Consolidated Financial Highlights

Corporate Data

EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2010 and 2011
Japanese yen(millions)

U.S. dollars(thousands)%
Charge2010/2011

2010

2011

2011

\ 152,671\ 196,452$ 2,362,622+28.7%

5,524

13,024

156,633+135.8%

Total assets

153,426

164,417

1,977,354+7.2%

Net assets

109,096

116,820

1,404,931+7.1%

For the year:
Net sales
Net income

At year-end:

Per share data:

Japanese yen

U.S. dollars

Net income\ 113.72\ 268.32

3.23+136.0%Net assets

2,115.38

2,279.57

27.42

+7.8%

35.00

50.00

0.60

+42.9%Cash dividends

Note :: Dollar figures are translated, for convenience only, at the rate of \ 83.15 to U.S. $1.00.

$

Business Operations
Review of Fiscal Year Ended March 31, 2011

Outlook of Fiscal Year Ended March 31, 2012

The fall of the Lehman Brothers had taken a toll on
automobile makers and resulted in an economic
slowdown world-wide where as increasing domestic
demand in China and Asia is expected to continue. While
the EXEDY Group benefited from the recovery in orders
for the most of the year, the Tohoku earthquake that haddevastated eastern Japan had as well affected ourdomestic business as we ended the 2010 year. We havetaken action by implementing successful cost-cutting
activities which contributed to our positive results in thefiscal year.
For the consolidated results of the fiscal year underreview, net sales had risen to ￥196.4 billion (an increaseof 28.7% from the previous fiscal year), operating income
increased to ￥21.4 billion (an increase of 97.2% from theprevious fiscal year), ordinary income climbed to ￥20.8
billion (an increase of 96.3% from the previous fiscal
year), and net income edged to ￥13.0 billion (an increaseof 135.8% from the previous fiscal year).

The Tohoku earthquake that had taken place ineastern Japan has decreased domestic orders and has
left car markers as well as transmission makers out of key
materials that were being sourced from the Tohoku area.
Eventhough the recovery of the area will take time,
the automotive industry is recovering faster than
expected.
In this situation, for the consolidated results of fiscal
2011, we forecast a net sales of ￥200.0 billion (anincrease of 1.8% from the previous fiscal year), an
operating income of ￥18.0 billion (a decrease of 15.9%
from the previous fiscal year), an ordinary income of￥17.9 billion (a decrease of 14.1% from the previous
fiscal year), and a net income of ￥11.5 billion (a decreaseof 11.7% from the previous fiscal year).
September, 2011

Haruo Shimizu
President and Chief Executive Officer

From left to right: Katsumi Shintou (Director), Masayuki Matsuda (Director),
Etsuji Terada (Director), Haruo Shimizu (President and Chief Executive Officer),
Hisayasu Masaoka (Director), Hidehito Hisakawa (Director), Hideki Miura (Director)
Annual Report 20112

Consolidated Five-Year Summary
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31
Japanese yen(millions)2007
For the year:

2008

U.S. dollars(thousands)

2009

2010

2011

2011

		
		
		
		
		
		

Net sales\ 166,745\ 187,303\ 166,750\ 152,671\ 196,452$ 2,362,622

Net income

10,497

11,658

5,441

5,524

13,024

156,633

		
		
		
		
		
		
At year-end:

		
		
		
		
		
		

Total assets\ 144,073\ 158,147\ 136,907\ 153,426\ 164,417$ 1,977,354

Current assets

70,26582,00059,871

81,47891,136

1,096,043

Property, plant and equipment

65,011

68,22070,14064,98665,395

786,470

Current liabilities

32,932

37,207

24,11532,911

36,156434,828

Long-term debt

2,727

2,966

2,627

3,099

4,200

50,511

Net assets

99,847110,033

103,249

109,096

116,820

1,404,931

Net assets / Total assets
Retained earnings
Per share data:
Net income
Net income - diluted
Net assets

64.3 %
75,04964.6 %
84,93470.9 %

67.0 %

87,58892,14067.0 %

67.0%

102,979

1,238,473

		
		
		
		
		
		
Japaneseyen 		
U.S. dollars
		
		
		
		
\ 215.09\ 239.95\ 112.00\ 113.72\ 268.32

$

3.23

－

－

－

－

－

－

1,907.92

2,102.64

1,999.38

2,115.38

2,279.57

27.42

Note : Dollar figures are translated, for convenience only, at the rate of \ 83.15 to U.S. $1.00.				

Financial Section
Consolidated Five-Year Summary

6

Consolidated Balance Sheets

7

Consolidated Statements of Income

9

Consolidated Statements of Changes in Net Assets

10Consolidated Statements of Cash Flows11

Notes to Consolidated Financial Statements

12

Independent Auditors' Report

25

Corporate Data

26

6

Consolidated Balance Sheets
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIESAs of March 31, 2010 and 2011
Japanese yen(millions)

ASSETS

U.S. dollars(thousands)

2010

2011

2011

\ 25,597\ 30,038$ 361,251

645

283

3,403

33,39433,229399,627

Current Assets:		
Cash and cash equivalents [Notes 1(q) and 17]
Time deposits
Notes and accounts receivable (Notes 17 and 19) 		Trade		

Non-consolidated subsidiaries and affiliates

13

8

96

		

Allowance for doubtful accounts

(87)

(82)

(986)

Inventories (Note 2)

16,455

21,232

255,346

Deferred tax assets (Note 8)

2,417

2,819

33,903

Short-term loans
Other current assets
		

Total current assets

638

463

5,568

2,406

3,146

37,835

81,47891,136

1,096,043

8,275

8,166

98,208						Property, Plant and Equipment (Note 4 ) :		
Land
Buildings and structures

41,732

42,105506,374

Machinery and vehicles

106,877

107,490

1,292,724

Tools and furniture

37,26338,741

465,917

Construction in progress

2,052

6,367

76,573		Less - accumulated depreciation		

Total property, plant and equipment

196,199

202,869

2,439,796(131,213)(137,474)(1,653,326)

64,98665,395

786,470

1,137

1,494

17,968

639

703

8,455

		
		
		
Investments and Other Assets: 		Investments in securities (Notes 3 and 17)
Investments in and loans to		non-consolidated subsidiaries and affiliates

124

141

1,696

Deferred tax assets (Note 8)

2,793

2,144

25,785

Other assets

2,269

3,404

40,937

6,962

7,886

94,841\ 153,426\ 164,417$1,977,354

Long-term loans

		

Total investments and other assets

Total Assets

The accompanying notes to the consolidated financial statements are an integral part of these statements.

