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Third internal audit meeting

At the Brother Group, Internal Audit Dept. of Brother Industries, Ltd. (BIL) works with regional headquarters in the Americas, Europe, and Asia/Oceania to check that internal controls are functioning properly on a group basis.

From February 1 to 3, 2012, a global internal audit meeting was held, focusing on enhancing internal audit functions which will become increasingly important in global operations.

This global internal audit meeting is held in Japan once every year. The third meeting was attended by about 20 individuals in total from Brother International Corporation (U.S.A.) (regional headquarters in the Americas), Brother International Europe Ltd. (regional headquarters in Europe), Brother International Corporation (regional headquarters in Asia/Oceania), and BIL's Finance & Accounting Dept. and MIS Dept.

The meeting actively discussed how to build a cooperative framework for making internal audits more effective and efficient throughout the Brother Group, as well as setting up rules and creating audit plans.

Brother's internal audits are intended to (i) check that group companies are properly managed overall, (ii) obtain information about the entire group, and (iii) utilize such information for risk management. The audits also check from an independent viewpoint that financial reports are properly managed and credible, based on the internal control report system under the Financial Instruments and Exchange Act of Japan.

At the meeting, BIL President Koike expressed his expectations for "establishment of an audit framework based on a stronger sense of responsibility" and "stronger audit functions".

The help desk not only offers technical support but also sends feedback from customers to relevant departments.

In July 2011, XING INC., a Brother Group company focused on online karaoke and contents services, celebrated the first anniversary since two karaoke brands (JOYSOUND and UGA) were merged. XING took this opportunity to enhance the call center functions in the latter half of FY 2011 (April 1, 2011-March 31, 2012), to improve customer satisfaction. Notably, the help desk, which offers technical support to explain products and systems, increased the efficiency and speed of operations, as well as distribution of information through VOC (Voice Of Customer) activities for using valuable feedback from customers to improve products and services.

Specifically, a new system was introduced to quickly classify and analyze items that receive many comments and requests from customers, and send information to relevant departments. The analyzed information is used to improve operations and develop and introduce new karaoke systems. These efforts have helped increase the overall efficiency of the help desk and have significantly improved inquiry acceptance rates (the percentage of calls from customers connected to the help desk). The inquiry acceptance rates have been above 80% in all months in FY 2011.

XING remains committed to quickly reflecting customers' needs in enhancing its services and products, to further raise customer satisfaction.

Global CSR & Brand Strategy Conference

On January 25, 2012, the fourth Global CSR & Brand Strategy Conference was held.
As a guiding principle of the global business strategy, Brother has been promoting global CSR with the aim of establishing "Brother" as a global "trustworthy brand". This annual conference was launched to enable the top management of group companies to review the progress of Brother's CSR and brand activities and share a vision for the future. The conference was attended by BIL President Koike who served as chairman of the conference, BIL executive officers, and representatives of sales and manufacturing facilities from the Americas, Europe, Asia/Oceania, and Japan.

This first conference since the Great East Japan Earthquake focused on two topics:

• Continuing with the sharing activities of the Brother Group Global Charter (the Global Charter);
• Advancing environmental activities under the "Brother Earth" slogan.

It was confirmed that the Brother Group will continue working on CSR activities in respective regions and support restoration from the earthquake disaster through our business and the voluntary activities of employees.

To take action with clearly defined corporate responsibilities, it was agreed that the Brother Group Principles of Social Responsibility (the Brother Group's Code of Conduct which embodies the Global Charter) will be publicized in and outside the company.

The Brother Group will continue CSR management on a global scale by properly identifying diversifying expectations and needs of stakeholders in different regions around the world, anticipating even unforeseeable risks, and taking the initiative.

A certification logo awarded to the top 30 companies

Brother Industries, Ltd. (BIL) was ranked 17th in a questionnaire survey of the 2012 JAPAN BEST COMPANIES TO WORK FOR^® under the auspices of Great Place to Work^® Institute Japan (GPTW Japan). This is the third consecutive year that BIL has been chosen as one of the top 30 companies in Japan since 2010 when the company enrolled in this survey.

This JAPAN BEST COMPANIES TO WORK FOR^® is designed to evaluate enrolled companies through a questionnaire survey. It is noteworthy that GPTW conducts this unique survey both to the companies and their employees, and places much emphasis on feedback from employees (accounting for 2/3 of the total evaluation score).

