinforcement of a cooperative relationship with The Home Depot Inc. in North America. In addition, as a part of sale reinforcement measures in emerging markets, Makita strengthened its global sales throughout the fiscal year by incorporating local subsidiaries in Colombia and India, and in Morocco, which is a significant milestone and will be the key base to African markets for Makita.

The results of operation of FY 2009 was largely affected by a decrease in demand for power tools globally due to negative factors such as a rapid appreciation of Japanese yen since fall 2008, a decreased demand in Japan and in the United States since the beginning of FY 2009. In the second half of FY 2009, a demand in Western Europe and emerging markets in Eastern Europe and Russia, Asia, Central and South America and the Middle East sharply went down and a decline in sales was accelerated by the simultaneous recession worldwide. As a result, consolidated net sales decreased by 14.2% to ¥294,034 million compared to FY 2008.

In light of a return to shareholders, the Company paid an interim dividend of ¥30 per share in November 2008 and a year-end dividend of ¥50 per share in June 2009. It also repurchased six million shares of its own stock during FY 2009, of which four million shares were retired.

Currency Fluctuations

Makita is affected by fluctuations in foreign currency exchange rates due to its place in the global market. Makita is primarily exposed to fluctuations of the Japanese yen against the euro, the U.S. dollar, as well as other currencies of countries where Makita does business. Makita’s consolidated financial statements, presented in Japanese yen, are affected by currency exchange rate fluctuations through both translation and transaction risks.

Translation risk is the risk that Makita’s consolidated financial statements for a particular period or for a particular date will be affected by changes in the prevailing exchange rates between the Japanese yen and the currencies in which the subsidiaries prepare their financial statements. Even though the fluctuations of currencies against the Japanese yen can be substantial and, therefore, significantly impact comparisons with prior accounting periods and among various geographic markets, the translation effect is a reporting consideration and does not reflect Makita’s underlying results of operations. Transaction risk is the risk that the currency structure of Makita’s costs and liabilities will deviate from the currency structure of sales proceeds and assets. Makita enters into foreign exchange forward contracts in order to hedge a portion of its transaction risk. Doing so has reduced, but not eliminated, the effects of exchange rate fluctuations against the Japanese yen, which in some years can be significant.

Generally, the depreciation of the Japanese yen against other currencies, particularly the euro, has a positive effect on Makita’s operating income and net income. Conversely, the appreciation of the Japanese yen against other currencies, particularly the euro, has the opposite effect. The first half of FY 2009 saw the appreciation of the euro and the higher appreciation of the currencies of resource-rich countries, whereas the exchange rates of most foreign currencies depreciated against the Japanese yen in the second half.

FY 2009 compared to FY 2008

Net Sales

Makita’s consolidated net sales for FY 2009 amounted to ¥294,034 million, a decrease of 14.2%, or ¥48,543 million, from FY 2008. In FY 2009, the average Japanese yen-U.S. dollar exchange rate was ¥100.71 for U.S.$1.00, representing a 12% appreciation of the Japanese yen compared to the average exchange rate in FY 2008. The average Japanese yen-euro exchange rate in FY 2009 was ¥144.07 for 1.00 euro, representing a 10.8% appreciation of the Japanese yen compared to the average exchange rate in FY 2008. Excluding the effect of currency fluctuations, consolidated net sales would have decreased by 4.5% in FY 2009.

In terms of product type, the sales of power tools decreased by 16.1%, or ¥41,166 million; the sale of gardening and household products decreased by 8.6%, or ¥3,494 million; and revenue from parts, repairs and accessories decreased by 8.4%, or ¥3,883 million. Decrease of sales of Makita’s main products including grinders, hammer drills and driver drills ranged between 12% and 19% due to a rapid decline in demand for power tools which worsened our business environment in the second half of FY 2009.

On the other hand, the ratio of sale of cordless power tools to total sales of power tools increased to 27.2% from 26.4% in FY 2008.

Sales by region

The decrease in consolidated net sales in FY 2009 can be attributed to a decrease in sales in Japan by 11.4%, or ¥5,971 million, to ¥46,222 million, a decrease in sales in Europe by 14.5%, or ¥23,247 million, to ¥137,113 million; a decrease in sales in North America, by 25.0%, or ¥14,133 million, to ¥42,289 million; a decrease in sales in Asia (excluding Japan) by 2.8%, or ¥634 million, to ¥21,995 million and a decrease in sales in Other regions, including Central and South America, the Middle East, Africa and Oceania, by 8.9% or ¥4,558 million, to ¥46,415 million.

In Japan, the number of new housing construction starts has been stagnant since summer 2007 partly due to the implementation of a more stringent Building Standards Law. Consequently, demand for power tools has not recovered, leading to a decline in sales.

In Europe, demand for construction in Western Europe decreased and the financial crisis considerably affected the real economy in Eastern Europe and Russia, where demand had been strong until the first half of FY 2009 before the outbreak of the financial crisis. The chain effect of this crisis caused a sharp decline in sales in the second half of FY 2009.

Net sales in local currency terms decreased in Western Europe by 6.6%, but increased in Eastern Europe and Russia by 2.3%. The considerable drop in the exchange rates of local currencies had a significant negative impact. The euro depreciated by 10.8% and the British pound by 23.9% against the Japanese yen year-over-year.

Net sales in translation into Japanese yen decreased in Eastern Europe and Russia by 5.8%, the United Kingdom by 25.4%, Germany by 12.7% and France by 15.2%. Excluding the effect of currency translation, sales in Europe decreased by 3.4%, or ¥5,415 million.

In North America, where the financial crisis began, housing investments and the commercial construction market considerably declined. Even Christmas season sales, typically the best sale opportunity during the year remained stagnant due to sluggish sales at retailers. The appreciation of the yen by 12% against the U.S. dollar was also a contributing factor to the decline of net sales. Excluding the effect of currency translation, sales in North America decreased by 13.5%, or ¥7,633 million.

In Asia, sales were favorable in the Southeast Asia region during the first half of FY 2009, but demand for construction fell rapidly in the second half of FY 2009. Excluding the effect of currency translation, sales in Asia increased by 0.9%, or ¥214 million.

In Other regions, investments in construction in Brazil and the Middle East increased due to the hike of crude oil and natural resource prices during the first half of FY 2009. However, such investments rapidly decreased following the financial crisis during the second half of FY 2009. A sharp decline in currencies of emerging countries also accelerated the rapid decline of new construction starts. In Oceania, net sales on a local currency basis increased by 4.8%, however, this was largely affected by the decline of currencies in the second half of FY 2009. The Australian dollar fell by 18.5% against the Japanese yen and Brazil’s Real declined by 14.4% (year-over-year comparison on exchange rates for net sales). Excluding the effect of currency translation, sales in Other regions increased by 6.4%, or ¥3,245 million.

Review of Performance by Product Group

The Power Tools group offers a wide range of products such as drills, grinders and sanders, rotary hammers and hammer drills, demolition hammers and electric breakers, cordless impact drivers, circular saws, slide compound saws and cutters. These products represent the largest portion of Makita’s consolidated net sales.

In FY 2009, sales of power tools decreased by 16.1% to ¥214,703 million year-over-year, accounting for 73.0% of consolidated net sales. In Japan, sales of power tools decreased by 11.9% to ¥20,788 million, accounting for 45.0% of the domestic net sales. Overseas sales of power tools decreased by 16.5% to ¥193,915 million, accounting for 78.3% of overseas net sales.

New products launched during FY 2009 included brushless impact drivers and rotary hammers equipped with 36V lithium-ion batteries.

Gardening and Household Products

Principal products in Makita’s gardening and household products group include chain-saws, brush-cutters, vacuum cleaners and cordless cleaners. In FY 2009, sales of gardening and household products decreased by 8.6%, to ¥36,916 million, which accounted for 12.6% of consolidated net sales. Domestic sales of gardening and household products decreased by 15.9%, to ¥12,907 million, accounting for 27.9% of total domestic sales. Overseas sales of gardening and household products decreased by 4.2%, to ¥24,009 million, accounting for 9.7% of total overseas sales in FY 2009.

New products launched during FY 2009 included cordless cleaners and sprays powered by lithium-ion batteries, low-vibration hedge trimmers and backpack-type, mini 4-stroke engine-equipped grass cutters.

In FY 2008, Makita acquired all outstanding shares of Fuji Robin Industries, Ltd. (currently Makita Numazu Corporation), in exchange for approximately ¥2,673 million in cash and 81,456 Makita shares (with a fair value of ¥397 million) aimed to expand its business in the gardening equipment market. Makita Numazu engages primarily in the production of engine-equipped gardening equipment, especially mini 4-stroke engines that are environment-friendly in terms of noise and exhaust emissions, and therefore future sales expansion is anticipated. While such effects is yet to be seen in terms of sales and profits, such effect can be expected after engine production is transferred to Makita’s plants in China in order to reduce costs of production of engine-equipped gardening equipments.

Parts, Repairs and Accessories

Makita’s after-sales services include the sales of parts, repairs and accessories. In FY 2009, the sales of parts, repairs and accessories decreased by 8.4%, to ¥42,415 million, accounting for 14.4% of consolidated net sales. Domestic sales of parts, repairs, and accessories decreased by 5.4% to ¥12,527 million, accounting for 27.1% of domestic net sales.

Overseas sales of parts, repairs, and accessories decreased by 9.6% to ¥29,888 million, accounting for 12.0% of overseas net sales.

Cost of sales decreased by 14.2%, or ¥28,326 million to ¥170,894 million compared with FY 2008.

The ratio of cost of sales improved by 0.1 point from 58.2% in to 58.1% compared with FY 2008. The 0.1 point improvement of the cost of sales on a full-fiscal year basis is mainly due to positive effects from strong sales in the first half of FY 2009, a rise in the production rate of the plants in China and favorable exchange rate fluctuations, despite a decline in sales during the second-half of FY 2009 and rapid appreciation of the Japanese yen resulting in a rise in the cost of sales.

Gross profit on sales decreased by 14.1%, or ¥20,217 million, to ¥123,140 million.

Gross profit margin rose by 0.1 point from 41.8% to 41.9% compared with FY 2008.

Selling, general and administrative expenses for FY 2009 decreased by 4.7%, or ¥3,563 million from FY 2008 to ¥72,635 million compared with FY 2008.

R&D cost mainly incurred in Japan increased. Although personnel cost increased overseas on a local currency basis, the corresponding amount in Japanese yen decreased due to the appreciation of the Japanese yen. In FY 2009, selling, general and administrative expenses excluding the impact of currency fluctuations increased by 4.1%, or ¥3,121 million compared with FY 2008. The ratio of selling, general and administrative expenses to sales rose by 2.5 points from 22.2% in FY 2008 to 24.7% in FY 2009.

In FY 2009, the Company demolished parts of its head office building and Okazaki plant through reconstruction projects. Makita recognized net losses on disposal or sales of property, plant and equipment of ¥430 million in FY 2009, compared with net losses of ¥128 million in FY 2008.

As a result of the above, operating income for FY 2009 decreased by 25.3%, or ¥16,956 million to ¥50,075 million. This decrease was mainly due to currency fluctuations and decrease in sales. Operating margin decreased by 2.6 points, from 19.6% to 17.0% compared with FY 2008.

In FY 2009, other expense was ¥6,058 million, compared with other expense of ¥1,260 million in FY 2008.

The major components of other expense were as follows:

(1) Realized losses on securities amounted to ¥3,548 million, compared with realized losses on securities of ¥1,384 million in FY 2008. This increase of losses was mainly due to the decline of stock price.