7

Japanese yen(millions)

LIABILITIES AND NET ASSETS

2010

U.S. dollars(thousands)

2011

2011

Current Liabilities:
Short-term borrowings including
current portion of long-term debt (Notes 4, 6 and 17)

\

4,722

\

3,465

$

41,672

Notes and accounts payable (Note 17) 16,496

19,358232,808

		Construction

724

1,591

19,134

		

25

33

397

Accrued expenses (Note 17)

6,098

7,126

85,701

Accrued income taxes

3,902

3,844

46,230		TradeNon-consolidated subsidiaries and affiliates

944

739

8,886

32,911

36,156434,828

Long-term debt (Notes 4, 6 and 17)

3,099

4,200

50,511

Deferred tax liabilities (Note 8)

1,069

1,145

13,770

Employees' severance and retirement benefits (Note 9)

6,106

5,044

60,661Retirement benefits for directors and corporate auditors

156

9

108

Other current liabilities
		

Total current liabilities		Long-term Liabilities:

Other long-term liabilities
		

Total long-term liabilities

989

1,043

12,545

11,41911,441

137,595

8,284

8,284

99,627

		Contingent Liabilities (Note 19)		
		
Net Assets		
Shareholders' Equity (Note 18):		
Common stock
Authorized - 168,000 thousand shares in 2010 and 2011
Issued - 48,594 thousand shares in 2010 and 2011
Capital surplus

7,541

7,541

90,691Retained earnings

92,140102,979

1,238,473

(39)

(804)

(9,669)107,926

118,000

1,419,122

Treasury stock
12 thousand shares in 2010 and 288 thousand shares in 2011		Total shareholders' equity

Accumulated Other Comprehensive Income
Net unrealized holding gains on other securities
Foreign currency translation adjustments [Note 1(c)]		Total accumulated other comprehensive income

319

357

4,293

(5,477)(8,240)(99,098)(5,158)(7,883)(94,805)

6,328

6,703

80,614

109,096

116,820

1,404,931\ 153,426\ 164,417$ 1,977,354

		Minority Interests 						Total net assets

		
Total Liabilities and Net Assets		

8Consolidated Statements of Income
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2010 and 2011
Japanese yen(millions)

U.S. dollars(thousands)

2010

2011

\ 152,671\ 196,452$ 2,362,622

122,375

152,344

1,832,159

30,29644,108530,463

19,44522,712

273,145

10,851

21,396257,318

77

78

938

Interest expense

(334)

(323)

(3,885)Losses on sale or disposal of property, plant and equipment

(612)

(32)

(385)

Net Sales 		

2011

		
Cost of Sales 		Gross profit		Selling, General and Administrative Expenses (Note 10)		
Operating income		
Other Income (Expenses) : 		Interest and dividend income

Equity in gains of non-consolidated subsidiaries and affiliates

20

59

710

Foreign exchange gains (losses), net

101

(860)

(10,343)

Gains on reversal of allowance for doubtful accounts

28

4

48

Gains on reversal of reserve for warranty

106

178

2,141

Impairment losses on property, plant and equipment (Note 5)

(571)

－

－

Other, net

510

511

6,146

(675)

(385)

(4,630)10,17621,011

252,688

Current

4,498

6,504

78,220

Deferred

(35)

225

2,706

5,713

14,282

171,762

189

1,258

15,1295,524\ 13,024$ 156,633

Income before income taxes and minority interests		
Income Taxes (Note 8)		Income before Minority Interests
		
Minority Interests in Net Income of Consolidated Subsidiaries
		
Net Income\		Japanese yen

Per Share Data (Note 14) :		
Net income
Net income - diluted
Cash dividends\ 113.72\ 268.32

$

3.23

－

－

－

35.00

50.00

0.60

The accompanying notes to the consolidated financial statements are an integral part of these statements.

9

U.S. dollars

Consolidated Statements of Comprehensive Income
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2010 and 2011
Japanese yen(millions)

Income before Minority Interests		

\

U.S. dollars(thousands)

2010

2011

5,713

\ 14,2822011
171,762

Other Comprehensive Income		Net unrealized holding gains on other securities 		

192

38

457

Foreign currency translation adjustments		

820(3,122)(37,547)

144

1

12

1,156

(3,083)(37,078)

6,869\ 11,199$ 134,684

Owners of the parent		

6,607

10,299123,860

Minority interests		

262

900

10,824

Share of other comprehensive income of associates accounted forusing equity method				Total other comprehensive income

Comprehensive Income		\Comprehensive Income attribute to:		

Consolidated Statements of Changes in Net Assets
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2010 and 2011
Japanese yen (millions)
Accumulated othercomprehensive income

Shareholders' equity

Commonstock

Balance as of March 31, 2009\
Increase for unification of accounting policies
applied to foreign subsidiaries
Net income
Purchase of treasury stock
Cash dividends paid
Other, net
Balance as of March 31, 2010
Net income
Purchase of treasury stock
Cash dividends paid
Other, net
Balance as of March 31, 2011\

CapitalsurplusRetainedearnings

Treasurystock

Net unrealized
ForeignTotalholding gains currency
shareholders'on othertranslation
equitysecurities adjustments

Minority
interests

Total
Net Assets

8,284 \

7,541 \ 87,588 \(38) \ 103,375 \127 \ (6,368) \6,115 \ 103,249

－
－
－
－
－
8,284
－
－
－
－
8,284 \

－
－
5,524
－
－
－
(972)
－
－
－
7,541
92,14013,024－－－(2,185)－－－
7,541 \ 102,979 \

－
－
5,524
－
(1)
(1)
(972)
－
－
－
(39) 107,926
13,024
－
(765)
(765)
(2,185)－－－(804) \ 118,000 \

－
－
－
－
－
－
－
－
891
192
(5,477)
319
－
－
－
－
－
－
(2,763)38
357 \ (8,240) \

－
－
5,524
－
(1)
－
(972)
－
213
1,296
6,328 109,096
13,024－(765)－(2,185)－375(2,350)6,703 \ 116,820

U.S. dollars (thousands)
Accumulated othercomprehensive income

Shareholders' equity

Commonstock

Balance as of March 31, 2010
Net income
Purchase of treasury stock
Cash dividends paid
Other, net
Balance as of March 31, 2011

CapitalsurplusRetainedearnings

Treasurystock

Net unrealized
Foreignholding gains currency
Total
shareholders'on othertranslation
equitysecurities adjustments$ 99,627 $ 90,691 $ 1,108,118 $ (469) $ 1,297,967 $－－ 156,633－ 156,633(9,200)(9,200)－－－－－ (26,278)－ (26,278)
－
－
－
－
－
$ 99,627 $ 90,691 $ 1,238,473 $ (9,669) $ 1,419,122 $Minority
interests

Total
Net Assets

3,836 $ (65,869) $ 76,104 $ 1,312,038－－ 156,633－(9,200)－－－－－ (26,278)－
4,510 (28,262)
457 (33,229)
4,293 $ (99,098) $ 80,614 $ 1,404,931

The accompanying notes to the consolidated financial statements are an integral part of these statements.

10Consolidated Statements of Cash Flows
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2010 and 2011
Japanese yen(millions)

U.S. dollars(thousands)

2010

2011

2011

\ 10,176\ 21,011$ 252,688

11,994

11,754

141,359

604

2

24

Cash Flows from Operating Activities: 		Income before income taxes and minority interests
Adjustments for :Depreciation and amortization
Losses on sale or disposal of property, plant and equipment
Impairment losses on property, plant and equipment

571

－

－

Decrease in allowance for doubtful accounts

(16)

(0)

(0)

Increase (decrease) in employees' severance and retirement benefits

545(1,062)(12,772)

Interest and dividend income

(77)

(78)

(938)

Interest expense

334

323

3,885

Decrease (increase) in notes and accounts receivables(8,588)(814)(9,790)

Increase in inventories(1,716)(5,644)(67,877)

Increase (decrease) in notes and accounts payables

3,145

3,453

41,527

Other, net

2,190

524

6,302

		Subtotal

19,162

29,469354,408

Interest and dividend income received

128

104

1,251

Interest paid

(323)

(316)

(3,801)

Income taxes paid

547

(6,449)(77,559)

19,51422,808274,299

Increase in time deposits

(290)

(460)

(5,532)

Decrease in time deposits

16

809

9,729

(7,565)(13,965)(167,949)

52

354

4,257

Payments for acquisitions of intangible assets

(262)

(826)

(9,934)

Payments for purchases of investment in securities

(10)

(286)

(3,440)

Payments for additional portions of consolidated subsidiaries

(42)

(439)