As in the past two years, BIL gained high scores exceeding the average of the top 30 companies in the following items this year:

• Staff's desire to work at this company for long years.
• Promoting work-life balance.
• Contributing positively to society.
• Having a warm atmosphere.

Brother Group's CSR management aims to become a trusted company to stakeholder. We place a high value on the above items to gain confidence from customers and society on an ongoing basis. We will continue to expose ourselves to objective evaluation criteria so that we can verify our efforts and build a company that is worth working for and gives pride to employees.

BIC (USA) employees and their family members sorting donated garments and toys

Brother International Corporation (U.S.A.) (BIC (USA)) runs the Community Service Day program, in which one paid holiday is given to employees who volunteer for eight or more hours in the local community (including participating in projects and events without any compensation) during a one-year period. This program was initiated in the early 1990's based on an employee suggestion that a program should be created to recognize employees' participation in volunteer activities that contribute to the local community, so that Brother can grow as a community-oriented company. Ever since, this program has been used as a framework to take Brother's team spirit into the community.

Notably, during the Christmas season of 2011, more employees than average participated in the community contribution activities. The various main activities included:

• Nine employees and their family members participated in activities (organized by a charity) to offer coats, jackets, toys, etc. to people in financial difficulties, to donate and sort garments.
• Working with a charity, Brother employees picked children's wishes from a tree designed with wishes written on pieces of paper, and arranged and delivered 29 presents to the charity.
• Employees delivered school supplies and encouraged children, in cooperation with an organization that provides an after-school learning environment for children.
• Employees solicited donations of food including canned goods at work, and donated them to a local food bank.
• Dozens of employees signed up to donate blood at a special drive in Tennessee in response to a request from a blood bank.

Other activities included participating in Walkathons (making donations depending on the distance walked), volunteer activities at an animal shelter, and mentoring and coaching for children. BIC (USA) employees take full advantage of the Community Service Day program to participate in activities to contribute to the community when time allows.

Creating snowman emblems with embroidery sewing machines

BCN employees sewing the emblems on towels, making presents ready for delivery

Brother (China) Ltd. (BCN), a sales facility in China, launched the Brother Loving Care Embroidery Workshop as a social contribution program involving employees, by utilizing sewing machines. As its first activity, in December 2011, the workshop donated 100 towels on which snowman emblems were sewn and two Brother sewing machines to children at a child welfare institution in Shanghai.

This welfare institution, which is home to more than 600 children, has a long history of taking care of children with disabilities and orphans. To deliver decorative and inspiring Christmas presents, BCN employees used embroidery sewing machines to create lovely snowman emblems and sewed them on towels. On the day BCN employees visited the institution, they were dressed up as Santa Claus, and had fun with children decorating a Christmas tree, singing Jingle Bells, and eating cake.

BCN will continue with annual heart-warming activities on different themes, as part of the Brother Loving Care Project.

PR1000e: the latest model of professional embroidery sewing machine

Presentation of a new product for dealers

Today, there are many people around the world who are starting to offer quick over-the-counter services to fix a hem or embroider customers' names, or who are launching new embroidery businesses, using high-performance embroidery sewing machines. To meet these needs, Personal and Home Company (P&H Company) of Brother Industries, Ltd. is creating professional embroidery sewing machines that combine the advanced technologies of industrial sewing machines with the user-friendliness of home sewing machines. P&H Company actively hosts workshops to enable customers to make full use of its products, as well as seminars for prospective entrepreneurs who are keen to start their own embroidery business.

The company's employees visit dealers around the world to directly explain what makes its products unique and how they differ from those of competitors, what dealers should emphasize when selling the products, and how to identify potential customers.

In FY 2011 (April 1, 2011 - March 31, 2012), workshops and seminars for the PR-1000e (the flagship model of professional embroidery sewing machines) were held targeting customers and dealers in the U.S., Europe, Asia, Eastern Europe, Russia, Central and South America, resulting in a great response. Meanwhile, the PR-650e (a new model for the Japanese market) was released in September 2011. Designed to reflect customers' needs, this product has been highly evaluated in Japan by sportswear manufacturers and business suit franchise stores for the quality and speed of its embroidery as well as name embroidery functions.

P&H Company remains committed to well-tailored solution activities to expand the embroidery business market, by increasing customer satisfaction and enhancing communications.