(2) The amount of foreign exchange losses increased by ¥2,175 million, to ¥3,408 million, in FY 2009 due to foreign exchange losses mainly in Brazil and China.

As the Company operates using only its equity capital, and the subsidiaries are financed by loans from within the Group, the variation in interest expense is insignificant.

Income before income taxes for FY 2009 decreased by 33.1%, or ¥21,754 million, to ¥44,017 million. This was the first profit decline in seven fiscal years. The ratio of income before income taxes to sales in FY 2009 decreased by 4.2 points, from 19.2% to 15.0% compared with FY 2008.

Provision for income taxes for FY 2009 amounted to ¥10,731 million, a decrease of 45.6%, or ¥8,997 million, compared with FY 2008. The FY 2009 tax rate decreased because the ratio of the overall net income of overseas subsidiaries to consolidated net income increased. As a result, the effective tax rate for FY 2009 was 24.4%, a decrease of 5.6 points from 30.0% for FY 2008.

As a result of the above, net income for FY 2009 decreased by 27.7%, or ¥12,757 million, to ¥33,286 million compared with FY 2008. Net income ratio to sales was 11.3% in FY 2009.

Basic earnings per share of common stock decreased by 26%, to ¥236.9 in FY 2009 from ¥320.3 in FY 2008. In FY 2009, the Company repurchased six million shares of its own stock and then retired four million shares of treasury stock.

Segment information described below is based on the location of the Company and its relevant subsidiaries.

In FY 2009, sales in the Japan segment decreased by 15.3%, to ¥120,230 million. Sales to external customers decreased by 11.9% to ¥63,859 million, which accounted for 21.7% of consolidated net sales. The decrease reflects 11.4% decrease in sales in the domestic market. The decrease was largely caused by the sharp decline in exports to North America and Europe further affected by inter-segment sales and the appreciation of the Japanese yen against mainly the U.S. dollar, the euro, the Australian dollar and the British pound. Segment operating expenses in Japan decreased by 6.6%, to ¥112,109 million, operating income decreased by 63.1%, to ¥8,121 million in FY 2009.

In FY 2009, sales in the Europe segment decreased by 14.7% to ¥141,384 million. Sales to external customers decreased by 14.3%, to ¥137,230 million, which accounted for 46.7% of consolidated net sales. This decrease is mainly due to a decrease of sales in Europe and depreciation of local currencies in Europe. Segment operating income decreased by 26.9%, to ¥19,716 million.

In FY 2009, sales in the North America segment decreased by 23.3%, to ¥47,136 million. Sales to customers decreased by 24.5% to ¥42,446 million, which accounted for 14.4% of consolidated net sales. Operating income decreased by 50.8%, to ¥845 million. This decrease in sale was primarily due to a large decline in sales in the United States, most notably a significant decrease in sales at specialty stores for professional applications.

In FY 2009, sales in the Asia segment decreased by 14.1% to ¥96,651 million. Sales to external customers decreased by 11.7%, to ¥9,954 million, which accounted for 3.4% of the consolidated net sales. This decrease is primarily due to declines in sales of subsidiaries in Singapore, Hong Kong and China, as well as the adverse effect of exchange rate fluctuations. Segment operating income decreased by 12.9%, to ¥12,213 million in FY 2009.

In FY 2009, sales in the Other segment decreased by 4.5% to ¥40,666 million. Sales to external customers decreased by 4.3%, to ¥40,545 million, which accounted for 13.8% of the consolidated net sales. Although the number of products sold increased, sales on the Japanese yen basis decreased due to the effect of unfavorable exchange rates. Segment operating income decreased by 13.3%, to ¥4,850 million, in FY 2009.

FY 2008 compared to FY 2007

Makita’s consolidated net sales for the fiscal year ended March 31, 2008 (“FY 2008”) amounted to ¥342,577 million, an increase of 22.4%, or ¥62,644 million, from the fiscal year ended March 31, 2007 (“FY 2007”). In FY 2008, the average yen-dollar exchange rate was ¥114.44 for $1.00, representing a 2.2% appreciation of the yen compared with the average exchange rate in FY 2007. The average level of the Japanese yen-euro exchange rate in FY 2008 was ¥161.59 for 1.00 euro, representing a 7.7% depreciation of the yen compared with the average exchange rate in FY 2007. Excluding the effect of currency fluctuations, consolidated net sales would have increased by 17.6% in FY 2008.

Makita’s consolidated net sales of products increased by 24.0% in FY 2008, as did the overall number of units of products sold. The significant increase in the quantity of goods sold in FY 2008 primarily reflected strong sales of power tools such as drills, hammer drills, rotary hammers and grinders. In Europe, competitiveness improved due to the strength of the euro against the Japanese yen. In other regions, against the backdrop of high crude oil and natural resources prices, net sales increased in Oceania, Latin America and the Middle East. Sales of new products, such as lithium ion battery products, comprised 10.4% of consolidated net sales of Makita in FY 2008, or ¥35,798 million.

In terms of product type, the sales of power tools increased by 21.3%, or ¥44,975 million, gardening and household products increased by 43.7%, or ¥12,287 million, and revenue from parts, repairs and accessories increased by 13.2%, or ¥ 5,382 million. In particular, sales of drills, hammer drills, rotary hammers and grinders increased.

The increase in consolidated net sales in FY 2008 can be attributed to an increase in sales in Japan by 11.4%, or ¥5,333 million, to ¥52,193 million, an increase in sales in Europe by 29.3%, or ¥36,340 million, to ¥160,360 million and, an increase in sales in North America, by 9.6%, or ¥4,950 million, to ¥56,422 million, increased sales in Asia (excluding Japan) by 16.2%, or ¥3,160 million, to ¥22,629 million and an increase in sales in other regions, including Australia, Latin America and the Middle East, by 33.7% or ¥12,861 million, to ¥50,973 million.

The increased sales in Japan in FY 2008 primarily reflected strong sales of lithium ion battery based impact drivers. In addition, Makita Numazu, which became a subsidiary in May 2007 to strengthen the area of gardening tools including engine-powered tools, contributed to the overall increased sales in Japan.

The increased sales in Europe in FY 2008 primarily reflected the appreciation of the euro against the Japanese yen, as well as the introduction of new products, particularly rotary hammers with AVT (Anti Vibration Technology) and lithium ion battery products. Net sales in yen terms increased in Russia and Eastern Europe by 44.0%, in the United Kingdom by 24.6%, in Germany by 30.7% and in France by 18.4% compared to FY 2007. Excluding the effect of fluctuations of the local currencies, net sales in Europe would have increased by 20.4%, or ¥25,298 million in FY 2008.

The increased sales in North America in FY 2008 primarily reflected strong sales of lithium ion battery products, despite falls in housing investments in the wake of the sub-prime loan problem. Excluding the effect of fluctuations of the local currencies, net sales in North America would have increased by 9.7%, or ¥5,013 million in FY 2008, compared with FY 2007.

The increased sales in Asia excluding Japan in FY 2008 primarily reflected the increased sales in Singapore and Indonesia, particularly with respect to power tools, such as grinders and rotary hammers. Excluding the effect of fluctuations of the local currencies, net sales in Asia would have increased by 15.1%, or ¥2,947 million in FY 2008.

The increased sales in other regions including Australia, Latin America and the Middle East in FY 2008 were primarily due to an increase in the number of units sold, particularly with respect to power tools such as grinders, hammer drills and rotary hammers. With regard to other regions, construction investment was strong due to continued economic growth with a backdrop of an increase in the price of mineral resources and crude oil. Accordingly, excluding the effect of fluctuations of the local currencies, net sales in other regions would have increased by 27.9%, or ¥10,616 million in FY 2008.

The group offers a wide range of products such as dependable drills, rotary hammers, hammer drills, demolition hammers, grinders, cordless impact driver and sanders. This group generates the largest portion of Makita’s consolidated net sales.

In FY 2008, sales of power tools grew by 21.3%, to ¥255,869 million, accounting for 74.7% of consolidated net sales. In Japan, sales of power tools decreased by 6.6%, to ¥23,605 million, accounting for 45.2% of total domestic sales. Overseas sales of power tools increased by 25.1% to ¥232,264 million, or 80.0% of total overseas sales.

Principal products in Makita’s gardening and household products group include chain saws, petrol brush-cutter, vacuum cleaners and cordless cleaners. In FY 2008, Makita recorded a 43.7% increase in sales of gardening and household products, to ¥40,410 million, or 11.8% of consolidated net sales. Domestic sales of gardening and household products increased by 69.0%, to ¥15,340 million, accounting for 29.4% of total domestic sales. Makita Numazu, which became a subsidiary in May 2007 to strengthen the area of gardening tools including engine-powered tools, contributed to increased sales in Japan. Makita recorded a 31.6% increase in overseas sales of gardening and household products, to ¥25,070 million, which accounted for 8.6% of total overseas sales in FY 2008.

Makita’s after-sales services include the sales of parts, repairs and accessories. In FY 2008, parts, repairs and accessories sales increased by 13.2%, to ¥46,298 million, accounting for 13.5% of consolidated net sales. Domestic sales of parts, repairs, and accessories increased by 5.9%, to ¥13,248 million, accounting for 25.4% of total domestic sales. Overseas sales of parts, repairs, and accessories grew by 16.4%, to ¥33,050 million, accounting for 11.4% of total overseas sales.

Cost of sales increased by 21.5%, or ¥35,311 million from FY 2007 to ¥199,220 million.

The sales cost ratio improved by 0.4 points from 58.6% in FY 2007 to 58.2% due mainly to an increased production rate in China, as well as sales growth resulting from favorable exchange rate fluctuations, primarily the depreciation of the Japanese yen against the euro.

Gross profit on sales increased by 23.6%, or ¥27,333 million to ¥143,357 million. Gross profit margin rose by 0.4 points from 41.4% in FY 2007 to 41.8%.

Selling, general and administrative expenses for FY 2008 increased by 14.1%, or ¥9,396 million from FY 2007 to ¥76,198 million. The main factors were a rise in shipping costs due to increased sales, increased personnel costs due to an increase in the number of employees, and increased advertising costs due to sales promotion activities by overseas subsidiaries. Additionally, selling, general and administrative expenses excluding the impact of currency fluctuations increased by 10.2%.

On the other hand, the ratio of selling, general and administrative expenses to sales fell by 1.7 points from 23.9% to 22.2%, due to increased sales.

In FY 2008, the Company demolished parts of its headquarters building. Also, certain subsidiaries recorded losses on disposal of fixed assets. Accordingly, Makita recognized net losses on disposal or sales of property, plant and equipment of ¥128 million in FY 2008, compared with net gains of ¥249 million in FY 2007.

As a result of the above, operating income for FY 2008 increased by 39.1% to ¥67,031 million. Operating income margin increased by 2.4 points, from 17.2% in FY 2007 to 19.6% in FY 2008.

In FY 2008, other expense was ¥1,260 million, compared with other income of ¥1,147 million in FY 2007.

The major components of other expense were as follows:

(1) Realized losses on securities amounted to ¥1,384 million, compared with realized gains on securities of ¥918 million in FY 2007. This result was due mainly to the decline of stock prices.
(2) The amount of foreign exchange losses increased by ¥815 million, to ¥1,233 million, in FY 2008 due to foreign exchange losses mainly in China and Japan.

Income before Income taxes

Income before income taxes for FY 2008 increased by 33.3%, or ¥16,448 million as compared with FY 2007 to ¥65,771 million. The ratio of income before income taxes to sales for FY 2008 increased by 1.6 points, from 17.6% in FY 2007 to 19.2%.