(5,280)

Payments for acquisitions of consolidated subsidiaries(Note 8)

(448)

－

－

Additions to loans receivable

(28)

(52)

(625)
2,526

		

Net cash provided by operating activities

Cash Flows from Investing Activities:

Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment

Collection of loans receivable

65

210

Other, net

(82)

(58)

(697)

(8,594)(14,713)(176,945)(5,051)

		Net cash used in investing activities

Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net

(403)

(420)

Proceeds from long-term loans payable

913

2,018

24,269(1,153)(13,867)

Repayments of long-term loans payable(955)

Payments for acquisitions of treasury stock

(1)

(765)

(9,200)Cash dividends paid

(972)

(2,186)(26,290)

Cash dividends paid to minority shareholders

(434)

(368)

(4,426)

Other, net

(11)

(6)

(71)

(1,863)(2,880)(34,636)

205

(774)

(9,308)		Net cash used in financing activities

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase in Cash and Cash Equivalents 		

9,262

4,441

53,410Cash and Cash Equivalents at Beginning of Year 		

16,33525,597

307,841\ 25,597\ 30,038$ 361,251

Cash and Cash Equivalents at End of Year		

The accompanying notes to the consolidated financial statements are an integral part of these statements.

11

Notes to Consolidated Financial Statements
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES

1. Summary of Significant Accounting and Reporting Policies(a) Basis of presenting the consolidated financial statements
The accompanying consolidated financial statements of Exedy
Corporation (“the Company") and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in the
Financial Instruments and Exchange Law in Japan and its related
accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.
The accounts of the Company’s overseas subsidiaries are preparedin accordance with either International Financial Reporting Standards
or U.S. generally accepted accounting principles, with consolidation
adjustments for the specified six items, which are described in“Practical Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for Consolidated Financial Statements(“PITF
No.18”)”, as applicable. The accompanying consolidated financial
statements have been restructured and translated into English fromthe consolidated financial statements of the Company prepared inaccordance with Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the Financial
Instruments and Exchange Law in Japan. Certain supplementary
information included in the statutory Japanese language consolidated
financial statements, but not required for fair presentation, is notpresented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts
is included solely for the convenience of readers outside Japan, using
the prevailing exchange rate at March 31, 2011, which was ¥83.15 to
U.S. $1.00. The convenience translation should not be construed as
representation that the Japanese yen amounts have been, could havebeen, or could in the future be, converted into U.S. dollars at this or
any other rate of exchange.
(b) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which theCompany has power of control through majority voting rights or the
existence of certain conditions evidencing control by the Company.
The consolidated financial statements include the accounts of theCompany and its 29 (28 as of March 31, 2010) significant majority
owned subsidiaries.
Investments in non-consolidated subsidiaries and affiliates over which
the Company has the ability to exercise significant influence over
operating and financial policies of the investees, are accounted forusing the equity method. Investments in 5 (4 as of March 31, 2010)
non-consolidated subsidiaries and 1 (1 as of March 31, 2010) affiliate
are accounted for using the equity method.
In the elimination of investments in consolidated subsidiaries,
the assets and liabilities of the subsidiaries, including the portion
attributable to minority shareholders, are valued using the fair value
at the time the Company acquired control of the respective subsidiary.
Material intercompany balances, transactions and profits have been
eliminated in consolidation. All the overseas subsidiaries except for 1
consolidated subsidiary, are consolidated using a fiscal period ending
December 31. Significant transactions occurring from January 1 toMarch 31, the Company’s fiscal year-end, are adjusted for in the
consolidated financial statements.
(c) Translation of foreign currencies
Monetary assets and liabilities denominated in foreign currency aretranslated into Japanese yen at current rates at each balance sheet
date and the resulting translation gains or losses are charged toincome for the current period.

The balance sheets of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rates except forshareholders' equity accounts, which are translated at historicalrates. Income statements of consolidated overseas subsidiaries
are translated at the average rates during the year. Translation
adjustments resulting from translating financial statements whose
accounts are denominated in foreign currencies are not included in
the determination of net income but are reported as “Foreign currencytranslation adjustments” in a component of net assets and minority
interests.
(d) Securities
Securities consist principally of marketable and nonmarketable equity
securities.
Other securities with available fair market value are stated at fairmarket value. Net unrealized holding gains and losses on thesesecurities are reported, net of applicable income taxes, as a separate
component of net assets.
Realized gains and losses on the sale of such securities are computed
using the moving average cost method.
Other securities with no available fair market value are stated atmoving average cost, net of the amount considered uncollectible.
If the fair market value of other securities declines significantly, suchsecurities are stated at fair market value and the difference between
the fair market value and the carrying amount is recognized as a loss
in the period of decline. If the net asset value of other securities withno available fair market value declines significantly, such securities
should be written down to the net asset value by charging to income.
(e) Derivatives
All derivatives are stated at fair value.
(f) Inventories
Inventories possessed for selling except for supplies are mainly statedat the lower of cost (first-in, first-out) or net realizable value at March
31, 2011. Supplies are mainly stated at cost determined by the lastpurchase cost method.
(g) Property, plant and equipment
The Company and its domestic consolidated subsidiaries compute thedepreciation of property, plant and equipment by using the decliningbalance method and its overseas consolidated subsidiaries mainly byusing the straight-line method. The depreciation of buildings acquiredby the Company and its domestic consolidated subsidiaries on andafter April 1, 1998 is computed by using the straight-line method.
Estimated useful lives of property, plant and equipment are as follows:
Buildings and structures...........3 - 50 years
Machinery and vehicles…........2 - 15 years
Tools and furniture……….......2 - 20 years
Maintenance and repairs including minor renewals and betterments
are charged to income as incurred.
(h) Software
Software is amortized using the straight-line method over the useful
lives (3-5 years) of the software.
(i) Leases
Finance leases, except for certain immaterial leases, are capitalized
and depreciated over lease terms, as applicable. However, as
permitted, the Company and consolidated domestic subsidiaries
account for finance leases commencing prior to April 1, 2008 which
do not transfer ownership of the leased property to the lessee as
operating lease with disclosure of certain “as if capitalized” informationin Note 7.

12(j) Income taxes
The Company and its consolidated subsidiaries recognize the tax
effects of temporary differences between the carrying amounts ofassets and liabilities for tax and financial reporting purposes.
The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used forincome tax purposes.

(o) Per share data
The computation of net income per share is based on the weighted
average number of shares outstanding during each year, excluding
the Company’s treasury stock, and based on net income attributed toordinary shareholders, excluding bonuses to directors and corporate
auditors, etc. The computation of net assets per share is based on
the number of shares of common stock outstanding at the year-end,
excluding the Company’s treasury stock, and based on net assets
attributed to ordinary shareholders, excluding minority interests.

(k) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historicalbad debt ratio during a certain reference period plus the estimateduncollectible amount based on the analysis of individual accounts.

Cash dividends per share shown in the statements of income are theamounts applicable to the respective years.

