AKEBONO REPORT 2011 Akebono Brake Industry Co. Ltd. 33Notes to Consolidated Financial StatementsAkebono Brake Industry Co. Ltd. and Consolidated Subsidiaries Years Ended March 31 2011 and 20101. Basis of Presenting Consolidated Financial StatementsThe accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Law and its related counting regulations and in conformity with accounting principlesgenerally accepted in Japan which are different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.The consolidated financial statements are stated in Japanese yen the currency of the country in which Akebono BrakeIndustry Co. Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollars areincluded solely for the convenience of readers outside Japan and have been made at the rate of ?83 to $1 (rounded down tothe nearest $1 000; or rounded down to the nearest cent per share) the approximate rate of exchange at March 31 2011.Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollarsat that or any other rate.2. Summary of Significant Accounting PoliciesScope of consolidation?The consolidated financial statements as of March 31 2011 include the accounts of the Companyand its 31 significant (33 in the fiscal year ended March 31 2010) subsidiaries (together the “Group”). Under the controllingcompany accounting method companies in which the Company directly or indirectly is able to exercise control over operationsare fully consolidated and those companies over which the Group has the ability to exercise significant influence areaccounted for by the equity method. During the fiscal year ended March 31 2011 Akebono Tec Corporation and AkebonoManagement Service Co. Ltd. were removed from the scope of consolidation following a short-form merger into the Company.An investment in one associated company (one in the fiscal year ended March 31 2010) is accounted for by the equitymethod. Investments in the remaining two associated companies (two in the fiscal year ended March 31 2009) are stated atcost. If the equity method of accounting had been applied to the investments in these companies the effect on the accompanyingconsolidated financial statements would not be material. The differences between the cost and the underlying net equity (atfair value) of investments in consolidated subsidiaries and associated companies accounted for by the equity method havebeen amortized over a period of 5 years. All significant intercompany balances and transactions have been eliminated in consolidation.All material unrealized profit included in assets resulting from transactions within the Group is eliminated.3. Matters Related to Consolidated Statements of IncomeLoss on earthquake disasterThe Company recorded a ?1 252 million loss on earthquake disaster including an impairment loss on property plant andequipment and restoration costs totaling ?886 million and fixed costs due to the temporary shutdown of plants amounting to?111 million. Of this total ?515 million is a provision for loss on earthquake disaster.4. Reconciliation between Consolidated Statements of Cash Flows and Consolidated Balance Sheets5. Per share informationReference MaterialsYenU.S. Dollars2011 2010 2011Per share of common stock:Basic net income ? 39.75 ? 17.80 $ 0.47Diluted net income 39.61 17.76 0.47Cash dividends applicable to the year 10.00 5.00 0.12Millions of YenThousands ofU.S. Dollars2011 2010 2011Cash and deposits ? 26 661 ? 16 754 $ 321 216Certificate of deposit included in marketable securities 20 300 10 800 244 578Time deposits (certificate of deposit) with maturity over three months (8 500) (6 002) (102 409)Cash and cash equivalents ? end of period ? 38 461 ? 21 552 $ 463 385Feature Social Repor t Environmental Repor t Economic Repor t Reference Materials