At a nonprofit organization run by high school students, a donated Brother printer playing an integral part of their welfare and other activities. (Fuji City, Shizuoka Prefecture)

As one of the customer services, Brother offers loaner products for free of charge to customers whose products are in need of repair. In 2010, Brother Sales, Ltd. (a sales facility in Japan) launched a program to refurbish such loaner products as fax machines and multi-function centers, etc., and to donate them to citizens groups and welfare organizations. This program aims at contributing to society with Brother's extra loaner products which have accumulated due to shortened repair times.

In 2011, it was decided to also donate products on display in stores when they are replaced by new ones. The products are refurbished by Mie Brother Precision Industries, Ltd., a servicing center, before being donated, and Brother Sales, Ltd. is in charge of shipping including the costs. Recipients are solicited and screened in partnership with eparts, a nonprofit corporation that runs donation programs.

In FY 2011 (April 1, 2011-March 31, 2012), recipients were solicited for the third (June to July) and fourth (November to December) campaigns. A total of 146 fax machines and multi-function centers were donated to 57 entities.

From May to August, 2011, a similar donation program was implemented under the "Ganbaro! NPO (Keep it up, NPOs)" project to support reconstruction after the Great East Japan Earthquake. Nonprofit organizations that suffered damage or that are involved in the reconstruction work were invited to apply; 100 inkjet multi-function centers were donated to 58 entities. In June, a letter of thanks was received from an organization that suffered damage in Kesennuma City, Miyagi Prefecture, soon after it heard that it had been selected as a recipient: "There are still piles of debris left by the disaster everywhere, which make us feel depressed. Under these circumstances, this donation greatly encourages us." This message boosted the motivation of staff involved in the donation program, and the Brother Group is determined to run this program continuously.

A thank-you message from a recipient

We run a small facility which provides daily care. Every day, senior citizens visit our facility in good cheer and health. Each month, they want to receive an upcoming schedule, and from mid month we are always asked, "When will the new schedule be available?" We will use the donated multi-function center to distribute the schedules containing lots of fun activities.
(Lupinus-kai, a social welfare corporation)

Brother product section at a sales agency visited during a training session

The Brother Group's trainee program, which is part of efforts to become "a truly global company", is designed to develop staff with a broad outlook, strong expertise, and the ability to fit in with global management of the group.

Under this program, employees of Brother Industries, Ltd. are sent to group companies outside Japan and vice versa for periods ranging from three months to two years. While gaining business experience and attending training sessions, trainees are expected to:

• acquire extensive knowledge, skills, and personal networks for future business; and
• develop the ability to cope with global challenges through training in different countries.

Priority is given to sending young employees.

Since its launch in FY 2008 (April 1, 2008-March 31, 2009), a growing number of employees have taken advantage of the program, which contributes to produce global leaders. In FY 2011, eight employees have been sent to facilities outside Japan, while 23 employees have come to Japan from other countries (as of December 2011).

To become a truly global company, the Brother Group will continue to strengthen and enhance the trainee program to develop competitive global human resources.

The president explaining the policy directory to the employees

Global Charter promotional leaders attentively listening to the president

At the Brother Group, Global Charter promotional leaders meetings are held to increase understanding of the Brother Group Global Charter (Global Charter) which is the foundation of activities of all Brother Group employees. As part of continuing efforts to ensure penetration of the Global Charter, new Global Charter promotional leaders were appointed in respective departments in FY 2011 (April 1, 2011-March 31, 2012) to share information and discuss issues.

At the first Global Charter promotional leaders meeting in May (the first for FY 2011), President Koike explained the policy, encouraged leaders, and answered their questions. Amid a lively atmosphere, targets for this fiscal year, visions for activities, etc. were confirmed among participants.

At the second meeting in September, the leaders gave presentations on the efforts of their respective departments. In addition, the secretariat reported on activities to share a common understanding of the Global Charter outside Japan (China, South Korea, and Taiwan). Thus, information was shared about various self-motivated activities throughout the world.

At the third meeting in December, the respective departments gave updates on their new developments. The leaders also shared information about Brother Group employees' access to the FY 2011 version of Terry's Video (a video message from President Koike), and discussed a new action plan for promoting understanding of the Global Charter via e-learning programs.

The Global Charter promotional leaders meetings will continue to be held to identify ways of boosting Global Charter sharing activities.

Zhuhai Brother employees eagerly listening to the lecturer at the health seminar for mothers-to-be

Zhuhai Brother Industries, Co., Ltd. (Zhuhai Brother), which mainly manufactures home sewing machines and label writers, employs about 2,500 people, of whom 95% are women. Therefore, the creation of a safe and secure workplace environment for women is a top priority of CSR at Zhuhai Brother, and various efforts have been made for their benefit.