Provision for Income taxes

Provision for income taxes for FY 2008 amounted to ¥19,728 million, an increase of 59.7%, or ¥7,376 million, as compared with FY 2007 due mainly to an increase in taxable income. In FY 2007, Makita reversed the valuation allowance on deferred tax assets in the amount of ¥2,701 million related to certain subsidiaries based on both improved performance in recent years and a steady outlook for the future performance of these subsidiaries, and thus the valuation allowance decreased by ¥2,655 million, including the effect of translation. However, in FY 2008, the balance of valuation allowance remained relatively unchanged compared with FY 2007. As a result, the effective tax rate for FY 2008 was 30.0%, 5.0 points increased from 25.0% for FY 2007.

Net Income

As a result of the above, net income for FY 2008 increased by 24.5%, or ¥9,072 million compared with FY 2007, to ¥46,043.

Earnings per Share

Basic earnings per share of common stock amounted to ¥320.3, compared with ¥257.3 in FY 2007.

Regional Segments

Segment information described below is based on the location of the Company and its relevant subsidiaries.

Japan Segment

In FY 2008, sales in the Japan segment grew by 12.9%, to ¥142,006 million. Sales to external customers increased by 17.3% to ¥72,466 million, which accounted for 21.2% of consolidated net sales. The increase reflects a 11.4% rise in sales in the domestic market as well as a 35.9% increase in export sales mainly to Africa and Asia. Segment operating expenses in Japan increased by 10.7%, to ¥120,020 million, operating income increased by 26.3%, to ¥21,986 million in FY 2008.

Europe Segment

In FY 2008, sales in the Europe segment grew by 26.9% to ¥165,824 million. Sales to external customers increased by 28.3%, to ¥160,218 million, which accounted for 46.8% of consolidated net sales. This increase is mainly due to strong sales of the rotary hammer and lithium ion battery products, and the high growth achieved in the Eastern Europe and Russian economies. Segment operating income increased by 49.4%, to ¥26,974 million.

North America Segment

In FY 2008, sales in the North America segment climbed by 8.3%, to ¥61,446 million. Sales to external customers increased by 9.3% to ¥56,234 million, which accounted for 16.4% of consolidated net sales. This increase was mainly due to higher sales of lithium ion battery products. However, operating income for FY 2008 decreased by 31.6%, to ¥1,719 million. This decrease is mainly due to a decrease in a gain on disposal of property, plant and equipment in FY 2008.

Asia Segment (excluding Japan)

In FY 2008, sales in the Asia segment increased by 46.6% to ¥112,482 million. The increase in sales in this segment is primarily due to higher inter-segment sales from two factories in China to Europe and North America. Sales to external customers increased by 16.2%, to ¥11,271 million, which accounted for 3.3% of consolidated net sales. This increase is primarily due to an increase in sales in Singapore. Segment operating income grew by 41.5%, to ¥14,014 million in FY 2008.

Other Segment

In FY 2008, sales in the other segment increased by 32.0% to ¥42,560 million. Sales to external customers increased by 32.0%, to ¥42,388 million, which accounted for 12.4% of consolidated net sales.

Sales increase in this segment is primarily due to an increase in sales in Latin America and Middle East. Segment operating income grew by 61.5%, to ¥5,596 million, in FY 2008. The reason for this increase is mainly an improvement of cost ratio of sales in Oceania.

CRITICAL ACCOUNTING POLICIES

As disclosed in Note 3 to the accompanying consolidated financial statements, the preparation of Makita’s consolidated financial statements in accordance with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions. These estimates and assumptions were determined by management’s judgment based on currently known facts, situations and plans for future activities, which may change in the future. Certain accounting estimates are particularly sensitive because of their significance to the consolidated financial statements and accompanying notes and due to the possibility that future events affecting the estimates may differ significantly from management’s current judgments. Accordingly, any changes in the facts, situations, future plans or other factors on which management bases its estimates may result in a significant difference between earlier estimates and the actual results achieved. Makita believes that the following are the critical accounting policies and related judgments and estimates used in the preparation of its consolidated financial statements and accompanying notes.

Revenue Recognition

Makita believes that revenue recognition is critical for its financial statements because net income is directly affected by the estimation of sales incentives. In recognizing its sales incentives, Makita is required to make estimates based on assumptions about matters that are highly uncertain at the time the estimate is made. Makita principally generates revenue through the sale of power tools. Makita’s general revenue recognition policy follows the provisions of Staff Accounting Bulletin No. 104, SAB 104, Revenue Recognition, and Emerging Issues Task Force Issue, EITF No. 01-9, Accounting for consideration Given by a Customer (including a Reseller of the Vendor’s Products). In accordance with SAB 104 and as disclosed in the consolidated financial statements, Makita recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services are rendered, the sales price is fixed and determinable and collectibility is reasonably assured. Makita believes the foregoing conditions are satisfied upon the shipment or delivery of Makita’s product.

With respect to “Revenue Recognition,” Makita offers sales incentives to qualifying customers through various incentive programs. Sales incentives primarily involve volume-based rebates, cooperative advertising and cash discounts, and are accounted for in accordance with the EITF No.01-9.

Volume-based rebates are provided to customers only if customers attain a pre-determined cumulative level of revenue transactions within a specified period of a year or less. Liabilities for volume-based rebates are recognized with a corresponding reduction to revenue for the expected sales incentive at the time the related revenue is recognized, and are based on the estimation of sales volume reflecting the historical performance of individual customers.

If expected sales levels are not achieved or achieved in levels higher than anticipated resulting in a greater magnitude of incentive, the result could have a material impact on Makita’s financial statements.

Cooperative advertisings are provided to certain customers as a contribution to or as sponsored funds for advertisements. Under cooperative advertising programs, Makita does not receive an identifiable benefit sufficiently separable from its customers. Accordingly, cooperative advertisings are also recognized as a reduction of revenue at the time the related revenue is recognized based on Makita’s ability to reliably estimate such future advertising to be taken.

Cash discounts are provided as a certain percentage of the invoice price as predetermined by spot contracts or based on contractually agreed upon amounts with customers. Cash discounts are recognized as a reduction of revenue at the time the related revenue is recognized based on Makita’s ability to reliably estimate such future discounts to be taken. Estimates of expected cash discounts are evaluated and adjusted periodically based on actual sales transactions and historical trends.

The following table shows the changes in accruals for volume-based rebates, cooperative advertising and cash discounts for the years ended March 31, 2007, 2008 and 2009:

		Japanese yen												U.S. dollars
		(In millions)												(In thousands)
		For the year ended March 31,
		2007				2008				2009				2009
Volume-based rebates:
Actual payment for the year		¥	(6,139	)		¥	(9,626	)		¥	(10,343	)		$	(104,475	)
Charged to earnings for the year			7,477				9,897				7,866				79,455
Translation adjustments			(203	)			346				662				6,687
Accrued expenses or deduction of account receivables (BS) as of March 31			3,859				4,476				2,661				26,879
Cooperative advertisings:
Actual payment for the year			(2,576	)			(3,585	)			(3,981	)			(40,212	)
Charged to earnings for the year			3,026				3,517				3,435				34,697
Translation adjustments			(70	)			64				185				1,869
Accrued expenses or deduction of account receivables (BS) as of March 31			957				953				592				5,980
Cash discounts:
Actual payment for the year			(5,439	)			(5,891	)			(5,514	)			(55,697	)
Charged to earnings for the year			5,315				5,881				5,444				54,990
Translation adjustments			(19	)			58				14				141
Accrued expenses or deduction of account receivables (BS) as of March 31			348				396				340				3,434

Inventory Valuation and Reserve

Inventories are valued at the lower of cost or market price, with cost determined based on the average cost method. The valuation of inventory requires Makita to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The determination of obsolete or excess inventory requires Makita to estimate the future demand for products taking into consideration such factors as macro and microeconomic conditions, competitive pressures, technological obsolescence, changes in consumer buying habits and others. The estimates of future demand that Makita uses in the valuation of inventory are the basis for revenue forecasts, which are also consistent with short-term manufacturing plans. If demand forecast for specific products is greater than actual demand and Makita fails to reduce manufacturing output accordingly, Makita could be required to write down additional on-hand inventory, which would have a negative impact on gross profit and, consequently, a potential material adverse impact on net income. However, sales of previously written-down or written-off inventory is not significant to any of the periods presented and Makita believes that the gross profit of the resulting sales of such inventory items is similar to that realized on all of its sales for the respective periods presented. Accordingly, the impact on Makita’s consolidated gross profit margin by sales of previously written-down or written-off inventory is not material. Makita usually sells or scraps remaining inventory items within a few years after write off and/or write down.

Impairment Losses on Securities

Makita holds marketable securities and investment securities, which are accounted for in accordance with SFAS No. 115. Makita believes that impairment on securities is critical because it holds significant amounts of securities and any resulting impairment loss could have a material adverse impact on net income. Makita uses significant judgment based on subjective as well as objective factors in determining when an investment is other-than-temporarily impaired. Makita regularly reviews available-for sale securities and held-to-maturity securities for possible impairment based on criteria that include, but are not limited to, the extent to which cost exceeds market value, the duration of a market decline, Makita’s intent and ability to hold to recovery and the financial health, specific prospects and creditworthiness of the issuer. Makita performs comprehensive market research and analysis and monitors market conditions to identify potential impairments loss.

Allowance for Doubtful Receivables

Makita performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness, as determined by Makita’s review of their current credit information. Makita continuously monitors collections and payments from its customers and maintains a provision for probable estimated credit losses based upon its historical experience and any specific customer collection issues that Makita has identified. Such credit losses have historically been within Makita’s expectations and the provisions established. However, Makita cannot guarantee that it will continue to experience the similar credit loss rates that it has in the past. Changes in the underlying financial condition of its customers could result in a material impact to Makita’s consolidated results of operations and financial condition.

Impairment of Long-Lived Assets

Makita believes that impairment of long-lived assets is critical for its financial statements because Makita has significant amounts of property, plant and equipment, the recoverability of which could significantly affect its operating results and financial condition.

Makita performs an impairment review for long-lived assets held and used whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. This review is based upon Makita’s projections of expected undiscounted future cash flows. Estimates of the future cash flows are based on the historical trends adjusted to reflect the best estimate of future operating conditions. Makita believes that its estimates are reasonable. However, different assumptions regarding such cash flows could materially affect Makita’s evaluations. Recoverability of assets to be held and used is assessed by comparing the carrying amount of an asset or asset group to the expected future undiscounted cash flows of the asset or group of assets. If an asset or group of assets is considered to be impaired due to factors such as a significant decline in market value of an asset, current period operating or cash flow losses and significant changes in the manner of the use of an asset, the impairment charge to be recognized is measured as the amount by which the carrying amount of the asset or group of assets exceeds fair value. Long-lived assets meeting the criteria to be considered as held for sale, if any, are reported at the lower of their carrying amount or fair value less costs to sell.

Fair value is determined based on recent transactions involving sales of similar assets, by discounting expected future cash flows, or by using other valuation techniques. If actual market and operating conditions under which assets are operated are less favorable than those projected by management, resulting in lower expected future cash flows or a shorter expected future period to generate such cash flows, additional impairment charges may be required.

In addition, changes in estimates resulting in lower fair values due to unanticipated changes in business or operating assumptions could adversely affect the valuations of long-lived assets and in turn affect Makita’s consolidated results of operations and financial condition.