(l) Employees' severance and retirement benefits
The Company and its consolidated subsidiaries provide for
employees' severance and retirement benefits at the end of the fiscal
year based on the estimated amounts of projected benefit obligationand the fair value of the plan assets at that date.
Actuarial differences are fully amortized in the year following the year
in which the actuarial differences are recognized. Prior service costs
are recognized in expenses in the year in which they are incurred.
(Changes in accounting policies)
Effective from the fiscal year ended March 31, 2010, the Company
and consolidated domestic subsidiaries adopted the “Partial
Amendments to Accounting Standard for Retirement Benefits (Part3)” (Accounting Standards Board of Japan (“ASBJ”) Statement
No.19 issued on July 31, 2008). The new accounting standard
requires domestic companies to use the rate of return on long-term
government or gilt-edged bonds as of the end of the fiscal year for
calculating the projected benefit obligation of a defined-benefit plan.
Previously, domestic companies were allowed to use a discountrate determined by taking into consideration fluctuations in the yieldof long-term government or gilt-edged bonds over a certain period.
This change had no material impact on the consolidated financial
statements for the year ended March 31, 2010.
(m) Retirement benefits for directors and corporate auditors
Domestic consolidated subsidiaries have unfunded retirement
allowance plans for directors and corporate auditors. The amounts
required under the plans have been fully accrued.
(Additional information)
The Company abolished the practice of providing for retirement
benefits for directors and corporate auditors based on the resolution
for the abolishment of the institution for retirement benefits for
directors and corporate auditors at the ordinary general meeting of
the shareholders on June 24, 2009. As a result of this resolution,
the estimated future payment of \401 million was transferred fromretirement benefits for directors and corporate auditors to other longterm liabilities.
(n) Accounting for consumption taxes
Consumption taxes withheld upon sale and consumption taxes paidby the Companies on their purchases of goods and services are notincluded in the amounts of respective revenue or cost or expense
items in the accompanying consolidated statements of income.

13(p) Goodwill
Goodwill, except for minor goodwill is amortized by the straight-line
method over five years. Minor goodwill is expensed as incurred.
(q) Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits
and short-term investments which have maturities of three months orless when purchased, are easily convertible into cash and have few
risks of fluctuation in value.
(r) Reclassification
Certain comparative figures have been reclassified to conform to thecurrent year’s presentation.

(s) Changes in accounting policies
Asset Retirement Obligations
Effective April 1, 2010, the Company and its consolidated domestic
subsidiaries adopted “Accounting Standards for Asset Retirement
Obligations” (ASBJ Statement No.18 issued on March 31, 2008)
and “Guidance on Accounting Standards for Assets Retirement
Obligations” (ASBJ Guidance No. 21, issued on March 31, 2008). The
effect on operating income, income before income taxes and minority
interests, and net income as a result of applying the new accounting
standard has been immaterial.
Presentation of Comprehensive Income
Effective March 31, 2011, the Company adopted “AccountingStandard for Presentation of Comprehensive Income” (ASBJ
Statement No. 25 on June 30, 2010) and “Revised AccountingStandard for Consolidated Financial Statements” (ASBJ Statement
No. 22, revised on June 20, 2010).
As a result of the adoption of these standards, the Company haspresented the consolidated statement of comprehensive income inthe consolidated financial statements for the fiscal year ended March
31, 2011.
The consolidated balance sheet and the consolidated statement ofchanges in net assets as of and for the fiscal year ended March 31,
2010 have been modified to conform with the new presentation rulesof 2011. In addition, the Company has presented the consolidated
statement of comprehensive income for the fiscal year ended March
31, 2010 as well as that for the fiscal year ended March 31, 2011.
(t) Supplemental information
Disclosures about Segments of an Enterprise and RelatedInformation
Effective April 1, 2010, the Company adopted “Accounting Standard
for Disclosures about Segments of an Enterprise and RelatedInformation” (ASBJ Statement No. 17 on March 27, 2009) and“Guidance on Accounting Standard for Disclosures about Segmentsof an Enterprise and Related Information” (ASBJ Guidance No. 20,
issued on March 21, 2008).

2. Inventories
Inventories as of March 31, 2010 and 2011 were as follows:
U.S. dollars(thousands)

Japanese yen(millions)Finished goods
Work-in process
Raw materials
Supplies

2010

2011

7,312
3,458
4,605
1,080
\ 16,455\ 10,227
4,082
5,678
1,245
\ 21,232\2011$ 122,995
49,092
68,286
14,973$ 255,346

The ending inventory balance represents after write-down of book value when their carrying amounts become unrecoverable, andthe write-down recognized at cost of sales were \203 million and \260 million ($3,127 thousand) as of March 31, 2010 and 2011,
respectively.

3. Securities
Other securities with book values (fair values) exceeding acquisition costs as of March 31, 2010 and 2011 were as follows:
Japanese yen (millions)

March 31, 2010

Acquisition cost

Equity securities
Interest-bearing securities
Others

\

\

334
－
－
334

Book value
910
－
－
910

\

\

Difference
576
－
－
576

\

\

Japanese yen (millions)

March 31, 2010

Acquisition cost

Equity securities
Interest-bearing securities
Others

\

\

644
－
－
644

Book value
1,286
－
－
1,286

\

\

U.S. dollars (thousands)
Difference

Acquisition cost

Book value

$

$

642
－
－
642

\

\

$

7,745
－
－
7,745

15,466－－
15,466$

Difference
$

7,721
－
－
7,721

$

Other securities with book values (fair values) not exceeding acquisition costs as of March 31, 2010 and 2011 were as follows:
Japanese yen (millions)

March 31, 2010

Acquisition cost

Equity securities
Interest-bearing securities
Others

\

\

197
－
－
197

Book value
\

\

159
－
－
159

Difference
\

\

(38)
－
－
(38)

Japanese yen (millions)

March 31, 2010

Acquisition cost

Equity securities
Interest-bearing securities
Others

\

\

174
－
－
174

Book value
\

\

140
－
－
140

U.S. dollars (thousands)
Difference\\

Acquisition cost
$

(34)
－
－
(34)

$

Book value

2,093
－
－
2,093

1,684
－
－
1,684

$

$

Difference
$

$

(409)
－
－
(409)

The book value of securities with no available fair values as of March 31, 2010 and 2011 were as follows:
U.S. dollars(thousands)

Japanese yen(millions)

2010
Other securities with no fair value
Non-listed equity securities

\

68

2011
\

68

2011
$

818

14

4. Assets Pledged as Collateral
The following assets were pledged as collateral for \107 million and \179 million ($2,153 thousand) of secured loans from governmentsponsored agencies as of March 31, 2010 and 2011, respectively :U.S. dollars(thousands)

Japanese yen(millions)2010
Accounts receivable and inventories
Land
Buildings and structures, net

－
62
35
97

\

\

2011
\

\

94
－
－
94

2011
$

$

1,130
－
－
1,130

As is customary in Japan, short-term and long-term bank loans are made under general agreements which provide that additional
security and guarantees for present and future indebtedness will be given at the request of the bank under certain circumstances,and that any collateral so furnished will be applicable to all indebtedness to that bank. To date, the Company and its consolidated
subsidiaries have not received any such requests from their banks.