In December 2011, a new health seminar was held for mothers-to-be, to provide employees who are expecting or plan to have a baby with accurate knowledge about sanitation and nutrition before and after childbirth as well as childbirth and breastfeeding methods, etc.

The 37 employees who attended the seminar learned about periodic checkups before childbirth, nutrition during pregnancy, and selection of childbirth/breastfeeding methods, etc. through lectures given by specialized physicians, and learned about the importance of these matters. The second seminar will be in March 2012, and subsequent seminars will be held in FY 2013 (April 1, 2013-March 31, 2014) and beyond.

BINZ started to join Relay For Life more than 10 years ago

In 1985, a doctor who wished to make a difference for cancer patients held a fund-raising event to fight against cancer in Washington State, U.S.A. He raised donation from his friends by running 24-hour marathon in order to share a sense of solidarity with patients and to support patients and therapy research. This campaign, named Relay For Life, spread across the world and built ties in the fight against cancer throughout local communities. At the Brother Group, employees of Brother International Corporation (U.S.A.) and Brother International (NZ) Ltd. (BINZ) started to take part in these events more than 10 years ago as part of social contribution activities. Group companies in Japan have also joined the event since 2010.

Tasuki sashes bearing the Brother logo were passed on to employees in the subsequent participating countries. The tasuki sashes were embroidered with the national flags of the countries where the facilities are located.

At the Asia-Pacific CSR Conference in Singapore in February 2011, sales facilities in Asia and Oceania and Brother International Corporation (a facility that supervises these sales facilities) decided to actively participate in Relay For Life as part of CSR activities based on a shared awareness across the region. Their participation in Relay For Life means that almost every month employees of the Brother facility somewhere in the U.S., Japan, and other Asia & Oceania countries are to join this event or other similar events. In one year, line connecting the facilities which participated in the relay would form a single beautiful ring around the globe. Thus, this activity was named the Golden Ring Project.

In May, the project started in the U.S., traveling through Asia, Oceania, and Japan, to South Africa. In the meantime, tasuki sashes bearing the Brother logo (made with sewing machines by volunteers at BIL's P&H Company which deals in home sewing machines and embroidery machines among others, in 2010) were passed on to subsequent participating facilities; when received, the tasuki sashes were embroidered with the national flags of the countries where the facilities are located. These activities helped employees appreciate the global network among the facilities, while the funds raised through the project were donated to cancer fighting organizations, research institutions, and patient support groups in respective countries.

The Brother Group will step up efforts as a global team of Relay For Life to further expand the Golden Ring.

Earthquake response members reviewing models of a disaster-resistant supply chain

The Great East Japan Earthquake in March 2011 disrupted supply chains in many industries and highlighted the difficulty of handling risks in the event of a disaster. Having experienced partial disruption of parts procurement after the earthquake, the Brother Group has been building a disaster-resistant supply chain.

Specifically, an earthquake response concurrent team was set up in March immediately after the earthquake as an initial response, consisting of members from relevant departments. In particular, the Purchasing Dept. gathered information from suppliers and adjusted delivery schedules for parts that were difficult to procure. Meanwhile, the Development Dept. and Production Dept. cooperated in evaluating substitute parts. This quick response successfully minimized the impact of the earthquake on production.

Subsequently, earthquake response members from the Purchasing Dept. analyzed the causes of procurement problems and developed a minimal operation model that should be sustained in the event of a major earthquake. This model was shared with relevant in-house departments. Meanwhile, parts suppliers and the Brother Group reviewed response measures from their respective viewpoints and then launched efforts such as developing general-purpose parts, procuring parts from two or more suppliers, and manufacturing parts at two or more facilities.

With cooperation from suppliers, the Brother Group will quickly prepare a procurement manual reflecting diverse risks including major natural disasters, and invest resources in building a more reliable supply chain for customers and business partners.

• *: Supply chain: the process from production of raw materials for products to delivery to end consumers

Coaching Group Training (Top: managers, Bottom: supervisors)

Brother (China) Ltd. (BCN), a sales company in China, has conducted a large-scale coaching training for approximately one year from November 2010 as part of a personnel training program for self-directed employees. This implementation is based on BCN's idea that in order to achieve Brother Group's mid-term strategy "CS B2015" (with targets including sales volume of JPY750 billion and operating profits of JPY58 billion for FY2015), urgent measure should be taken in early stage to develop self-directed employees who can take leadership and work proactively, and coaching would be an effective way to achieve the goal.