Retirement and Termination Benefit Plans

Makita believes that pension accounting is critical for its financial statements because assumptions used to estimate pension benefit obligations and pension expenses can have a significant effect on its operating results and financial condition. Accrued retirement and termination benefits are determined based on consideration of the levels of retirement and termination liabilities and plan assets at the end of a given fiscal year.

The levels of projected benefit obligations and net periodic benefit cost are calculated based on various annuity actuarial calculation assumptions. Principal assumptions include discount rates, expected return on plan assets, assumed rates of increase in future compensation levels, mortality rates and some other assumed rates. Discount rates employed by Makita are reflective of rates available on long-term, high quality fixed-income debt instruments. Discount rates are determined annually on the measurement date.

The expected long-term rate of return on plan assets is determined annually based on the composition of the pension asset portfolios and the expected long-term rate of return on these portfolios.

The expected long-term rate of return on plan assets is designed to approximate the long-term rate of return actually earned on the plan assets over time to ensure that funds are available to meet the pension obligations that result from the services provided by employees.

A number of factors are used to determine the reasonableness of the expected long-term rate of return, including actual historical returns on the asset classes of the plans’ portfolios and independent projections of returns of the various asset classes.

Accordingly, these assumptions are evaluated annually and retirement and termination liabilities are recalculated at the end of each fiscal year based on the latest assumptions. In accordance with U.S.GAAP, actual results that differ from the assumptions are accumulated and amortized over the average remaining service periods and therefore, generally affect Makita’s results of operations in such future periods.

The Company and certain of its subsidiaries have various contributory and noncontributory employee benefit plans covering substantially all of their employees. The discount rate assumed to determine the pension obligation for the pension plan was 2.5% as of March 31, 2009.

As of March 31, 2009, Makita allocated 38.3% and 34.0% of plan assets to equity securities and debt securities, respectively. The value of these plan assets are influenced by fluctuations in world securities markets. Significant depreciation or appreciation will have corresponding impact on future expenses.

The following table illustrates the sensitivity to changes in the discount rate and the expected return on pension plan assets, while holding all other assumptions constant, for Makita’s pension plans as of March 31, 2009.

		Change in				Change in
		projected benefit				pre-tax pension
Change in assumption		obligation				expenses
		Japanese yen (In millions)
50 basis point increase / decrease in discount rate			(2,135)/2,384				(2)/ 1
50 basis point increase / decrease in expected return on assets			—				(188)/ 188

While Makita believes that the assumptions are appropriate, significant differences in its actual experience or significant changes in its assumptions may materially affect Makita’s accrued retirement and termination benefits and future expenses.

Although pension liability increases in the current unfavorable investment environment, Makita holds sufficient surplus funds. Therefore, Makita is satisfied that its pension plans can be maintained.

Realizability of Deferred Income Tax Assets

Makita is required to estimate its income taxes in each of the jurisdictions in which Makita operates. This process involves estimating Makita’s current tax provision together with assessing temporary differences resulting from differing treatment of items for income tax reporting and financial accounting and reporting purposes. Such differences result in deferred income tax assets and liabilities, which are included within Makita’s consolidated balance sheets. Makita must then assess the likelihood that Makita’s deferred income tax assets will be recovered from future taxable income and, to the extent Makita believes that recovery is not “more likely than not”, Makita must establish a valuation allowance.

Significant management judgment is required in determining Makita’s provision for income taxes, deferred income tax assets and liabilities and any valuation allowance recorded against Makita’s gross deferred income tax assets. During FY 2008 and FY 2009, Makita reversed a portion of the valuation allowance in the amount of ¥237 million and ¥32 million, respectively. Makita has recorded a valuation allowance of ¥329 million as of March 31, 2009 against certain deferred income tax assets because of no tax planning strategy and an anticipated expiration of net operating loss carry forwards. For the balance of deferred income taxes, although realization is not assured, management believes, judging from an authorized business plan, it is more likely than not that all of the deferred income tax assets, less the valuation allowance, will be realized. The amount of such net deferred income tax assets that are considered realizable, however, could change in the near term and any such change may have a material effect on Makita’s consolidated results of operations and financial position if estimates of future taxable income are different.

New Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 has been subsequently amended by FASB Staff Position FAS157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” and FASB Staff Position FAS157-2, “Effective Date of FASB Statement No. 157.” SFAS No. 157, as amended, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements for instruments within its scope. SFAS No. 157, as amended, is effective from the fiscal period beginning after November 15, 2007, except for non-financial assets and liabilities that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually), for which it is effective from the fiscal period beginning after November 15, 2008. SFAS No. 157, as amended, is required to be adopted by Makita in this fiscal year. This Statement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The adoption did not give rise to any material effect on Makita’s consolidated financial position or results of operations. Makita does not expect the adoption of SFAS No. 157 for non-financial assets and liabilities that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually) from the fiscal period beginning after November 15, 2008 will have a material impact on its consolidated results of operations and financial condition.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115”, which permits an entity to measure many financial assets and financial liabilities at fair value that are not currently required to be measured at fair value. Entities that elect the fair value option reports unrealized gains and losses in earnings. SFAS No. 159 is effective for fiscal periods beginning after November 15, 2007 and is required to be adopted by Makita, in this fiscal year. The adoption did not give rise to any material effect on Makita’s consolidated financial position or results of operations as Makita did not elect to report financial assets and liabilities under the fair value option.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”, and No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”. These statements aim to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. These statements are effective for fiscal years beginning after December 15, 2008 and are required to be adopted by Makita, in the fiscal year beginning April 1, 2009. Under SFAS No. 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition date at fair value with limited exceptions. SFAS No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of noncontrolling interests (minority interests) as equity in the consolidated financial statements. The amount of net income attributable to noncontrolling interests will be included in consolidated net income on the face of the consolidated income statement. This statement also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. Other than the recharacterization of minority interests, Makita does not expect the adoption of these statements will have a material impact on its consolidated results of operations and financial condition.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities- an amendment of FASB Statement No. 133”, which amends and expands the current disclosures required by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS No. 161 requires entities to provide greater transparency on how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133, and how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. SFAS No. 161 does not change the existing standards relative to recognition and measurement of derivative instruments and hedging activities. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and is required to be adopted by Makita, in this fiscal year. In December 2008, the FASB issued FSP FAS No. 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”. FSP 132(R)-1 requires additional disclosures about plan assets including investment policies, fair value of each major category of plan assets, development of fair value measurements and concentrations of risk. FSP 132(R)-1 is effective for fiscal years ending after December 15, 2009 and is required to be adopted by Makita in the year ending March 31, 2010. Makita is currently evaluating these additional disclosure requirements, but Makita does not expect the adoption of FSP 132(R)-1 will have an impact on its consolidated results of operations and financial condition.

B. Liquidity and capital resources

Makita’s principal sources of liquidity are cash on hand, cash provided by operating activities and borrowings within credit lines. As of March 31, 2009, Makita held cash and cash equivalents amounting to ¥34,215 million and the Company’s subsidiaries had credit lines up to ¥16,079 million, of which ¥110 million was used and ¥15,969 million was unused and available. As of March 31, 2009, Makita had ¥239 million in short-term borrowing, which included bank borrowings and the current portion of capital lease obligations. Short-term borrowing was used for daily operations at the subsidiaries. The amount excluding current maturities of long-term indebtedness was ¥110 million, a decrease of 93% or ¥1,472 million from FY 2008. For further information regarding Makita’s short-term borrowings, including the average interest rates, see Note 11 to the accompanying consolidated financial statements.

The Company’s subsidiaries are financed by loans within the Makita Group—from subsidiaries with surplus funds to subsidiaries that lack funds—and the variation in interest expense is insignificant.

As of March 31, 2009, Makita’s total short-term borrowings and long-term indebtedness amounted to ¥1,057 million, representing a decrease of 59.8% from ¥2,632 million reported for FY 2008. Makita’s ratio of indebtedness to shareholders’ equity was down by 0.4 points to 0.4%. This decrease was mainly due to a decrease of long-term borrowing, which decreased from ¥908 million to ¥818 million. Makita expects to continue to incur additional indebtedness from time to time as required to finance working capital needs. Makita has no potentially significant refinancing requirements in FY 2009 and thereafter.

Makita has historically maintained a high level of liquid assets. Management estimates that the cash and cash equivalents level of ¥34,215 million as of March 31, 2009, together with Makita’s available credit facilities, cash flow from operations and funds available from long-term and short-term debt financing, will be sufficient to satisfy its future working capital needs, capital expenditure and research and development through FY 2010 and thereafter.

Makita requires operating capital mainly to purchase materials required for production, to conduct research and development, to respond to cash flow fluctuations related to changes in inventory levels and to cover the payment cycle of receivables from wholesalers. Makita further requires funds for capital expenditures, mainly to expand production facilities and purchase metal molds. Makita also requires funds for financial expenditures, primarily to pay dividends and to repurchase its own stock.

Maintaining the level of Makita’s production and marketing activities requires capital investments of approximately ¥10 billion annually. Please see “– Fiscal Year 2009 – Capital Expenditures” below for a description of Makita’s principal capital expenditures for FY 2009 and the main planned expenditures for FY 2010. As part of the Company’s policy to maximize shareholder return, the Company distributed to its shareholders an interim dividend of ¥30 per share in November 2008, and a year-end dividend of ¥50 per share in June 2009. During FY 2009, the Company repurchased six million shares of its own stock for approximately ¥17.6 billion.

At the Ordinary General Meeting of Shareholders held in June 2009, the Company’s shareholders approved a cash dividend of ¥50 per share. The total cash dividend payments amount to ¥6,888 million, and were made in June 2009.

In 2007, Makita acquired all outstanding shares of Fuji Robin Industries, Ltd.(currently Makita Numazu Corporation) for approximately ¥2.7 billion in cash and 81,456 Makita shares. Makita financed the cash portion of the purchase price from internal sources.

Makita believes it will continue to be able to access the capital markets on terms and for amounts that will be satisfactory to it and as necessary to support the business and to engage in hedging transactions on commercially acceptable terms.

While Makita had received an A+ rating from Standard & Poor’s Financial Services LLC through the end of FY 2008, starting FY 2009, Makita no longer requests ratings from rating agencies in consideration of its cost reduction efforts. Makita believes that because its financial health is ensured by a high equity ratio, there is little need for financing through bank borrowings or corporate bonds issuances.

FY 2009

Net cash provided by operating activities decreased by ¥7,097 million from ¥29,275 million in FY 2008 to ¥22,178 million in FY 2009, due to the deterioration of business results in the second half of FY 2009. Primary factors that affected such result include the following:

Cash flow increasing factors:

•

¥25,428 million increase due to lower levels of cash used in operating activities such as purchases of parts and raw materials, selling, general and administrative expenses and income tax payments

Cash flow decreasing factors:

•

¥32,525 million decrease due to lower level of cash received from customers as a result of decrease in sales

Net cash provided by investing activities was ¥232 million in FY 2009 as opposed to net cash used in investment activities in the amount of ¥4,508 million in FY 2008 primarily as a result of the following:

•		¥20,565 million decrease due to lower purchases of available-for-sale securities and held-to-maturity
•		¥8,302 million decrease of sales and maturities of securities
•		¥4,791 million decrease due to proceeds from maturity of time deposits
•		¥2,010 million increase due to higher capital expenditures including expenditures for the partial reconstruction of the Okazaki Plant, purchases of metal molds for the manufacture of new products, construction of the research and development facility at the Makita China Plant, expansion of the Makita Romania Plant, construction of the second plant in Brazil and construction of the headquarter building of the sales company in France

Net cash used in financing activities increased by ¥19,364 million from ¥13,815 million in FY 2008 to ¥33,179 million in FY 2009 primarily as a result of the following:

•		¥17,640 million used for repurchase of the Company’s own shares of common stock
•		¥1,638 million increase due to dividends paid

Accounting for all these activities and the effect of exchange rate fluctuations, Makita’s cash and cash equivalents decreased by ¥12,091 million from ¥46,306 million as of the end of FY 2008 to ¥34,215 million as of the end of FY 2009.