5. Impairment of Fixed Assets
The Company and its consolidated subsidiaries evaluated the profitability in each business category, which is Manual automotive
drivetrain operations, Automatic automotive drivetrain operations, Industrial drivetrain operations and Other (Plants and other facilities).
Accounting for impairment of fixed assets shall be applied only when the investment may not be recoverable in the business.
In the year ended March 31, 2010, the result indicates impairment in industrial machine drivetrain business due to deterioration ofbusiness environment and can not recover the investment through the future. Therefore the Company and its consolidated subsidiaries
recognized impairment losses on those assets where the recoverable value was less than the net book value. The recoverable value of
assets was based on value in use. Impairment losses were recognized for the excess of the net book value over the recoverable value.
Moreover, the Company and its consolidated subsidiaries has some assets which belong to Manual automotive drivetrain category
and there is no prospect for use. Therefore, the Company and its consolidated subsidiaries recognized impairment losses on thoseassets where the recoverable value was less than the net book value. The recoverable value of assets was based on net selling price.
Impairment losses were recognized for the excess of the net book value over the recoverable value.
Impairment losses on fixed assets for the year ended March 31, 2010 were as follows:
March 31,2010
Asset Group

Asset Type

Industrial machine drivetrain

Buildings and structures
Machinery and vehicles
Tools and furniture
Construction in progress
Intangible assets

Production

MT

Machinery and vehicles

Idle

Japanese yen(millions)

Usage

\

\

89
357
70
44
2
9
571

6. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2010 and 2011 were as follows:

Japanese yen(millions)2010
Short-term borrowings
Current portion of long-term debt
Current portion of lease obligation
Long-term debt
Lease obligations
Other interest bearing debt

\

\

3,371
1,351
16
3,099
28
58
7,923

U.S. dollars(thousands)

2011
\

\

2,775
690
22
4,200
27
81
7,795

2011
$

$

33,3748,298
265
50,511
325
973
93,746Weighted
averageinterest rates
4.3 %
8.8
－
4.2
－
0.4

Average interest rates for lease obligations are omitted because lease obligations include assumed interest amounts.

15

Year
due

2012-20192012-2015

Annual maturities of long-term debt and lease obligations as of March 31, 2011 were as follows:

Long-term deptYears ending March 31

Japanese yen(millions)

2013
2014
2015
2016 and thereafter\\

U.S. dollars(thousands)

1,844
1,361
579
416
4,200

$

14
7
4
2
27

$

$

22,177
16,368
6,963
5,003
50,511

Lease obligation
Years ending March 31
2013
2014
2015
2016 and thereafter

\

\

169
84
48
24
325

$

7. Leases(a) Finance leases
As discussed in Note 1 (i), finance leases commenced prior to April 1, 2008 which do not transfer ownership of leased assets to lessees
are accounted for as operating leases. Information relating to finance leases, except those leases for which the ownership of the leased
assets is considered to be transferred to the lessee, is described below.
Pro forma information regarding leased property such as acquisition cost, accumulated depreciation, accumulated losses on impairment
and future minimum lease payments under finance leases that do not transfer the ownership of the leased property to the lessee for theyears ended March 31, 2010 and 2011 were as follows:
Japanese yen(millions)

March 31, 2011
Machinery and vehicles
Tools and furniture

Acquisition Accumulated
cost
depreciation
\
\

141
115
256

\
\

96
50
146

Accumulated
losses on
impairment
\
\

－
－
－

Balance
\
\

45
65
110
U.S. dollars(thousands)

Japanese yen(millions)

March 31, 2011
Machinery and vehicles
Tools and furniture

Acquisition Accumulated
cost
depreciation
\
\

80
96
176

\
\

57
48
105

Accumulated
losses on
impairment
\
\

－
－
－

Balance
\
\

23
48
71

Acquisition Accumulated
cost
depreciation
$

962
1,155
$ 2,117

Accumulated
losses on
impairment

$

$

685
578
$ 1,263$

Balance
$

－
－
－

$

277
577
854

The scheduled maturities of future lease payments, on such lease contracts for the years ended March 31, 2010 and 2011 were as follows:
U.S. dollars(thousands)

Japanese yen(millions)2010
Due within one year
Due over one year
Lease payments for the year

2011

\

26
45
71

$

313
541
854

\

30

$

361

\

\

38
72
110

\

50

\

2011
$

The amounts of acquisition costs and future minimum lease payments under finance leases included the interest expense portions.
Depreciation expenses, which are not reflected in the accompanying consolidated statements of income, calculated by the straight-line
method, would have been \50 million and \30 million ($ 361thousand) for the years ended March 31, 2010and 2011, respectively.
The Company had no leased assets on which impairment should have been recognized for the years ended March 31, 2010 and 2011.

16

(b) Operating leases
The scheduled maturities of future lease payments under non-cancelable operating leases as of March 31, 2010 and 2011, were as follows:
U.S. dollars(thousands)

Japanese yen(millions)2010
Due within one year
Due over one year

\
\

6
16
22

2011
8
22
30

\
\

2011
$
$

96
265
361

8. Income Taxes
Significant components of the Company and consolidated subsidiaries' deferred tax assets and liabilities as of March 31, 2010 and 2011were as follows:
U.S. dollars(thousands)

Japanese yen(millions)2010
Deferred tax assets:
Employees' severance and retirement benefits
Net operating losses carried forward
Accrued bonuses to employees
Impairment losses on property, plant and equipment
Unrealized profit eliminated in consolidation (inventories)
Losses on devaluation of inventories
Unrealized profit eliminated in consolidation (fixed assets)
Accrued warranty costs
Accrued enterprise tax
Retirement benefits for directors and corporate auditors
Accounts payable
Depreciation
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets\

Deferred tax liabilities:
Depreciation and amortization
Retained earnings of overseas subsidiaries
Reserve for advanced depreciation
Net unrealized holding gains on other securities
Other
Total deferred tax liabilities
Valuation allowance
Deferred tax liabilities
Net deferred tax assets

2,466
1,797
892
703
379
424
220
343
262
－
162
122
971
8,741
(2,014)
6,727

2011
\

4,141

$

(1,038)(1,001)
(329)
(251)
(119)
(2,738)－(2,738)(1,144)
(795)
(326)
(220)
(101)
(2,586)－(2,586)

\

2,038
1,169
1,079
659
492
471
374
328
258
218
－
－
976
8,062
(1,509)
6,553

2011

\

24,51014,05912,977
7,925
5,917
5,664
4,498
3,945
3,103
2,622
－
－
11,737
96,957(18,148)
78,8093,815(12,483)(12,038)(3,957)(3,019)(1,431)(32,928)－(32,928)$

45,881The Company and its consolidated subsidiaries are subject to a number of taxes based on income, which, in the aggregate, indicate astatutory tax rate in Japan of approximately 40.4% for the years ended March 31, 2010 and 2011.
The following table summarizes the significant differences between the statutory tax rate and the Company's effective tax rate forfinancial statement purposes for the years ended March 31, 2010 and 2011:2010
Statutory tax rate
Adjustments for:		 Non-deductible expenses
		 Per capita inhabitants tax
		 Tax credit for research and development expenses
		 Different tax rates applied to overseas subsidiaries
		 Increase(decrease) of retained earnings of overseas subsidiaries
		 Dividend
		 Increase in valuation allowance		Other
Effective tax rate

17

2011

40.4 %
40.4 %
		
		
0.6
0.2
0.2
0.1
(2.7)
(1.5)
(3.8)
(5.3)
3.2
1.0
1.3
－
3.9
(1.9)
0.7
(1.0)%
43.8 %
32.0

9. Employees' Severance and Retirement Benefits
The Company and its domestic consolidated subsidiaries have adopted defined benefit retirement plans: cash balance plans and lumpsum payment plans, as well as defined contribution pension plans.
The liability for employees' severance and retirement benefits included in the liabilities section of the consolidated balance sheets as ofMarch 31, 2010 and 2011 consisted of the following:
Japanese yen(millions)

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial differences
Employees' severance and retirement benefits

2010

2011

\ (11,601)
5,968(5,633)(473)\ (6,106)\ (11,679)
6,446(5,233)189\ (5,044)

U.S. dollars(thousands)2011$ (140,457)
77,523(62,934)2,273$ (60,661)

Included in the consolidated statements of income for the years ended March 31, 2010 and 2011 were employees' severance andretirement benefit expenses comprised of the following:
Japanese yen(millions)2010
Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial differences
Employees' severance and retirement benefit expenses
Others

\

\

527
235
(101)
1,134
1,795
192
1,987

U.S. dollars(thousands)

2011
\

\

535
231
(119)
(473)
174
190
364

2011
$

$

6,434
2,778
(1,431)(5,688)
2,093
2,285
4,378

(Note) "Others" represents the payments to defined contribution pension plans.