Coaching is a talent development method that was devised in the U.S., and unlike conventional standardized program, the uniqueness lies in its technique with the distinctive feature of respecting individual initiative to maximize one's ability, and it is expected that trainees can enhance ability to think and solve problem independently.

Starting with basic training for managers, BCN provided basic and advanced trainings for the employees according to their job titles, ranging from supervisors (direct subordinates of managers) to top management such as managing director and vice managing director, under the guidance of a consulting firm.
After the series of trainings, some changes were found in behavior of many participating managers and many positive comments were made by supervisors, such as "I'd like to conduct coaching for my junior staff in the office as well." Based on the result, BCN is determined to encourage the employees to utilize the coaching skills that they've learned in every aspect of their operations, and to improve office teamwork and the company's performance as a whole.

Trainees working on embroidery with enthusiasm under the guidance of Taiwan Brother employees; completed works shown below

Taiwan Brother Industries, Ltd. (Taiwan Brother), a home sewing machine manufacturer, ran an embroidery skill training program for 30 unemployed adults from July 4 to September 8, 2011. This vocational training program was arranged in collaboration with Chang Jung Christian University at the request of the Training and Employment Center of the Labor Affairs Bureau of Kaohsiung City Government, Taiwan.

Trainees solicited by Chang Jung Christian University attended a basic training course (75 hours) that covered sales, service, work rules, and ethics. Next, the trainees learned how to use Brother's embroidery sewing machines under the guidance of Taiwan Brother employees in the company's sewing classroom, to produce their own works. This was the first time for all of the trainees to use sewing machines. The trainees became increasingly motivated as they took part in practical training sessions every day from 8 o'clock in the morning to 1 o'clock in the afternoon. Even after the session hours, a number of trainees continued to use sewing machines into the evening.

Through 175 hours of training, the trainees completed fine embroidery works that impressed Taiwan Brother employees. Three of the trainees who finished the course have now purchased Brother sewing machines and started their own business, while other trainees are engaged in embroidery-related work.

Japan Day event co-organized by the BIE and BUK

The Great East Japan Earthquake struck Japan on March 11. As part of efforts to support reconstruction, employees of the Brother Group companies have taken the initiative to raise funds in different countries and regions of the world. In Europe, contributions including those from suppliers added up to 96,000 euros during a period of about four months.

Employees of Brother International Europe Ltd. (BIE) and Brother UK Ltd. (BUK) joined forces to create a fundraising event - Japan Day 2011, to celebrate Japanese culture and raise money for the relief efforts in Japan. Employees and suppliers participated in the event which was held at the BIE headquarters in Manchester, UK.
The event was widely enjoyed with activities included learning how to wear a kimono with the chance to try a range of beautiful garments, the preparation and serving of sushi, the demonstration of martial arts and braiding, a photo exhibition of Japanese gardens, and a live performance of Japanese songs by a string quartet.

A team of BIE and BUK colleagues arranged the event, working tirelessly to identify groups who could provide demonstrations and interaction. Thanks to their efforts, 200 visitors were able to enjoy a unique and inspirational day of Japanese culture. The fundraising efforts at the event amounted to 15,350 pounds, which was matched by a corporate contribution from both the BIE and BUK, to make a combined total of 30,700 pounds available to support relief efforts in Japan.

"Kurumin" mark awarded to companies that are recognized to be in compliance with the standards

Brother Industries, Ltd. (BIL) has been assisting employees with child care in accordance with the Act on Advancement of Measures to Support Raising Next-Generation Children^*. In June 2011, BIL was recognized as a general business operator in compliance with the standards, and was awarded the "Kurumin" mark by the Minister of Health, Labour and Welfare in recognition as a certified business operator.

BIL took measures, including the following, based on its second general business operator action plan (FY 2008-FY 2010):

• Posting cases of taking paternity leave on the intranet
• Offering time management training programs for managers
• Encouraging employees to take annual paid leave

The "Kurumin" mark was awarded because these measures were recognized to be successful.

BIL remains committed to taking various measures to help employees balance their careers with child care by carrying out the third general business operator action plan (FY 2011-FY 2012), among others, thereby improving the workplace for employees.

• *: Act on Advancement of Measures to Support Raising Next-Generation Children:
  This act requires business operators employing 301 workers or more to formulate and submit general business operator action plans, in an effort to facilitate "measures to support raising next-generation children" (that is, measures intended to improve the environment so that next-generation children are born and raised in good health).