In FY 2009, demand for cash was high due to an increase in inventories, the repurchase of the Company’s own shares, capital expenditures and dividend payments, resulting in a year-over-year decline of ¥12,091 million in the cash balance as of March 31, 2009.

The downturn of the worldwide economy, which unfolded while Makita was enhancing its production system, resulted in a substantial decrease in sales in the second half of FY 2009. Inventory amount increased by ¥17,314 million in FY 2009 compared to the previous fiscal year, despite Makita’s efforts in adjusting its production level during the fourth quarter of FY 2009.

Capital expenditures are expected to be lower in FY 2010 compared to FY 2009, even though several relocation and/or expansion projects for certain facilities are planned. Makita expects the difficult business environment to continue in FY 2010 and projects a considerable decrease in net income in FY 2010 compared with FY 2009. Makita plans to reduce its inventory level by adjusting production levels in FY 2010.

Makita also expects a longer period for recovering trade accounts receivable in FY 2010, because Makita has granted an extension to several customers who are facing difficulties in financing as a result of the financial crisis. Makita expects its cash flow to increase in general, as the Company does not plan to repurchase its own shares.

Capital Expenditures

Makita has continued to allocate sizable amounts of funds for capital expenditures, which it believes is crucial for sustaining long-term growth. In light of the severity of the current market competition, however, Makita has focused its capital investments on constructing or expanding its plants in Brazil, Romania and China and also purchasing metal molds to manufacture new products. This required Makita to increase the amount of its capital expenditures in FY 2009 compared to FY 2008, amounting to ¥12,980 million, ¥15,036 million and ¥17,046 million for FY 2007, 2008 and 2009, respectively.

Capital expenditures in FY 2009 were primarily used for the partial reconstruction of the Okazaki Plant, purchases of metal molds for the manufacture of new products, the construction of the second plant in Brazil and the extension of the Makita Romania Plant to reinforce the global production system, as well as the construction of the headquarters building at a sales company in France.

Capital investments of the Company amounted to approximately ¥6.2 billion, while capital investment of overseas subsidiaries amounted to approximately ¥10.8 billion. All of Makita’s capital expenditures in FY 2009 were funded through internal sources.

Under its investment plans for FY 2010, the Makita Group is scheduled to make capital investments totaling ¥13 billion, which is 24% lower than for FY 2009. Of this total, the Company plans to make direct investments of ¥3.1 billion and its consolidated subsidiaries will invest ¥9.9 billion.

The Company’s main capital investment plan is to purchase metal molds for the manufacture of new products, rebuild the delivery center in the Okazaki Plant, and construct the Tokyo Technical Center.

The main facilities investments by consolidated subsidiaries include ¥9.9 billion in capital expenditures for production facilities in the China Plant, the purchase of metal molds for the manufacture of new products and the construction of the headquarters building and warehouses at sales companies in Europe and Asia. The projected capital expenditure in FY 2010 is planned to be funded by equity capital.

Total assets at the end of FY 2009 were ¥336,644 million, down 12.9% from the previous fiscal year-end. Total current assets decreased by 17.2% to ¥240,403 million, owing to such factors as a decrease of cash and cash equivalents, and securities.

Inventories decreased by ¥1,185 million from ¥112,187 million at the end of FY 2008 to ¥111,002 million at the end of FY 2009.

Property, plant and equipment, at cost less accumulated depreciation, increased by 5.3%, to ¥72,696 million. This increase was mainly due to relocation of headquarters in France and construction of the second plant in Brazil.

Investments and other assets decreased by 13.0%, to ¥23,545 million. This decrease was mainly due to a decrease of investment securities.

Total current liabilities decreased by 31.6%, to ¥40,817 million mainly due to decrease in income taxes payable, trade notes and accounts payable. The current ratio improved to 5.9 in FY 2009 from 4.9 in FY 2008.

Long-term liabilities increased by 29.3%, to ¥10,081 million, mainly due to an increase in pension obligations as a result of the increase in unrealized loss on securities.

Shareholders’ equity decreased by 10.4%, to ¥283,485 million. The main reasons for this decrease was the decrease in accumulated other comprehensive income.

Fluctuations in the accumulated other comprehensive income (losses) were due to the following reasons:

1.

Accumulated other comprehensive income occurred through net unrealized holding gains on available-for-sale securities were due to the decrease in the unrealized gains on available-for-sale securities as a result of the depreciation of the market value of the Company’s securities holding,

2.

Accumulated other comprehensive losses occurred through pension liability adjustment were due to the increase in net actuarial loss as a result of the depreciation of the market value of the plan asset ,

3.

Accumulated other comprehensive losses occurred through foreign currency translation adjustments were due to the decrease in foreign currency translation adjustments as a result of appreciation of the Japanese yen against the British pound, euro and U.S. dollars.

As a result, the shareholders’ equity ratio increased to 84.2%, from 81.9% in the previous fiscal year-end.

FY 2008

Net cash provided by operating activities decreased by ¥3,085 million from ¥32,360 million in FY 2007 to ¥29,275 million in FY 2008 as a result of the following:

•

¥65,664 million decrease due to higher levels of cash used in operating activities such as purchases of parts and raw materials, selling, general and administrative expenses, and income tax payments

•

¥62,579 million increase due to higher levels of cash received from customers as a result of net sales growth

Net cash used in investing activities decreased by ¥22,768 million from ¥27,276 million in FY 2007 to ¥4,508 million in FY 2008 primarily as a result of the following:

•		¥6,357 million decrease due to lower purchases of available-for-sale securities and held-to-maturity securities
•		¥8,101 million decrease due to higher proceeds from sales and maturities of securities
•		¥9,266 million decrease due to withdrawals of time deposits
•		¥2,056 million increase due to higher capital expenditures for reconstruction of the Okazaki plant, improvements to the headquarters buildings, and new plant constructions of Makita China, Makita Brazil and Makita Romania
•		¥1,385 million increase due to an acquisition of Makita Numazu for ¥2,034 million, net of cash acquired

Net cash used in financing activities increased by ¥5,508 million from ¥8,307 million in FY 2007 to ¥13,815 million in FY 2008 primarily as a result of the following:

•

¥4,025 million increase due to higher dividends paid

Accounting for all these activities and the effect of exchange rate changes, Makita’s cash and cash equivalents increased by ¥9,178 million from ¥37,128 million as of the end of FY 2007 to ¥46,306 million as of the end of FY 2008.

Makita has continued to allocate sizable amounts of funds for capital expenditures, which it believes is crucial for sustaining long-term growth. In light of the severity of the current market competition, however, Makita has focused its capital investments on expanding its plant in China and purchasing metal molds for new products to be manufactured. This required Makita to increase the amount of its capital expenditures in FY 2008 compared to FY 2007, amounting to ¥11,383 million, ¥12,980 million and ¥15,036 million for FY 2006, 2007 and 2008, respectively.

Capital expenditures in FY 2008 were mainly used for expansion and rebuilding of the Okazaki plant, improvements to the Company’s headquarters buildings, purchases of metal molds for new products, construction of the China plant, Brazil plant and Romania plant along with purchases of manufacturing facilities which make it easier to increase production capacities or maintain high production capacities. Capital investments of the Company amounted to approximately ¥8.6 billion, while capital investment of overseas subsidiaries amounted to approximately ¥6.4 billion. All of Makita’s capital expenditures in FY 2008 were funded through internal sources.

Under its investment plans for FY 2009, the Makita Group is scheduled to make capital investments totaling ¥25 billion, which is 66% higher than for FY 2008. Of this total, the Company plans to make direct investments of ¥8 billion and its consolidated subsidiaries will invest ¥17 billion.

In continuation from FY 2008, the Company’s main capital investment plan is to rebuild the Okazaki plant, Nagoya Branch in Japan, and purchase of metal molds for new products. The main facilities investments by consolidated subsidiaries include production facilities for Makita (China) Co., Ltd., and Makita Romania S.R.L. and the purchase of metal molds for new products. Due to the expansion of its business in Europe, the Company plans to invest approximately ¥10 billion in upgrading and expanding of its European and Asian sales subsidiaries, including Makita France, Makita Switzerland, Makita Benelux, Makita Poland, Makita Germany and Makita Taiwan. The remaining ¥7 billion will continue to be invested in the construction of the Romania plant, China plant and Brazil factories. These are all scheduled to be funded with internal sources.

Financial Position

Total assets at the end of FY 2008 were ¥386,467 million, up 4.9% from the previous fiscal year-end. Total current assets increased by 9.0% to ¥290,355 million, owing to such factors as an increase of cash and cash equivalents, and inventories.

Inventories increased by ¥19,387 million from ¥92,800 million at the end of FY 2007 to ¥112,187 million at the end of FY 2008. Since demand for Makita products is growing steadily, Makita increased inventories so that sales opportunities would not be lost.

Property, plant and equipment, at cost less accumulated depreciation, increased by 9.0%, to ¥69,058 million. Investments and other assets decreased by 29.9%, to ¥27,054 million. Total current liabilities increased by 9.8%, to ¥59,656 million mainly due to increase in income taxes payable, trade notes and accounts payable.

Long-term liabilities decreased by 16.8%, to ¥7,797 million, mainly due to a decrease in deferred income tax liabilities incurred as a result of the decrease in unrealized gains on securities and long-term prepaid pension expenses. The current ratio was 4.9 times as same as at March 31, 2007.

Shareholders’ equity increased by 4.6%, to ¥316,498 million. The main reasons for this increase are an increase in retained earnings, from ¥215,365 million in FY 2007 to ¥249,191 in FY 2008.

Fluctuations in the accumulated other comprehensive income (losses) are due to the following reasons:

1.

Accumulated other comprehensive income occurred through net unrealized holding gains on available-for-sale securities are due to the decrease in the unrealized gains on available-for-sale securities as a result of the depreciation of the market value of the Company’s securities holding,

2.

Accumulated other comprehensive losses occurred through pension liability adjustment are due to the increase in net actuarial loss as a result of the depreciation of the market value of the plan asset,

3.

Accumulated other comprehensive losses occurred through foreign currency translation adjustments are due to the decrease in foreign currency translation adjustments as a result of appreciation of the Japanese yen against the U.S. dollar, the British pound and the Chinese Renmin yuan.

As a result, the shareholders’ equity ratio slightly decreased to 81.9%, from 82.1% in the previous fiscal year-end.

C. Research and development, patents and licenses, etc.

Approximately 660 of Makita’s employees are engaged in research and development of technologies in which Makita has a competitive edge and the development of new products.

Makita regards R&D as a high priority and believes that having a strong capability in R&D is crucial to its continuing development of high-quality, reliable products that meet users’ needs. In FY 2009, Makita allocated ¥6,883 million to R&D, an increase of 16.2% compared with FY 2008. In FY 2008, Makita allocated ¥5,922 million to R&D, an increase of 8.5% compared to FY 2007. The ratio of R&D expenses to net sales was approximately 2.3% in 2009, 1.7% in FY 2008 and 2.0% in FY 2007, respectively.