Assumptions used in the calculation of the above information were as follows:

2010
Method of attributing the projected benefits to periods of service
Discount rate
Expected rate of return on plan assets
Amortization of prior service costs
Amortization of actuarial differences

2011

Straight-line basis Straight-line basis
2.0%
2.0%
2.0%
2.0%
1 year
1 year
1 year
1 year

10. Research and development expenses
Research and development expenses are charged to income as incurred. Research and development expenses charged to income forthe years ended March 31, 2010 and 2011 were as follows:
Japanese yen(millions)2010
Research and development expenses

\

4,370

U.S. dollars(thousands)

2011
\

4,596

2011
$

55,27418

11. Derivatives
The following table provides information on derivative instruments as of March 31, 2010 and 2011.
Japanese yen (millions)

March 31, 2010
Forward exchange contracts:
To sell U.S. dollars
To sell EuroTo sell Japanese Yen
To buy U.S. dollars
To buy Thai bahts
To buy Japanese Yen

Contract
amount\ 1,070
24
90
91
55
13
\ 1,343

Fair
value
\

\

(22)
(1)
0
(2)
(2)
(0)
(27)

Gain
(Loss)
(22)
(1)
0
(2)
(2)
(0)
(27)

\

\

Japanese yen (millions)

March 31, 2011
Forward exchange contracts:
To sell U.S. dollars
To sell EuroTo buy U.S. dollars
To buy Thai bahts
To buy Japanese Yen

Contract
amount
672
116
203
73
17
\ 1,081

\

Fair
value
\

\

(4)
(4)
(4)
(1)
(0)
(13)

\

\

U.S. dollars (thousands)

Gain(Loss)

Contract
amount

(4)
(4)
(4)
(1)
(0)
(13)

$ 8,082
1,395
2,441
878
205
$ 13,001

Fair
value

Gain
(Loss)

$

(48)
(48)
(48)
(12)
(0)
$ (156)

$

(48)
(48)
(48)
(12)
(0)
$ (156)

12. Segment Information(a) General information about reportable segments
The Company and its consolidated subsidiaries are mainly engaged in the manufacture and sale of automotive parts. From the aspectsof function, technological specification and productive structure, the product lines of the Company are classified roughly into 2 group,"Manual Transmission Parts" and "Automatic Transmission Parts". The Company in cooperation with its consolidated subsidiaries designbusiness strategy and conduct business for these 2 product lines inside Japan and overseas. And concerning these 2 product lines,
separate financial information is accessible among the constituent units of the Company and that are subject to periodical examination,in order for the Board of Directors of the Company to determine the allocation of management resources. Accordingly, the reportablesegments of the Company are composed of 2 segments, "MT (Manual automotive drivetrain related business)" which manufactures andsells Manual Transmission Parts and "AT (Automatic automotive drivetrain related business)" which manufactures and sells AutomaticTransmission Parts.
(b) Basis of measurement about reported segment profit or loss, segment assets, segment liabilities and other material items
The accounting policies of the reportable segment are mainly consistent to what described in Note 1 "Summary of Significant Accounting
and Reporting Policies". The segment profit (loss) is based on operating income before amortization of goodwill. The prices of the goods
traded or transferred among the segments are mainly determined considering market prices of the goods.
(c) Information about reported segment profit or loss, segment assets, segment liabilities and other material items
Reported segment information for the years ended 31, 2010 and 2011 was as follows :Japanese yen(millions)
Sales:
Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Eliminations (inter-segment net sales)
Operating Costs and Expenses:
Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Non-allocated operating expenses and eliminations

19

U.S. dollars(thousands)

2010

2011

2011

\ 45,733
95,651
141,384
17,883
159,267(6,596)\ 152,671\ 57,349
120,756
178,105
27,964
206,069(9,617)\ 196,452$ 689,705
1,452,267
2,141,972
336,308
2,478,280(115,658)$ 2,362,622\ 39,837
90,434130,271
17,579147,850(6,030)\ 141,820\ 47,916
110,574
158,490
25,432
183,922(8,866)\ 175,056$ 576,259
1,329,814
1,906,073
305,857
2,211,930(106,626)$ 2,105,304

Operating Income:Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Non-allocated operating expenses and eliminations
Assets:Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations
Depreciation and Amortization:
Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations
Capital Expenditures:
Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations

\

5,896
5,217
11,113304
11,417(566)\ 10,851\

9,433
10,182
19,615
2,532
22,147(751)\ 21,396$\ 41,524
73,995
115,519
17,396
132,915
20,511\ 153,426\ 43,033
78,937
121,970
20,990142,960
21,457\ 164,417$ 517,535
949,332
1,466,867
252,435
1,719,302
258,052$ 1,977,354

3,032
7,937
10,9691,142
12,111(117)\ 11,994

\

2,861
7,820
10,681
1,067
11,7486\ 11,754

$

1,527
3,270
4,797
1,597
6,394
(103)
6,291

\

4,266
9,218
13,484
2,291
15,775(62)\ 15,713

$

\

\

\

113,446
122,453
235,899
30,451
266,350(9,032)$ 257,318

34,40894,047
128,455
12,832
141,28772$ 141,359
51,305
110,860
162,165
27,552
189,717(745)$ 188,972(Note) 1. "Other operations" is the business segment which doesn't attribute to any reportable segments, and contain industrial machine drivetrain
operation, clutches for motorcycle operation, transport operation, etc.
2. The contents of Adjustments are as follows :(a) "Non-allocated operating expenses and eliminations" of Operationg Income \(751) million consists of "Elimination of intersegment
transactions" \179 million, "Amortization of goodwill" \(130) million,"Company-wide expense" which is not allocated to reportable segments\(848) million and "other adjstments" \48 million. "Company-wide expense" mainly consists general and administrative expenses andexpence for new-product development not attributable to any reportable segments.
(b) "Corporate and eliminations" of Assets \21,457 million consists of "Company-wide assets" which is not allocated to reportable segments \23,371
million, "Elimination of intersegment transaction" \(2,190) million "unamortized balance of goodwill" \518 million and "other adjstments" \242 million.
"Company-wide assets" mainly consists of the cash and cash equivalents and securities that are not attributable to any reportable segments.
(c) "Corporate and eliminations" of Capital Expenditures \(62) million consists of "Adjustment of unrealized gain for intersegmnet transaction of
fixed assets" \(62) million.
3. The segment income is adujted to accord with operating income of "consolidated statement of income".