Makita is placing greater emphasis on designing power tools that are smaller and lighter, that feature electronic controls and that have internal power sources allowing for cordless operation.

Makita has developed the Optimum Charging System, a battery recharging system which employs digital communication functions between the recharger and the battery to provide information on the status of the battery’s charge, and automatically selects the most appropriate recharging mode. This system enables batteries to last longer. In particular, for lithium ion batteries, the total operable hours of use has been doubled compared to the conventional batteries.

Makita also developed an original battery verification system that can be connected to personal computers. Through the use of this system, customers and users can check the status of the battery’s charge and the history of the battery’s usage.

Makita is also placing more emphasis on developing safe products with reduced dust emissions that feature low noise, level and low vibration. Makita developed power tools featuring an AVT mechanism that meet operating environment related regulations, which have increasingly become stringent, especially in Europe. These power tools have been highly acclaimed by commercial users. Makita also focuses on designing recyclable products that are environmentally-friendly.

Makita also strives to reduce the development time for new products in order to effectively meet the needs of users. In addition, Makita has been focusing on developing models that use generic parts, as well as consolidating the variety of products to reduce cost. Makita established a R&D division at Makita China Plant where local personnel are hired to accelerate the development of general-purpose products. Furthermore, Makita plans to establish the Tokyo Technical Center to improve its ability to develop engine-equipped gardening equipment and enhance product line-up.

New products developed during FY 2009 include rotary hammers equipped with 36V lithium-ion batteries, brushless motor-based impact drivers, low-vibration electric hedge trimmers and lithium ion battery based cordless sprays.

D. Trend information

Given the ongoing worldwide recession, global demand for power tools will likely remain stagnant, competition is expected to intensify and exchange rate fluctuations will likely continue. Consequently, the business environment in which the Makita Group operates is expected to remain difficult in the foreseeable future.

Accordingly, for FY 2010, Makita projects an appreciation of the Japanese yen compared with FY 2009, with exchange rates of U.S.$1=¥95 and €1=¥125 for FY 2010.

Makita expects sales to recover in the emerging markets in the second half of FY 2010 where potential demand for Makita’s products is strong.

However, Makita expects the demand for power tools to remain weak in the developed markets such as Japan, the United States and Western Europe.

In Japan, the level of housing construction activities is expected to be lower in FY 2010 compared to that of FY 2009. In Europe, competition is likely to intensify as a result of contraction of the market, and there is a concern that prices of products will decline. In the United States, market condition is expected to remain stagnant, and price competition is expected to further intensify. In Asia, lower demand is expected and procurement costs of Makita’s local subsidiaries are likely to increase due to depreciation of local currencies. Sales in Asia in FY 2010 will highly depend on the recovery of demand in India and China, however, sales are expected to remain slow in export-dependent countries. In Central and South America, weak business conditions are expected to continue in the Central America region affected by the sluggish U.S. economy however, the Brazilian market is expected to remain steady. In the Middle East, the difficult economic climate is likely to continue until foreign investment into the region recommences. In Oceania, economic recovery is likely to depend on the exchange rate of the Australian dollar and exports.

Makita is currently adjusting production levels in each production base based on its FY 2010 sales plan, and is striving to reduce excess inventories and maintain appropriate levels of inventories for its products.

Under such business environment, Makita intends to maintain and further enhance its leading sales and after-sales systems by enhancing its capability for developing environment-friendly power tools and gardening equipment; and compact engines that are responsive to environmental standards and needs, strengthen its global production system to flexibly respond to the changing market conditions and further reduce production costs, and enhance its sales and after-sales activities for commercial users.

E. Off-balance sheet arrangements

A subsidiary of the Company discounted notes receivable to fund their working capital in FY 2009. Makita also has certain operating leases entered into in the ordinary course of business. Discounted notes receivable were not significant as of March 31, 2009. See Note 15 to the accompanying consolidated financial statements.

F. Tabular disclosure of contractual obligations

						Japanese yen (In millions)
						Expected payment date, year ending March 31,
		Total				2010				2011				2012				2013				2014				Thereafter
Capital lease			447				129				278				27				11				2				—
Interest expenses on capital lease			35				17				17				1				—				—				—
Operating lease			2,203				681				503				319				242				175				283
Unsecured loans from bank			500				—				—				500				—				—				—
Contributions to defined benefit plan			2,569				2,569				—				—				—				—				—
Purchase obligation			9,261				9,164				97				—				—				—				—
Total		¥	15,015			¥	12,560			¥	895			¥	847			¥	253			¥	177			¥	283
						U.S. dollars (In thousands)
						Expected payment date, year ending March 31,
		Total				2010				2011				2012				2013				2014				Thereafter
Capital lease			4,515				1,303				2,808				273				111				20				—
Interest expenses on capital lease			354				172				172				10				—				—				—
Operating lease			22,253				6,879				5,081				3,222				2,444				1,768				2,859
Unsecured loans from bank			5,051				—				—				5,051				—				—				—
Contributions to defined benefit plan			25,949				25,949				—				—				—				—				—
Purchase obligation			93,545				92,566				979				—				—				—				—
Total		$	151,667			$	126,869			$	9,040			$	8,556			$	2,555			$	1,788			$	2,859

Note:		1. Determination of contributions to defined benefit plan after FY 2010 is not practicable. 2. The notional amount of derivative financial instruments that are expected to settle in FY 2010 is ¥24,666 million and their estimated fair value is ¥(1,162) million at March 31, 2009. Please see note 17 to the consolidated financial statements for further information.

G. Safe harbor

All information is not historical in nature disclosed under Item 5.

Forecasts of operating and financial results and statements of trend information and contractual obligations are forward-looking statements.

See “Cautionary Statement with Respect to Forward-Looking Statements” for additional information.

Item 6. Directors, Senior Management and Employees

A. Directors and senior management

The board of directors of the Company resolved at a meeting held on April 28, 2009 to adopt a corporate officer system effective June 25, 2009 in order to promote prompt execution of Makita’s business affairs. To this end, Makita has decided to reduce the number of the Company’s directors by three directors.

The Directors and Statutory Auditors of the Company as of June 26, 2009 are as follows:

Masahiko Goto
Current Position: President, Representative Director and Chief Executive Officer since May 1989
Date of Birth: November 16, 1946
Director since: May 1984
Business Experience:
     May 1984: Director, General Manager of General Planning Department
     July 1987: Managing Director of Administration Headquarters

Yasuhiko Kanzaki
Current Position: Director, Managing Corporate Officer, in charge of International sales and General Manager of International Sales
     Headquarters: Europe, Middle East and Africa Region since June 2009
Date of Birth: July 9, 1946
Director since: June 1999
Business Experience:
     April 1995: Director of Makita International Europe Ltd.
     June 1999: Director, Assistant General Manager of International Sales Headquarters 1
     June 2003: Director, General Manager of International Sales Headquarters (Europe Region)
     June 2007: Managing Director, General Manager of International Sales Headquarters (Europe Region)

Tadayoshi Torii
Current Position: Director, Managing Corporate Officer, in charge of Production and General Manager of Production Headquarters since
     June 2009
Date of Birth: December 10, 1946
Director since: June 2001
Business Experience:
     October 1998: General Manager of Production Department
     June 2001: Director, General Manager of Quality Control Headquarters
     June 2003: Director, General Manager of Production Headquarters

Shiro Hori
Current Position: Director, Managing Corporate Officer in charge of International Sales and General Manager of International Sales
     Headquarters: America, Asia and Oceania Region since June 2009
Date of Birth: February 24, 1948
Director since: June 2003
Business Experience:
     April 1997: Assistant General Manager of Europe Sales Department
     March 1999: General Manager of Europe Sales Department
     June 2003: Director, General Manager of International Sales Headquarters: America Area and International Administration
     September 2007: Director, General Manager of Overseas Sales Headquarters (America, Asia, and Oceania Area and International
          Administration)

Tomoyasu Kato
Current Position: Director, Corporate Officer, General Manager of Research and Development Headquarters in charge of Research and
     Development since June 2009
Date of Birth: March 25, 1948
Director since: June 2001
Business Experience:
     March 1999: General Manager of Technical Administration Department
     June 2001: Director, General Manager of Research and Development Headquarters

Tadashi Asanuma
Current Position: Director, Corporate Officer, in charge of Domestic Sales and General Manager of Domestic Sales Marketing Headquarters
     since June 2009
Date of Birth: January 4, 1949
Director since: June 2003
Business Experience:
     April 1995: Manager of Saitama Branch Office
     April 2001: General Manager of Osaka Sales Department
     June 2003: Director, Assistant General Manager of Domestic Sales Marketing Headquarters
     July 2007: Director, General Manager of Domestic Sales Marketing Headquarters (Tokyo Sales Department)

Hisayoshi Niwa
Current Position: Director, Corporate Officer, General Manager of Quality Headquarters since June 2009
Date of Birth: February 24, 1949
Director since: June 2003
Business Experience:
     April 1995: Assistant General Manager of Production Control Department
     October 1999: General Manager of Production Control Department
     June 2003: Director, General Manager of Quality Control Headquarters
     April 2005: Director, General Manager of Quality Headquarters

Shinichiro Tomita
Current Position: Director, Corporate Officer, General Manager of Research and Development Headquarters in charge of Product Development
     since June 2009
Date of Birth: January 11, 1951
Director since: June 2007
Business Experience:
     October 2001: General Manager of Production Engineering Department
     September 2003: President of Makita (China) Co., Ltd.
     June 2007: Director, Assistant General Manager of Production Headquarters in charge of China Plant

Tetsuhisa Kaneko
Current Position: Director, Corporate Officer and General Manager of Purchasing Headquarters since June 2009
Date of Birth: April 6, 1955
Director since: June 2007
Business Experience:
     April 2004: General Manager of Technical Research Department
     August 2005: General Manager of 2nd Production Department
     October 2006: General Manager of 1st Production Department
     June 2007: Director, General Manager of Purchasing Headquarters

Yoji Aoki
Current Position: Director, Chief Financial Officer, Corporate Officer and General Manager of Administration Headquarters since June 2009
Date of Birth: May 22, 1950
Director since: June 2009
Business Experience:
     July 2001: General Manager of Personnel Department
     July 2004: General Manager of General Administration Department

Motohiko Yokoyama
Current Position: Outside Director, since June 2005
Date of Birth: May 13, 1944
Director since: June 2005
Business Experience:
     June 2004: President and Representative Director of Toyoda Machine Works, Ltd.
     January 2006: Vice President and Representative Director of JTEKT Corporation, which is the entity created by the merger of Toyoda
          Machine Works, Ltd. with Koyo Seiko Co., Ltd.
     June 2007: President and Representative Director of JTEKT Corporation

Toshihito Yamazoe
Current Position: Standing Statutory Auditor since June 2008
Date of Birth: October 16, 1949
Statutory Auditor since: June 2008
Business Experience:
     April 1999: Assistant General Manager of Asia and Oceania Sales Department
     August 2000: President of Makita (China) Co., Ltd.
     April 2006: General Manager of Europe Sales Department

Haruhito Hisatsune
Current Position: Outside Standing Statutory Auditor since June 2008
Date of Birth: February 7, 1947
Statutory Auditor since: June 2008
Business Experience:
     May 1990: Manager of Government Securities Service Section of Operation Department of The Nippon Bank
     May 1991: Officer of Examination Department of The Nippon Bank
     April 1997: General Manager of Overseas Section of The Hekikai Shinkin Bank
     January 2001: Managing Director of Business Center of The Hekikai Shinkin Bank
     August 2003: Management Director and Corporate Officer, Director of Business Center

Masafumi Nakamura
Current Position: Outside Statutory Auditor since June 2007
Date of Birth: September 17, 1942
Outside Statutory Auditor since: June 2007
Business Experience:
     May 1983: Representative partner of SAN-AI Audit Corporation
     April 2001: Representative partner of Tohmatsu & Co.
     January 2006: Representative partner of Masafumi Nakamura Accountancy Firm
     April 2006: Associate professor in Graduate School of Business at Aichi Shukutoku University
     June 2006: Outside Statutory Auditor for SUZUKEN CO., LTD.
     June 2007: Outside Statutory Auditor for Taiyo Kagaku Co., Ltd.
     November 2008: Outside Statutory Auditor for Shinwa Co., Ltd.
     April 2009: Professor in Graduate School of Business at Aichi Shukutoku University

Michiyuki Kondo
Current Position: Outside Statutory Auditor since June 2008
     (Attorney-at-law, Kondo Michiyuki Law Firm)
Date of Birth: October 23, 1944
Outside Statutory Auditor since: June 2008
Business Experience:
     April 1971: Attorney-at-law, Takasu Hiroo Law Firm
     May 1977: Established Kondo Michiyuki Law Firm
     May 2005: Outside Statutory Auditor for ELMO Co., Ltd.