(1) Information about products and services
Due to the segment of products and services are same as the reportable segment, description of this item is omitted.
(2) Information about geographic areas for the years ended March 31, 2011 was as follows :Sales:
Japan
America
Asia-Oceania
Other
Tangible Assets:
Japan
America
Asia-Oceania
Other

Japanese yen(millions)

U.S. dollars(thousands)

2011

2011

\ 89,646
36,99460,4009,412\ 196,452$ 1,078,124
444,907726,398
113,193$ 2,362,622\ 38,098
7,816
19,091390\ 65,395$ 458,184
93,999229,597
4,690$ 786,470

The Company's operations are classified into geographical areas as follows: Japan, America (including Mexico), Asia-Oceania (Thailand,
Malaysia, China, Korea, Indonesia, Vietnam, Australia, United Arab Emirates, New Zealand and India) and Other (Europe).
(3) Information about major customer for the years ended March 31 2011 was as follows :Japanese yen(millions)Company Name

Sales Segment

JATCO Corporation

AT and MT

2011\ 29,892

U.S. dollars(thousands)

2011$ 359,495

20

13. Related Party Transactions
For the years ended March 31, 2010 and 2011, the Company and its consolidated subsidiaries had operational transactions with Aisin
AW Co., Ltd and Aisin Holdings of America, Inc., which are subsidiaries of Aisin Seiki Co., Ltd. which holds 33.4% of the Company's
voting rights.
A summary of the significant transactions between the Company and its consolidated subsidiaries and such companies for the years
ended March 31, 2010 and 2011 were as follows:
March 31, 2011
CapitalTrade

Manufacturing
automotive
parts

Sale ofproducts

Sale ofproducts
Concurrently
servingas directors\ 4,059\ 26,480

Manufacturing
automotive
parts

Sale ofproducts

Sale ofproducts$ 282,290

Administrationof overall
North
Americanoperations

40%

Dept

Interest
expenseOperation

Voting rights

Relationship
Businessrelationship

Trade

Categories

Name

AddressThe
Company

Other relatedcompany's
subsidiary

Aisin AW
Co., Ltd.

Anjo City
Aichi pref.

\ 26,480

Dynax
Corporation

Other relatedcompany's
subsidiary

Aisin AW
Co., Ltd.

Anjo City
Aichi pref.

Exedy
Other related
Americacompany's
Corporation
subsidiary

Aisin
Holdingsof America,
Inc.

Indiana
U.S.A.

Operation

Voting rights(%)

BalanceAmountRelationship
BusinessrelationshipJapanese yen(millions)
U.S.dollars(thousands)

Subjects

Japanese yen(millions)
U.S.dollars(thousands)

Accounts

Japanese yen(millions)
U.S.dollars(thousands)

Accounts
receivable\ 1,021

Advanced
received\5\ 2,192

Accounts
receivable

\ 537

\ 37

Long-term
debt\ 1,547

March 31, 2011
CapitalJapanese yen(millions)
U.S.dollars(thousands)

Categories

Name

AddressThe
Company

Other relatedcompany's
subsidiary

Aisin AW
Co., Ltd.

Anjo City
Aichi pref.

\ 26,480$ 318,461

Manufacturing
automotive
parts

Sale ofproducts

Sale ofproducts
Concurrently
servingas directors\5,693$68,467

Dynax
Corporation

Other relatedcompany's
subsidiary

Aisin AW
Co., Ltd.

Anjo City
Aichi pref.

\ 26,480$ 318,461

Manufacturing
automotive
parts

Sale ofproducts

Sale ofproducts

Exedy
Other related
Americacompany's
Corporation
subsidiary

Aisin
Holdingsof America,
Inc.

Indiana
U.S.A.

$ 282,290

Administrationof overall
North
Americanoperations

Dept

Interest
expense(%)

40%

BalanceAmountJapanese yen(millions)
U.S.dollars(thousands)

Subjects

Accounts

Japanese yen(millions)
U.S.dollars(thousands)

Accounts
receivable\ 1,239$ 14,901

Advanced
received\8$ 96\2,941$35,370

Accounts
receivable\ 609$ 7,324\12$144

Long-term
debt\ 1,369$ 16,464(Transaction terms and policy determination thereof)
With regard to sale of products and debt, prices and other transaction terms are determined by negotiation in consideration of market situations.
Consumption taxes are included in the balance, but not in the trade amounts.

14. Per Share Data
Per share data for the years ended March 31, 2010 and 2011 were as follows :Japanese yen(millions)

Net income
Net income - diluted
Net assets

2010

2011

\ 113.72－
2,115.38\ 268.32－
2,279.57

U.S. dollars(thousands)

2011
$

3.23
－
27.42

Diluted net income per share is not disclosed because potentially dilutive securities have not been issued.
The information on which per share data was calculated for the years ended March 31, 2010 and 2011 was as follows:
Japanese yen(millions)

Net income per share of common stock
Net income
Amounts not attributed to ordinary shareholders
Net income attributed to ordinary shareholders
The weighted average number of shares (thousands)

21

\
\

2010

2011

5,524
－
5,524

\ 13,024－\ 13,024

48,582

48,539U.S. dollars(thousands)

2011$ 156,633－$ 156,633

15. Changes in Net Assets(a) Shares issued / Treasury stock
Increase

Decrease

48,594
48,594－－－－

48,594
48,594

12
12

0
0

－
－

12
12

Number of shares
as of March 31, 2009

March 31, 2010
Shares issued:
Common stock (thousands)
Treasury stock:
Common stock (thousands)

Number of shares
as of March 31, 2009

The increase of treasury stock - common stock 0 thousand is due to purchase of the stocks less than standard unit 8 hundred.
Increase

Decrease

48,594
48,594－－－－

48,594
48,594

12
12

276
276

－
－

288
288

Number of shares
as of March 31, 2010

March 31, 2011
Shares issued:
Common stock (thousands)
Treasury stock:
Common stock (thousands)

Number of shares
as of March 31, 2011

The increase of treasury stock - common stock 275 thousand is due to open-market purchase of treasury stock pursuant to a resolutionof the board of directors’ meeting held on January 27, 2011
The increase of treasury stock - common stock 1 thousand is due to purchase of the stocks less than standard unit 6 hundred.
(b) Dividends(1) Dividends
March 31, 2010
Resolution

Type of shares

Ordinary general
meeting of theshareholders on
June 24, 2009
Board of Directors'
meeting on
October 29, 2009

Cash dividends paid Dividends per share

Cut-off date

Effective date

\ 10.0March 31, 2009

June 25, 2009

\ 10.0

September 30, 2009

November 27, 2009

Cut-off date

Effective date

\ 25.0$ 0.30March 31, 2010

June 25, 2010

\ 20.0$ 0.24September 30, 2010

November 26, 2010

Japanese yen (millions)(Japanese yen)

Common stock\ 486

Common stock\ 486

Resolution

Type of shares

Japanese yen (millions)
U.S. dollars (thousands)(Japanese yen)
(U.S. dollars)

Ordinary general
meeting of theshareholders on
June 24, 2010

Common stock\ 1,215$ 14,612

Board of Directors'
meeting on
October 28, 2010

Common stock\ 972$ 11,690

March 31, 2011
Cash dividends paid Cash dividends paid

(2) Dividends, of which cut-off date was in the year ended March 31, 2011, and effective date of which will be in the year ending March 31, 2012
Resolution

Type of shares

Ordinary general
meeting of theCommon stock
shareholders on
June 28, 2011

Cash dividends paid

Source ofdividends

Cash dividends paid

\ 1,449$ 17,426

Retainedearnings\ 30.0$ 0.36

Japanese yen (millions)
U.S. dollars (thousands)(Japanese yen)
(U.S. dollars)

Cut-off date

Effective date

March 31, 2011

June 29, 201122

16. Cash flows
Acquisition of newly consolidated subsidiaries
In the year ended March 31, 2010, the Company acquired a part of shares of Ceekay Daikin Limited.
The assets and liabilities of Ceekay Daikin Limited. acquired by the Company and the reconciliation between the acquisition cost andnet cash used for the acquisition were as follows:
Japanese yen(millions)
2,000
1,187
404
(1,838)
(886)
207
(231)
(201)
642
(194)
\
448

Current assets
Non-current assets
Goodwill
Current liabilities
Non-current liabilities
Foreign currency translation adjustments
Minority interests
Transferred from investment in securities
Acquisition cost
Cash and cash equivalents of newly consolidated subsidiary
Net acquisition cost\