The term of each director listed above expires in June 2011. The terms of Mr. Toshihito Yamazoe as Statutory Auditor and of Mr. Haruhito Hisatsune and Michiyuki Kondo as Outside Statutory Auditor expire in June 2012.

There are no family relationships between any of the individuals named above. There is no arrangement or understanding with major shareholders, customers, suppliers, or others pursuant to which any person named above.

B. Compensation

The aggregate amount of remuneration, including bonuses but excluding retirement allowances, paid by the Company during FY 2009 to all Directors and Statutory Auditors, who served during FY 2009 totaled ¥317 million. Remuneration paid by the Company during FY 2008 to all Directors and Statutory Auditors, who served during FY 2008 totaled ¥348 million. Some of the fringe benefits provided by the Company to its employees in Japan, such as medical and dental service insurance and welfare pension insurance were also made available to Directors and Standing Statutory Auditors.

The Company had an unfunded retirement and termination allowances program for Directors and Statutory Auditors. Under such program, the aggregate amount set aside as retirement allowances for Directors and Statutory Auditors was ¥468 million as of March 31, 2008 and was ¥450 million as of March 31, 2009. However, this Executive retirement and termination allowances program was abolished by the Annual General Meeting of Shareholders held on June 29, 2006, because the program featured minimal correlation with the Company’s results while presenting strong seniority-based elements. With regard to retirement and termination allowances accrued through that day, the retirement allowance will be paid to eligible executives upon their retirement.

Beginning in July 2006, the Company introduced a new remuneration program which links the Directors’ compensation to Makita’s stock prices. Under this remuneration program, a portion or all of the directors’ monthly compensation representing their retirement allowance will be contributed to the Executive Stock Ownership Plan, which in turn will acquire the Company’s stock. The acquired stock will be retained for the duration of the Director’s tenure. The purpose of this system is to effectively link a portion of the Directors’ remuneration to the stock price, and thereby provide further transparency of directors’ managerial responsibility with respect to improving the Company’s value.

C. Board practices

Under the Company Law, the Company has elected to structure its corporate governance system as a company with a board of statutory auditors as set out below.

The Company’s Articles of Incorporation provide for 15 or fewer Directors and 5 or fewer Statutory Auditors. All Directors and Statutory Auditors are elected at general meetings of shareholders. In general, the term of offices of Directors expires at the conclusion of the ordinary general meeting of shareholders held with respect to the last business year ending within two years from their election, and in the case of Statutory Auditors, within four years from their election; however, Directors and Statutory Auditors may serve any number of consecutive terms. With respect to each expiration date of the term of offices of current Directors and Statutory Auditors, see “A. Directors and senior management” of Item 6.A.

The Directors constitute the Board of Directors, which has the ultimate responsibility for administration of the affairs of the Company. The Board of Directors may elect from among its members a Chairman and Director, one or more Vice Chairmen and Directors, a President and Director, one or more Executive Vice Presidents and Directors, Senior Managing Directors and Managing Directors. From among the Directors referred to above, the Board of Directors elects one or more Representative Directors. Each Representative Director has the authority to individually represent the Company in the conduct of the affairs of the Company.

Makita announced the introduction of the corporate officer system at the Annual General Meeting of Shareholders held on June 25, 2009. The corporate officer system was introduced to improve corporate value by promoting swift execution of group strategies and strengthening the business affairs of the Company, during a period of severe fluctuation in the business environment of the Makita Group. At the board meeting, a total of 15 corporate officers were appointed, 10 of them concurrently serving as directors.

The Statutory Auditors of the Company are not required to be certified public accountants. However, at least half of the Statutory Auditors are required to be persons who have never been in the past a director, accounting counselor, corporate executive officer, general manager or any other employee of the Company or any of its subsidiaries. The Statutory Auditors may not, while acting as such, be a director, accounting counselor, corporate executive officer, general manager or any other employee of the Company or any of its subsidiaries. Each Statutory Auditor has the statutory duty to supervise the administration by the Directors of the Company’s affairs and also to examine the Company’s annual consolidated and non-consolidated financial statements and business report proposed to be submitted by a Representative Director at the general meeting of shareholders and, based on such examination and a report of an Accounting Auditor referred to below, to individually prepare their audit reports. They are required to attend meetings of the Board of Directors but are not entitled to vote. In addition to Statutory Auditors, independent certified public accountants or an audit corporation must be appointed by a general meeting of shareholders as Accounting Auditors. Such Accounting Auditors have, as their primary statutory duties, a duty to examine the Company’s annual consolidated and non-consolidated financial statements proposed to be submitted by a Representative Director to general meetings of shareholders and to report their opinion thereon to certain Statutory Auditors designated by the Board of Statutory Auditors to receive such report (if such Statutory Auditors are not designated, all Statutory Auditors) and the Directors designated to receive such report (if such Directors are not designated, the Directors who prepared the financial statements).

The Statutory Auditors constitute the Board of Statutory Auditors. The Board of Statutory Auditors has a statutory duty to, based upon the reports prepared by respective Statutory Auditors, prepare its audit report and Statutory Auditors designated by the Board of Statutory Auditors to submit such report (if such Statutory Auditors are not designated, all Statutory Auditors) submit such report to the Accounting Auditors and Directors designated to receive such report (if such Directors are not designated, the Directors who prepared the financial statements and the business report). A Statutory Auditor may note his or her opinion in the audit report of the Board of Statutory Auditors if his or her opinion expressed in his or her audit report is different from the opinion expressed in the audit report of the Board of Statutory Auditors. The Board of Statutory Auditors shall elect one or more full-time Statutory Auditors from among its members. The Board of Statutory Auditors is empowered to establish audit principles, the method of examination by Statutory Auditors of the Company’s affairs and financial position, and other matters concerning the performance of the Statutory Auditors’ duties. For names of the Statutory Auditors that constitute the current Board of Statutory Auditors, see Item 6. A. There are no contractual arrangements providing for benefits to Directors upon termination of service. Also see “B. Memorandum and articles of association — Directors” in Item 10.

D. Employees

The following table sets forth information about number of employees excluding temporary employees:

		As of March 31,
		2007				2008				2009
Employees by Geographic Areas
Japan			3,007				3,206				3,171
Europe			2,001				2,323				2,381
North America			926				995				912
Asia			2,542				3,278				3,203
Other regions			586				634				745
Total			9,062				10,436				10,412

As of March 31, 2009, Makita had 10,412 regular full-time employees and 1,801 temporary employees who were not entitled to retirement or certain other fringe benefits which regular full-time employees receive.

The Company has a labor contract with the Makita Workers’ Union covering wages and conditions of employment. All full-time employees of the Company in Japan, except management and certain other employees, must be union members. The Makita Union is affiliated with the Japanese Electrical Electronic & Information Union. The Company has not been materially affected by any work stoppages or difficulties in connection with labor negotiations in the past.

The Company’s employees are members of the labor union formed on September 13, 1947 that comprises, starting February 9, 1989, the Japanese Electrical Electronic & Information Union. As of March 31, 2009, there are 2,700 members of the labor union and Makita considers its relationship with the labor union to be good.

E. Share ownership

The total number of shares of the Company’s common stock owned by the Directors and Statutory Auditors as a group as of March 31, 2009 is as follows:

		Identity of		Number of		Percentage of
		Person or Group		Shares Owned		Outstanding shares
		Directors and Statutory Auditors		2,131,019		1.54 %

The following table lists the number of shares owned by the Directors and Statutory Auditors of the Company as of March 31, 2009.

Name		Position as of March 31, 2009		Number of Shares
Masahiko Goto		CEO&President, Representative Director		1,988,643
Masami Tsuruta		Managing Director		19,122
Yasuhiko Kanzaki		Managing Director		21,469
Kenichiro Nakai		CFO&Director		13,800
Tadayoshi Torii		Director		15,500
Tomoyasu Kato		Director		13,872
Shiro Hori		Director		11,813
Tadashi Asanuma		Director		6,500
Hisayoshi Niwa		Director		7,700
Zenji Mashiko		Director		7,500
Toshio Hyuga		Director		9,800
Tetsuhisa Kaneko		Director		6,300
Shinichiro Tomita		Director		3,700
Toshihito Yamazoe		Standing Statutory Auditor		5,000
Michiyuki Kondo		Outside Statutory Auditor		300

Item 7. Major Shareholders and Related Party Transactions

A. Major shareholders

Except for Masahiko Goto holding 1.44% of total numbers of shares of outstanding common stock with voting rights, excluding treasury stock, as of March 31, 2009, none of the Company’s Directors and Statutory Auditors own more than one percent of the Company’s common stock. Beneficial ownership of the Company’s common stock in the table below was prepared from publicly available records of the filings made by the Company’s shareholders regarding their ownership of the Company’s common stock under the Financial Instruments and Exchange Act of Japan.

Under the Financial Instruments and Exchange Act of Japan, any person who becomes beneficially, solely or jointly, a holder, including, but not limited to, a deemed holder who manages shares for another holder pursuant to a discretionary investment agreement, of more than 5% of the shares with voting rights of a company listed on a Japanese stock exchange (including ADSs representing such shares), must file a report concerning the shareholding with the Director of the relevant local finance bureau. A similar report must be filed, with certain exceptions, if the percentage of shares held by a holder, solely or jointly, of more than 5% of the total issued shares of a company increases or decreases by 1% or more, or if any change to a material matter set forth in any previously filed reports occurs.

Based on publicly available information, the following table sets forth the beneficial ownership of holders of more than 5% of the Company’s common stock as of March 31, 2009, indicated in the reports described below.

Name of Beneficial Owner		Number of Shares				Percentage
Master Trust Bank of Japan, Ltd. (Trust account)			8,867,600				6.43%
Japan Trustee Services Bank, Ltd. (Trust account)			8,538,600				6.19%

Based on information made publicly available on or after April 1, 2006, the following table describes transactions resulting in a 1% or more change in the percentage ownership held by major beneficial owners of the Company’s common stock.

						Shares Owned								Number of				Shares Owned
		Date of				Prior to								Shares				After the
Name of Shareholder		Transaction				Transaction				Percentage				Changed				Transaction				Percentage
Mitsubishi UFJ Financial Group		April 30, 2006					9,022,123				6.10	%			1,556,200				10,578,323				7.35	%
Barclays Global Investors, N.A.		June 30, 2006					9,029,552				6.27	%			(905,026	)			8,124,526				5.64	%
Mitsubishi UFJ Financial Group		July 31, 2006					10,578,323				7.35	%			(625,100	)			9,953,223				6.91	%
Barclays Global Investors, N.A.		September 30, 2006					8,124,526				5.64	%			(2,089,460	)			6,035,066				4.19	%
Nomura Asset Management		January 15, 2007					—				—				7,528,400				7,528,400				5.23	%
Mitsubishi UFJ Financial Group		January 22, 2007					9,953,223				6.91	%			(1,408,800	)			8,544,423				5.93	%
Mitsubishi UFJ Financial Group		April 14, 2008					8,544,423				5.93	%			1,478,577				10,023,000				6.97	%
Mitsubishi UFJ Financial Group		June 30, 2008					10,023,000				6.97	%			1,462,523				11,485,523				7.98	%
Mitsubishi UFJ Financial Group		October 27,2008					11,485,523				7.98	%			(1,446,434	)			10,039,089				6.97	%
Nomura Asset Management		March 13,2009					7,528,400				5.23	%			(1,677,600	)			5,850,800				4.18	%

As of March 31, 2009, the Company had 137,764,005 outstanding shares of common stock, excluding 2,244,755 shares of Treasury Stock. According to the Bank of New York Mellon, depositary for the Company’s ADSs, as of March 31, 2009, 3,620,303 shares of the Company’s common stock were held in the form of ADRs and there were 84 ADR holders of record in the United States. According to the Company’s register of shareholders and register of beneficial owners as of March 31, 2009, there were 16,768 holders of common stock of record worldwide and the number of record holders in the United States was 100.

The major shareholders do not have voting rights that are different to the other shareholders of the Company.

As far as is known to the Company, there is no arrangement, the operation of which may at a subsequent date result in a change in control of the Company.

To the knowledge of the Company, it is not directly or indirectly owned or controlled by any other corporation or by the Japanese or any foreign government.

B. Related party transactions

Makita sells and purchases products, materials, supplies and services to and from affiliated companies in the ordinary course of business. No Director or Statutory Auditor has been indebted to the Company or any of its subsidiaries at any time during the latest three fiscal years. Neither the Company nor any of its subsidiaries expects to make any loans to Directors or Statutory Auditors in the future.

During FY 2008, Makita acquired all outstanding shares of Fuji Robin Industries, Ltd. in exchange for approximately ¥2,673 million in cash and 81,456 Makita shares with a fair value of ¥397 million.

The Company recorded advertisement expenses of ¥2 million in FY 2008 and FY 2009, respectively, paid to Maruwa Co., Ltd., a Japanese corporation in which the Company’s President, Masahiko Goto, and his relatives hold a majority of the voting rights.

The Company recorded purchases of materials and production facilities amounting to ¥96 million in FY 2008 and ¥109 million in FY 2009 as a result of business transactions with Toa Co., Ltd., a Japanese corporation in which the Company’s President, Masahiko Goto, and his relatives hold a majority of the voting rights. In addition, in connection with such transactions, the Company recorded trade accounts payable of ¥15 million and ¥5 million, as of March 31, 2008 and March 31, 2009, respectively.

Makita recorded purchases of materials and machinery and facilities amounting to ¥658 million in FY 2008 and ¥614 million in FY 2009 as a result of business transactions with JTEKT Group, a corporation in which Motohiko Yokoyama, an Outside Director of the Company, severe as the President and Representative Director. In connection to the transactions, Makita recorded trade accounts payable of ¥65 million and ¥27 million as of March 31, 2008 and March 31, 2009, respectively.

C. Interests of experts and counsel

     Not applicable

Item 8. Financial Information

A. Consolidated statements and other financial information

1-3. Consolidated Financial Statements.
Makita’s audited consolidated financial statements are included under “Item 18 — Financial Statements.” Except for Makita’s consolidated financial statements included under Item 18, no other information included in this annual report has been audited by Makita’s Independent Registered Public Accounting Firm.

4. Not applicable.

5. Not applicable.

6. Export Sales.

On or about June 30, 2009, Milwaukee Electric Tool Corporation (“Milwaukee”) and Metco Battery Technologies, LLC (“Metco”) filed a complaint, which was subsequently amended on or about July 7, 2009 (the “Milwaukee Complaint”), in the U.S. District Court for the Eastern District of Wisconsin against the Company and its subsidiaries Makita U.S.A., Inc. and Makita Corporation of America (collectively, the “Company and its U.S. Subsidiaries”) alleging infringement of certain patents registered under Milwaukee’s name. The Milwaukee Complaint seeks damages of an unspecified amount, an award of attorneys’ fees, and a permanent injunction against the Company and its U.S. Subsidiaries. The response to the Milwaukee Complaint is not yet due, and the Company and its U.S. Subsidiaries have not yet answered or otherwise responded to it. The Company believes that the Company and its U.S. Subsidiaries do not infringe any valid claim of the patents alleged in the Milwaukee Complaint.

On July 7, 2009, the Company and its U.S. Subsidiaries filed a legal action for a declaratory judgment against Milwaukee in the U.S. District Court for the Central District of California, with respect to certain patents currently registered under Milwaukee’s name, including, but not limited to, those patents Milwaukee alleged, in the Milwaukee Complaint, that the Company and its U.S. Subsidiaries infringed. The Company and its U.S. Subsidiaries seek a declaratory judgment that these patents are invalid and/or are not infringed.

8. Dividend Policy
Makita’s basic policy on the distribution of profits is to maintain a dividend payout ratio of 30% or greater, with a lower limit on annual cash dividends of 18 Japanese yen per share. However, in the event special circumstances arise, computation of the amount of dividends will be based on consolidated net income after certain adjustments. In addition, Makita aims to implement a flexible capital policy, augment the efficiency of its capital employment, and thereby boost shareholder profit. Makita continues to consider repurchases of its outstanding shares in light of trends in stock prices. The Company intends to retire treasury stock when necessary based on consideration of the balance of treasury stock and its capital policy.

Makita intends to maintain a financial position strong enough to withstand the challenges associated with changes in its operating environment and other changes and allocate funds for strategic investments aimed at expanding its global operations.

According to this basic policy, the Company paid interim cash dividends in FY 2009 of ¥30 per share and ADS. The Company has declared a year-end cash dividend of ¥50 per share and ADS, which was approved by the shareholders’ meeting held on June 25, 2009.

The following table sets forth cash dividends per share of common stock declared in Japanese yen and as translated into U.S. dollars, the U.S. dollar amounts being based on the exchange rates at the respective payment date, using the noon buying rates for cable transfers in Japanese yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York:

		In Japanese yen								In U.S. dollars
Fiscal year ended March 31		Interim				Year-end				Interim				Year-end
2005			11				36				0.10				0.34
2006			19				38				0.16				0.32
2007			19				55				0.16				0.47
2008			30				67				0.30				0.67
2009			30				50				0.31			0.53

Note: Cash dividends in U.S. dollars are based on the exchange rates at the respective payment date, using the noon buying rates for cable transfers in Japanese yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York.

B. Significant changes

To Makita’s knowledge, except as a disclosed in this annual report, no significant change has occurred since the date of the annual financial statements.

Item 9. The Offer and Listing

A. Offer and listing details

The shares of common stock of the Company were listed on the First Section of the Tokyo Stock Exchange, the Osaka Securities Exchange and the Nagoya Stock Exchange in 1970. The Company decided to discontinue its listing on the Osaka Securities Exchange due to the low level of trading volume in its shares on that exchange, and it was delisted from that exchange at the end of February 2003. The shares of common stock of the Company were listed on the Amsterdam Stock Exchange (Euronext Amsterdam) in 1973, initially in the form of Continental Depositary Receipts. The Company decided to discontinue its listing on the Euronext Amsterdam Stock Exchange due to the extremely low level of trading volume in its shares on that exchange, and it was delisted from that exchange at the end of January 2005.

The Company’s American Depositary Shares, each representing one share (prior to April 1, 1991, five shares) of common stock and evidenced by American Depositary Receipts (“ADRs”), have been quoted since 1977 through the National Association of Securities Dealers Automated Quotation (“NASDAQ”) System under “MKTAY”.

The following table shows the high and low sales prices of the Common Stock on the Tokyo Stock Exchange for the periods indicated and the reported high and low bid prices of American Depositary Shares through the NASDAQ system.

		Tokyo Stock Exchange Price								NASDAQ Price
		Per Share of Common Stock								Per American Depositary Share
		(Japanese yen)								(U.S. dollars)
Fiscal year ended March 31,		High				Low				High				Low
2005			2,115				1,315				20.27				12.00
2006			3,820				1,755				34.19				16.15
2007			4,630				2,995				39.00				26.03
2008			5,920				2,885				50.60				27.28
2009			4,780				1,160				45.76				12.72
Quarterly
Fiscal year 2008
1 st quarter ended June 30, 2007			5,650				4,210				45.30				35.64
2 nd quarter ended September 30, 2007			5,820				4,030				47.44				35.20
3 rd quarter ended December 31, 2007			5,920				4,470				50.60				39.86
4 th quarter ended March 31, 2008			4,510				2,885				42.13				27.28
Fiscal year 2009
1 st quarter ended June 30, 2008			4,780				3,000				45.76				29.94
2 nd quarter ended September 30, 2008			4,380				1,965				39.30				19.07
3 rd quarter ended December 31, 2008			2,215				1,160				22.64				12.72
4 th quarter ended March 31, 2009			2,490				1,580				25.09				17.80
Monthly
January 2009			2,340				1,580				23.60				17.80
February 2009			2,220				1,750				24.35				19.24
March 2009			2,490				1,824				25.09				18.55
April 2009			2,500				2,125				24.79				21.68
May 2009			2,450				2,080				24.90				21.68
June 2009		2,535				2,095				25.58				22.05

B. Plan of distribution

     Not applicable

C. Markets

     See Item 9.A.

D. Selling shareholders

     Not applicable

E. Dilution

     Not applicable

F. Expenses of the issue

     Not applicable

Item 10. Additional Information

A. Share capital

     Not applicable

B. Memorandum and articles of association

Organization

The Company is a joint stock corporation (kabushiki kaisha) incorporated in Japan under the Companies Act (kaishaho) of Japan. It is registered in the Commercial Register (shogyo tokibo) maintained by the Kariya Branch Office of the Nagoya Legal Affairs Bureau of the Ministry of Justice of Japan.

Objects and purposes

Article 2 of the Articles of Incorporation of the Company provides that the purposes of the Company are to engage in the following businesses:

•		Manufacture and sale of machine tools including electric power tools, pneumatic tools, engine-powered tools, etc., and wood-working tools;
•		Manufacture and sale of electric machinery and equipment, gardening machinery and various other machinery and equipment;
•		Manufacture and sale of interior furnishings and household goods and their installation work;
•		Purchase, sale, lease and management of real estate;
•		Operation of sporting and recreational facilities;
•		Casualty insurance agency and business relating to offering of life insurance;
•		Tourist business under the Travel Agency Law;
•		Acquisition, assignment and licensing of industrial property rights, copyright and other intellectual property rights and provision of technical guidance;
•		Investment in various kinds of business; and
•		All other business incidental or relative to any of the preceding items.