17. Financial instruments
Effective from the year ended March 31, 2010, the Company and its consolidated subsidiaries adopted "Accounting Standard for Financial
Instruments"(ASBJ Statement No.10 issued on March 10, 2008) and "Guidance on Disclosing Fair Value of Financial Instruments"(ASBJ
Guidance No.19 issued on March 10, 2008).
The Company and its consolidated subsidiaries manage funds only in short-term deposits, raise funds by bonds or loans and engage
in derivative transactions for the purpose of avoiding the risk of foreign exchange rate fluctuation and ensuring steady cash flow, not fortrading or speculative purposes. Hedging accounting through derivative transactions was not applied as the necessary conditions were
not met.
Notes and accounts receivable have exposure to the credit risk of customers. The Company and its consolidated subsidiaries aremanaging such a risk by controlling the due date and balance of receivables from customers and watching their credit risk conditions inaccordance with the Group credit regulations. Furthermore, to avoid the risk and ensure steady cash flow of accounts receivable in foreign
currency, the Company and its consolidated subsidiaries engage in derivative transactions (forward currency exchange contracts).
Certain securities include exposure to market risk. The Company and its consolidated subsidiaries have such securities for the purpose ofmaintaining relationships with customers or suppliers not for trading purposes. The fair values of the securities are periodically reported to
the Board of Directors of the board meeting of the Company.
Due dates of notes and accounts payable are mainly within one year.
Short-term borrowings are mainly for the purpose of working capital and long-term debt is mainly for the purpose of payment forinvestment in equipment. Derivative transactions are entered and controlled by the financial department with approval of the financial
manager under the rules of each company, which provide the details such as the department in charge and the maximum transaction
amount. To reduce credit risk, transaction counterparties are limited to major financial institutions.
Notes and accounts payable and borrowings have exposure to liquidity risk. The Company and its consolidated subsidiaries arecontrolling such risk by planning monthly budgets of payment.
The book values of the financial instruments included in the consolidated balance sheet and their fair values at March 31, 2010 and 2011were as follows.
Japanese yen (millions)

March 31, 2010
Cash and time deposit
Notes and accounts receivable
Investments in securities
Other securities
Notes and accounts payable
Short-term borrowings
Accrued expenses
Long-term debt
Derivative transactions

23

Contract
amountFair
value\ 26,242\ 26,242

1,069(14,634)(3,371)(5,186)(4,450)(27)

1,069(14,634)(3,371)(5,186)(4,462)(27)

33,40533,405

Gain(Loss)
－
－
		
－
－
－
－
(12)
－
\

Japanese yen (millions)

March 31, 2011
Cash and time deposit
Notes and accounts receivable
Investments in securities
Other securities
Notes and accounts payable
Short-term borrowings
Accrued expenses
Long-term debt
Derivative transactions

Book
value

Fair
value

\ 30,321\ 30,321

33,235

1,426(17,178)(2,775)(6,223)(4,890)(13)

1,426(17,178)(2,775)(6,223)(4,817)(13)

33,235

U.S. dollars (thousands)
Book
value

Fair
value

－
－

$ 364,654
399,699$ 364,654
399,699$－－－－( △ 73)－

17,150(206,590)(33,373)(74,841)(58,809)(156)

17,150(206,590)(33,373)(74,841)(57,931)
(156)

－
－
－
－
( △ 878)－

Difference\

Difference－－

1. The methods used to determine the fair value of financial instruments and derivative transactions are as follows:
Cash and time deposit, notes and accounts receivable, notes and accounts payable, short-term borrowings and accrued expenses are settled in the
short term and the fair values are considered to be equal to book values. Therefore, fair values are stated at book values.
Investments in securities (Other securities) are stated at fair market value. Information regarding investments in securities classified by the purposes forwhich they are held is noted in the relevant section of this report.
Long-term debt is stated at fair value based on the method in which total amount of principal and interest is discounted at the interest rate that would beapplied if each company borrowed the same, but new, principal amount.
Derivative information is noted in the relevant section of this report.
2. Financial instruments for which the fair value is considered difficult to determine
Non-listed equity securities and investments in nonconsolidated subsidiaries and affiliates (book value \771 million ($9,272 thousand)) have no market
price available and are considered to be financial instruments for which the fair market value is difficult to determine.
Therefore, these instruments are not included in "Investment insecurities (Other securities)" in the table above.
3. Refund schedule for current credit after consolidated dateJapanese yen (millions)2012
Cash and time deposit
Notes and accounts
receivable\ 30,321

33,235\ 63,556

2013 ～ 2016 2017 ～ 2021
\
\

－
－
－

\
\

－
－
－

U.S. dollars (thousands)
2022 and
thereafter
\
\

－
－
－

2012
$ 364,654
399,700$ 764,354

2013 ～ 2016 2017 ～ 2021

2022 and
thereafter

$

$

－
－
－

$

$
$

－
－
－

－
－
－

$

4. Payment schedule for long-term debt after consolidated dateJapanese yen (millions)2012
Long-term debt\

690

2013 ～ 2016 2017 ～ 2021
\ 3,788\

412

U.S. dollars (thousands)
2022 and
thereafter
\

－

$

2012

2013 ～ 2016 2017 ～ 2021

2022 and
thereafter

8,298$ 45,556

$

$

4,955

－

18. Shareholders' Equity
Net assets section comprises three subsections, which are shareholders’ equity, valuation and translation adjustments and minority interests.
Under the Japanese Corporate Law ("the Law"), the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the newshares as additional paid-in-capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or
the excess, if any, of 25% of common stock over the total of additional paid-in-capital and legal earnings reserve must be set aside asadditional paid-in-capital or legal earnings reserve. Additional paid-in-capital is included in capital surplus and legal earnings reserve is
included in retained earnings in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit and could be capitalized
by a resolution of the shareholders' meeting.
Under the Law, additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, by a resolution of theshareholders' meeting, all additional paid-in-capital and all legal earnings reserve may be transferred to other capital surplus and retained
earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of
the Company in accordance with Japanese laws and regulations.

19. Contingent Liabilities
Contingent liabilities as of March 31, 2010 and 2011 were as follows :Japanese yen(millions)2010
Trade notes receivable discounted\

64

U.S. dollars(thousands)

2011
\

125

2011
$

1,503

24

Indepnedent Auditors' Report
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIESTo the Board of Directors of EXEDY Corporation:
We have audited the accompanying consolidated balance sheets of EXEDY Corporation and consolidated
subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of income,comprehensive income, changes in net assets and cash flows for the years then ended expressedin Japanese yen. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to independently express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thesestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonablebasis of our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of EXEDY Corporation and subsidiaries as of March 31, 2011 and 2010, andthe results of their operations and their cash flows for the years then ended, in conformity with accounting
principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2011 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.

Osaka, Japan
June 28, 201125

Consolidated Financial Highlights

Corporate Data

EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2010 and 2011
Japanese yen(millions)

U.S. dollars(thousands)%
Charge2010/2011

2010

2011

2011

\ 152,671\ 196,452$ 2,362,622+28.7%

5,524

13,024

156,633+135.8%

Total assets

153,426

164,417

1,977,354+7.2%

Net assets

109,096

116,820

1,404,931+7.1%

For the year:
Net sales
Net income
At year-end:

Per share data:

Japanese yen

U.S. dollars

Net income\ 113.72\ 268.32

3.23+136.0%Net assets

2,115.38

2,279.57

27.42

+7.8%

35.00

50.00

0.60

+42.9%Cash dividends

Note : Dollar figures are translated, for convenience only, at the rate of \ 83.15 to U.S. $1.00.

$